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Trump's low-energy vision · Politix

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  It is just not true that like the only market failure or the
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  only externality
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  SPEAKER_03: associated with the energy transition is CO2 as a pollutant per se.
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  Like the point is just carbon pricing on its own without huge
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  investments in
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  SPEAKER_03: innovation is unlikely to yield the change that we actually need.
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  SPEAKER_00: It's mostly relevant to the pace conversation.
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  SPEAKER_00: Yeah.
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  Inventing good electric cars rather than fiddling with the
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  price of gasoline is
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  SPEAKER_00: like what generates like the long term energy transition.
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  SPEAKER_00: Hi, folks.
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  SPEAKER_00: You are listening to a free preview of the Politics Podcast.
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  SPEAKER_00: Brian continues to be on vacation for one more week.
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  SPEAKER_00: So I am joined this week by Jane Flagle from Blue Horizons Foundation.
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  SPEAKER_00: We are going to talk about the energy provisions of this kind of horrific
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  SPEAKER_00: reconciliation bill that is winning its way through Congress.
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  SPEAKER_00: And then for paid members,
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  we're going to talk a little bit about the kind of underlying
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  philosophy behind
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  some of these clean energy programs and where we may be able to
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  go from here.
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  SPEAKER_00: So I hope you guys enjoy.
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  SPEAKER_00: Hi, welcome to the politics podcast.
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  SPEAKER_00: Brian continues to be on vacation in Europe, living it up.
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  So I'm here slaving away,
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  joined this week by Jane Flagle from the Blue Horizons
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  Foundation.
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  SPEAKER_00: Hi, welcome.
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  SPEAKER_03: Hi, Matt.
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  SPEAKER_03: Wow.
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  That's quite the entry point,
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  juxtaposing hanging out with me to hanging out in Europe.
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  SPEAKER_00: Yes, exactly.
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  SPEAKER_00: This is the Portugal of the mind.
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  SPEAKER_00: No, but this is an important time.
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  SPEAKER_00: There is a reconciliation bill working its way through Congress.
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  SPEAKER_00: It has passed the House.
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  SPEAKER_00: It is now on the decks in the Senate.
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  SPEAKER_00: I've talked a lot on
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  SPEAKER_00: on Slow Boring,
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  we've talked a lot on this show about the healthcare and tax
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  cutting provisions of
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  SPEAKER_00: this bill.
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  SPEAKER_00: I have not talked that much about the energy side,
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  SPEAKER_00: in part because I don't understand it as well,
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  SPEAKER_00: and in part because I had thought,
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  SPEAKER_00: until the last minute,
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  I thought that they were not going to make the energy side as
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  bad as they did in
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  SPEAKER_00: the House,
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  SPEAKER_00: because they made some changes at the end.
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  SPEAKER_00: Um,
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  SPEAKER_00: and,
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  SPEAKER_00: uh,
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  SPEAKER_00: I,
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  SPEAKER_00: I,
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  I want to talk to you about it cause I know you are incredibly
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  well-versed in these
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  SPEAKER_00: issues,
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  SPEAKER_00: um,
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  SPEAKER_00: and so forth.
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  SPEAKER_00: So, but can you tell people about yourself?
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  SPEAKER_00: Who are you?
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  SPEAKER_03: Yeah.
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  SPEAKER_03: Well, thanks for having me.
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  SPEAKER_03: I'm thrilled to be here.
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  So I am currently the inaugural executive director of Blue
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  Horizons Foundation,
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  which is a foundation focused principally on climate change out
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  of Boston.
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  SPEAKER_03: I live in New Hampshire, which is an important biographical note.
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  SPEAKER_03: Live free or die, obviously.
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  SPEAKER_03: I am
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  I have worked on energy and climate politics and policy my
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  entire career.
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  SPEAKER_03: I briefly worked at a think tank in DC after college.
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  I did a PhD in environmental science policy and management at
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  UC Berkeley.
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  SPEAKER_03: And then I spent some time in philanthropy.
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  So my first job out of grad school was to stand up the
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  environment program at the
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  SPEAKER_03: Bernard and Ann Spitzer Charitable Trust in New York.
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  SPEAKER_03: So I was there for a few years.
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  SPEAKER_03: That was from like
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  SPEAKER_03: 2018 to 2020-ish.
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  SPEAKER_03: And in that moment,
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  we were quite focused on what we might do to grow political and
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  policy support for
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  SPEAKER_03: innovation and clean energy technologies,
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  SPEAKER_03: which I'm happy to talk about,
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  SPEAKER_03: but we had some success there.
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  SPEAKER_03: Then I went to the Hewlett Foundation in California, where I ran the U.S.
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  SPEAKER_03: Climate Program.
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  SPEAKER_03: And that was really gearing up to the 2020 election.
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  SPEAKER_03: And while I was in that role,
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  I spent a lot of time thinking and working with the actual
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  experts in the field
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  about what a window of political opportunity might mean on
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  climate post-election
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  SPEAKER_03: and helping to
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  SPEAKER_03: shape a bit of what what we might be able to do.
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  Then Biden got elected and I went to the White House where I
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  was the senior
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  director for industrial emissions in the Office of Domestic
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  Climate Policy,
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  SPEAKER_03: which was a new policy office in the White House.
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  SPEAKER_03: And then I was there and then we passed the IRA.
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  SPEAKER_03: And then I went to Stripe,
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  SPEAKER_03: which is a payment processing company,
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  where I helped- If you subscribe to this podcast or to anything
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  on Substack,
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  SPEAKER_00: you are giving money to Stripe.
• 4:36
  SPEAKER_00: This is incredible.
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  SPEAKER_00: They love to process your payments.
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  SPEAKER_03: There's nothing they love more to process your payments,
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  except for perhaps helping to catalyze innovation in a much
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  needed category of
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  SPEAKER_03: technologies that the world needs to address climate risk,
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  SPEAKER_03: which is permanent carbon dioxide removal.
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  SPEAKER_03: So Stripe, along with a bunch of other
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  SPEAKER_03: companies launched this thing called Frontier,
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  which was the world's first advanced market commitment to buy
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  permanent carbon
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  SPEAKER_03: removal.
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  So I went there to help kind of launch the thing and,
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  you know,
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  do the first ever really like
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  basically offtake agreements for companies that were pulling
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  co2 out of the sky and
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  storing it permanently um and then um i've only been in my
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  current role for about
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  about five months um and i'm super super excited it feels like
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  we're at a really
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  SPEAKER_03: important moment on not just climate on many on many issues um uh
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  SPEAKER_03: right now.
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  And I get to work with a bunch of really great people to take a
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  moment to think
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  about what climate philanthropy might do that would be
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  constructive and useful in
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  this really sort of important and in some ways existential
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  moment in the energy
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  SPEAKER_00: transition.
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  But before we get thoughtful,
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  we do have this kind of immediate legislative
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  SPEAKER_00: crisis facing us.
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  SPEAKER_00: So this is a bill, it cuts taxes a lot.
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  SPEAKER_00: It extends TCJA fully.
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  SPEAKER_00: It throws on top of the pile some Trump tax gimmick stuff.
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  SPEAKER_00: It has some state tax provisions.
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  SPEAKER_00: And then this is partially offset by cutting spending.
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  SPEAKER_00: A lot of that is reduced nutritional assistance to poor families,
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  SPEAKER_00: reduced Medicaid spending,
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  SPEAKER_00: reduced affordable
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  SPEAKER_00: care act spending,
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  SPEAKER_00: healthcare stuff,
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  but they are also getting a lot of offsets out of rescinding
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  various inflation
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  SPEAKER_00: reduction act provisions that were related to energy.
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  SPEAKER_00: And this gets like super jargony really fast.
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  SPEAKER_00: 45Q, 45X, IPC, ITC, PTC.
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  SPEAKER_00: So can you, like what, like what is this?
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  SPEAKER_00: Like what's...
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  SPEAKER_03: Yeah, yeah.
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  SPEAKER_00: What are these energy tax credits?
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  SPEAKER_03: are not actually offsetting the costs of the stuff they want to do.
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  SPEAKER_03: Right.
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  Like it is not they are not actually paying for,
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  you know,
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  what are the estimates?
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  SPEAKER_03: Three to five trillion dollars, even with these supposed pay for.
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  SPEAKER_03: So,
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  SPEAKER_03: yes,
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  I would just say there are lots of ways to do deficit reduction
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  that are not what
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  SPEAKER_03: is being offered in this bill.
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  SPEAKER_00: Like you could reduce rather than increasing.
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  SPEAKER_03: Correct.
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  SPEAKER_03: Correct.
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  SPEAKER_03: One could one could, in fact, reduce the deficit.
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  But so so so the Inflation Reduction Act was a bill that passed
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  in 2022 and it
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  included a wide range of interventions to reduce the costs of
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  clean energy,
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  SPEAKER_03: basically,
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  SPEAKER_03: is the best way,
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  SPEAKER_03: best way to think about it.
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  SPEAKER_03: And.
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  SPEAKER_03: And so a big part of that,
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  SPEAKER_03: and in fact,
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  the vast majority of the emissions reductions associated with
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  the Inflation
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  SPEAKER_03: Reduction Act were embedded in tax policy,
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  SPEAKER_03: which is kind of weird.
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  SPEAKER_03: That's not how you normally think of environmental policy,
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  SPEAKER_03: which is how people tend to think about climate policy,
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  SPEAKER_03: but almost all of the most meaningful levers for emissions emissions.
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  and for deployment of clean energy were in fact these tax
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  credits that were
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  reformed and in many ways like made kind of more coherent than
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  they had been
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  SPEAKER_03: historically and enhanced in the IRA.
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  SPEAKER_03: So there are
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  SPEAKER_03: A couple of things may be worth calling out specifically,
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  SPEAKER_03: you know,
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  more than 80 percent of the emissions reductions and of the
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  deployment and of the
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  SPEAKER_03: costs,
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  SPEAKER_03: therefore,
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  SPEAKER_03: of the IRA are in these clean technology,
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  SPEAKER_03: neutral,
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  SPEAKER_03: clean electricity tax credits.
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  SPEAKER_03: So that's 45Y and 48E.
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  SPEAKER_03: And they're technology neutral, right?
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  SPEAKER_03: These are not tax credits for solar and wind.
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  These are tax credits for any zero emissions technology from
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  geothermal to nuclear
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  SPEAKER_03: to biomass to whatever carbon capture.
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  can qualify for a per kilowatt hour tax credit or an investment
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  tax credit that is
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  meant to reduce the costs of these projects and therefore speed
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  their deployment.
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  SPEAKER_00: And this is similar.
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  SPEAKER_00: There was related tax credits.
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  SPEAKER_00: Previously.
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  SPEAKER_00: Right.
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  So so something that that like real losers may recall from
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  reading political news
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  SPEAKER_00: is that like every year or two,
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  there will be a thing in Congress where they talk about tax
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  extenders because
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  there's a set of business tax breaks that are always that were
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  always written to be
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  SPEAKER_00: temporary,
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  but sort of wound up getting extended sort of inevitably at
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  times retrospectively.
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  SPEAKER_00: And some of those related to clean energy, right?
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  SPEAKER_00: And got kind of like rolled into this new tech neutral framework.
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  SPEAKER_03: Yeah,
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  the tech neutral framework is actually quite elegant and solves
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  part of the
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  SPEAKER_03: problem,
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  which is that I think the original solar ITC was enacted in
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  like 2005 or something,
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  SPEAKER_03: right?
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  SPEAKER_03: And it provides a 30% tax credit on the cost of installing PV systems.
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  SPEAKER_03: And
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  SPEAKER_03: I think what we saw happen was like the credit kept sort of coming up for
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  expiration and then getting extended and then coming up for
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  expiration and getting
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  SPEAKER_03: extended.
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  SPEAKER_03: And that's a silly way to do energy policy for sure.
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  SPEAKER_03: And that was true for the PTC as well.
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  So we just had this constant kind of like very confusing and
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  uncertain policy
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  signals we were sending to the market about like whether and
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  how we were willing to
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  SPEAKER_03: support these technologies.
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  And so the tech neutral changes in IRA sort of restored many of
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  these credits to
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  SPEAKER_03: their full value,
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  SPEAKER_03: but very importantly,
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  widened the aperture on the set of technologies that could
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  qualify for the tax
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  SPEAKER_03: credit.
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  SPEAKER_03: If you are a zero emitting technology, you can qualify.
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  There were also some additional changes to the tax credit
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  structure in the
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  SPEAKER_03: Inflation Reduction Act,
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  SPEAKER_03: including some like adders for
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  use of domestic content in your projects or investments in
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  energy communities or
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  SPEAKER_03: low income projects.
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  SPEAKER_03: Also, the IRA made the tax credits transferable.
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  SPEAKER_03: So there were lots of important changes that the IRA made,
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  which should all be in line broadly with what Republicans say
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  they support,
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  SPEAKER_03: which is kind of like
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  SPEAKER_03: you know, technology neutrality support.
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  The president has an EO calling to build gigawatts of new
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  nuclear power in the 2030s.
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  SPEAKER_03: That doesn't happen without policy support.
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  SPEAKER_03: And this is how this is how you do that.
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  SPEAKER_03: So, yeah.
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  SPEAKER_00: Right.
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  SPEAKER_00: So, I mean, the tech neutrality part, you know, this is
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  SPEAKER_00: Fiscally,
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  SPEAKER_00: not that important because the,
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  SPEAKER_00: I mean,
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  like the large bulk of the credits do in fact go to solar and
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  wind as it currently
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  SPEAKER_00: exists because like advanced geothermal,
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  SPEAKER_00: advanced nuclear,
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  SPEAKER_00: carbon capital,
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  SPEAKER_00: like those technologies don't exist.
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  SPEAKER_00: On the other hand...
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  It's like the idea of both making the tax credit permanent and
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  also being more
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  SPEAKER_00: technologically inclusive is to create the incentive to invest in those
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  SPEAKER_00: technologies rather than saying,
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  SPEAKER_00: well,
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  SPEAKER_00: if you invented a scalable advanced geothermal,
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  SPEAKER_00: then you could come to Congress and beg for subsidies to say,
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  SPEAKER_00: if you can make this work,
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  SPEAKER_00: it will be out.
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  SPEAKER_00: And I mean,
• 12:54
  SPEAKER_00: that was like important,
• 12:55
  SPEAKER_00: I think,
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  SPEAKER_00: to getting like Joe Manchin and others to vote for this.
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  SPEAKER_00: But also, you know, is important to the future, the future of America.
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  SPEAKER_00: Tell me about transferability.
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  SPEAKER_00: What does that mean to be transferable?
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  um so so transferability basically like part of the problem
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  with doing energy
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  policy in this way um through the through the tax code is that
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  you have to have tax
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  tax liability and tax equity markets to allow anyone builder of
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  a project to
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  actually utilize the credit okay so transferability basically
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  allows say you own a
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  SPEAKER_03: clean energy project you can basically
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  sell or transfer those credits to some unrelated third party,
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  like an investor or a company.
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  SPEAKER_03: So it basically means that,
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  SPEAKER_03: Matt,
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  SPEAKER_03: you don't have to use your personal tax liability to utilize the credit.
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  SPEAKER_03: So it opens up the market for these projects,
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  SPEAKER_03: basically,
• 13:51
  SPEAKER_03: in a really useful way,
• 13:52
  SPEAKER_03: makes these projects be able to be built more efficiently.
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  SPEAKER_03: It helps smaller projects, simplifies financing, all that stuff.
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  SPEAKER_00: Right.
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  SPEAKER_00: So just sort of think this through, right?
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  SPEAKER_00: It's like,
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  SPEAKER_00: if I have,
• 14:04
  SPEAKER_00: you know,
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  SPEAKER_00: like a big,
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  SPEAKER_00: very profitable company that pays a lot of taxes,
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  SPEAKER_00: then with the old tax credit,
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  SPEAKER_00: if I like also built utility scale solar...
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  SPEAKER_00: I could use the tax credit to offset my liability.
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  SPEAKER_00: I mean,
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  I think Warren Buffett actually did do a lot of this because
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  like he owns like a
• 14:24
  SPEAKER_00: big sort of nonsensical conglomerate.
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  So the energy arms of Berkshire Hathaway would reap tax credits
• 14:32
  that offset the
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  SPEAKER_00: liabilities that like Geico and other things that he also did.
• 14:38
  SPEAKER_00: But if you're a startup,
• 14:39
  SPEAKER_00: right,
• 14:39
  SPEAKER_00: you know,
• 14:40
  SPEAKER_00: if I've got like,
• 14:42
  SPEAKER_00: I don't know,
• 14:42
  SPEAKER_00: investors have put money into my company.
• 14:45
  SPEAKER_00: Because they believe in the long run, it's going to be profitable.
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  But like in the short run,
• 14:50
  I'm trying to build some innovative technology.
• 14:53
  SPEAKER_00: I'm not making profits now.
• 14:56
  SPEAKER_00: I couldn't get that tax credit without,
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  I have a friend who was upset about this because he worked on
• 15:02
  very complicated tax
• 15:04
  SPEAKER_00: credit deal structures.
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  And this made it simpler and was going to cut his law firm out
• 15:09
  of some business.
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  SPEAKER_00: So he's mad at you.
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  SPEAKER_03: This is a negative feedback loop, negative policy.
• 15:16
  But I mean,
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  so,
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  you know,
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  so because I mean,
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  I want to convey this correctly,
• 15:21
  right?
• 15:21
  SPEAKER_00: That it's like the IRA changes were a big deal.
• 15:24
  Like there's a meaningful amount of money that was coming
• 15:28
  through here above the
• 15:29
  SPEAKER_00: baseline because you were really trying to make it.
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  Like like make more companies avail themselves of these
• 15:38
  opportunities and deploy more energy.
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  SPEAKER_03: Totally, totally.
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  SPEAKER_03: And the other thing to note, so there's transferability.
• 15:45
  SPEAKER_03: There was also this provision called direct pay.
• 15:47
  SPEAKER_03: You couldn't claim transferability and direct pay at the same time,
• 15:50
  SPEAKER_03: but direct pay is like even more straightforward.
• 15:52
  It's basically like you just get the cash payment up front
• 15:56
  rather than having that.
• 15:57
  SPEAKER_03: Yeah.
• 15:58
  SPEAKER_00: And so what are these?
• 15:59
  So if I look at my Committee for Responsible Federal Budget
• 16:02
  breakdown of the IRA,
• 16:03
  SPEAKER_00: they've got lots of different provisions.
• 16:06
  SPEAKER_00: So one of them is repeal EV tax credits.
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  SPEAKER_00: So that was like a slice of it.
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  SPEAKER_00: Yeah.
• 16:13
  SPEAKER_00: But then another one says energy production and manufacturing credits.
• 16:19
  So we've been talking about that line item,
• 16:22
  but what's the manufacturing credits?
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  SPEAKER_03: Yeah.
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  SPEAKER_03: So the manufacturing credit is 45X, I think, because that's right.
• 16:34
  And the manufacturing tax credit is basically a subsidy for
• 16:41
  actually producing
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  SPEAKER_03: clean energy components in the U.S.
• 16:47
  SPEAKER_03: So the objective here is to boost domestic manufacturing for the
• 16:51
  SPEAKER_03: the clean energy supply chain.
• 16:53
  SPEAKER_03: So think like if you're producing,
• 16:56
  if you're a US company producing PV cells or wind turbine
• 17:01
  blades or whatever,
• 17:03
  you get a tax credit from the US government for doing that in
• 17:08
  the United States.
• 17:10
  And that tax credit has had quite broad support and actually
• 17:16
  helped incentivize a
• 17:17
  lot of what we're seeing in terms of the clean energy
• 17:19
  manufacturing boom in the
• 17:21
  SPEAKER_03: U.S.
• 17:21
  SPEAKER_03: today.
• 17:22
  SPEAKER_03: Right.
• 17:22
  SPEAKER_03: So like all of these battery factories that you're hearing about,
• 17:26
  SPEAKER_03: for instance,
• 17:27
  in places like Georgia and South Carolina and Kentucky are
• 17:31
  often availing.
• 17:32
  SPEAKER_03: I mean, they are all availing themselves of the 45x tax credit.
• 17:36
  SPEAKER_03: One thing that is often,
• 17:37
  SPEAKER_03: I think,
• 17:39
  SPEAKER_03: misunderstood or not well understood about 45X,
• 17:41
  SPEAKER_03: however,
• 17:42
  SPEAKER_03: is that...
• 17:46
  SPEAKER_03: It is simply not true that if you got rid of 30D,
• 17:50
  SPEAKER_03: which is the consumer tax credit for electric vehicles,
• 17:55
  SPEAKER_03: but maintained 45X,
• 17:57
  which would incentivize the production of the widgets that go
• 18:01
  into those vehicles
• 18:02
  SPEAKER_03: in the U.S.,
• 18:03
  it is simply not true that you would save the factories
• 18:06
  producing the widgets
• 18:07
  SPEAKER_03: because
• 18:09
  what you're doing is totally undermining the demand side for
• 18:14
  the product for whom
• 18:15
  SPEAKER_03: you are producing widgets.
• 18:16
  SPEAKER_03: And so, and this, the impacts of this go even further upstream, right?
• 18:20
  SPEAKER_03: Like to have a robust critical mineral sector in the United States,
• 18:25
  SPEAKER_03: like to have domestic mining,
• 18:27
  to have factories in the United States that are actually
• 18:30
  producing the batteries
• 18:31
  SPEAKER_03: and widgets that go into these facilities and vehicles.
• 18:34
  SPEAKER_03: You need signals automatically
• 18:37
  SPEAKER_03: across the supply chain from the earliest stages to the demand side.
• 18:40
  So simply like chopping off the demand side credits is going to
• 18:44
  have a huge
• 18:45
  SPEAKER_03: negative impact all the way upstream.
• 18:48
  And Jesse Jenkins has actually done some really interesting
• 18:50
  analysis on this for
• 18:53
  SPEAKER_03: 30D,
• 18:53
  SPEAKER_03: the EV credit in particular.
• 18:55
  SPEAKER_03: Like,
• 18:56
  SPEAKER_03: I think there are lots of folks who want to say like,
• 18:57
  SPEAKER_03: we want our battery factories,
• 18:59
  SPEAKER_03: but we don't want to subsidize electric vehicles.
• 19:01
  SPEAKER_03: And that's just not a coherent policy position.
• 19:04
  SPEAKER_00: Well,
• 19:04
  SPEAKER_00: I mean,
• 19:05
  SPEAKER_00: OK,
• 19:05
  SPEAKER_00: I mean,
• 19:06
  SPEAKER_00: I guess I guess like the part of how I'm thinking about this,
• 19:10
  SPEAKER_00: though,
• 19:10
  SPEAKER_00: is,
• 19:10
  SPEAKER_00: you know,
• 19:11
  SPEAKER_00: Republicans won the election.
• 19:13
  SPEAKER_00: Right.
• 19:14
  SPEAKER_00: Like they're going to do some cuts.
• 19:17
  SPEAKER_00: And so it is worth thinking about,
• 19:20
  SPEAKER_00: you know,
• 19:21
  SPEAKER_00: if we you know,
• 19:22
  SPEAKER_00: if we had to choose between our babies.
• 19:24
  SPEAKER_00: Oh, yeah.
• 19:25
  SPEAKER_00: Because like I.
• 19:27
  SPEAKER_00: I used to be a huge EV skeptic, honestly.
• 19:31
  And I bought a plug-in hybrid car,
• 19:34
  which has actually just kind of like EV pilled me.
• 19:38
  And I think I kind of screwed up and I could have gotten a
• 19:42
  bigger battery for less
• 19:43
  SPEAKER_00: money by just getting a pure electric car.
• 19:45
  SPEAKER_00: Anyway, so like, I just like, I think that in the future, like,
• 19:50
  people are going to be buying more and more electric cars,
• 19:54
  probably no matter what the U.S.
• 19:55
  SPEAKER_00: government does.
• 19:56
  SPEAKER_00: Although,
• 19:57
  SPEAKER_00: you know,
• 19:57
  SPEAKER_00: the subsidies,
• 19:58
  SPEAKER_00: the regulations,
• 19:59
  SPEAKER_00: I mean,
• 19:59
  SPEAKER_00: it all has some impact,
• 20:00
  SPEAKER_00: but like,
• 20:01
  SPEAKER_00: this is a good technology.
• 20:02
  SPEAKER_00: The technology is improving.
• 20:04
  SPEAKER_00: Adoption is growing in every country that I'm familiar with.
• 20:10
  SPEAKER_00: But there's a question about like,
• 20:14
  SPEAKER_00: You know,
• 20:15
  SPEAKER_00: I guess like a critique that you used to hear about this as well,
• 20:19
  SPEAKER_00: you know,
• 20:19
  SPEAKER_00: but this battery supply chain is all dependent on Chinese components,
• 20:23
  SPEAKER_00: Chinese batteries,
• 20:24
  SPEAKER_00: Chinese technology.
• 20:26
  And we could try to sort of like isolate ourselves from the
• 20:31
  world and just have
• 20:32
  SPEAKER_00: this localized market of industrial combustion engines.
• 20:38
  SPEAKER_00: like trucks and SUVs and we have our American oil.
• 20:42
  SPEAKER_00: But like,
• 20:43
  SPEAKER_00: you know,
• 20:43
  SPEAKER_00: we just saw in Russia or rather,
• 20:47
  SPEAKER_00: you know,
• 20:47
  Ukraine used this like fleet of battery powered drones to like
• 20:51
  destroy Russia's
• 20:53
  SPEAKER_00: strategic missile arsenal or their bomber arsenal.
• 20:56
  SPEAKER_00: And so like we're going to be using batteries.
• 20:59
  SPEAKER_03: Totally.
• 21:00
  SPEAKER_00: And battery powered things in the future.
• 21:02
  Also autonomous vehicles are going to require electrification
• 21:06
  of vehicles too.
• 21:07
  Like,
• 21:08
  yeah,
• 21:08
  it's just,
• 21:10
  it would be insane for things to not move in this direction.
• 21:13
  Are you now going to argue that that's why we don't need tax
• 21:15
  subsidies for them?
• 21:16
  SPEAKER_03: Like it's just going to happen naturally.
• 21:17
  SPEAKER_00: Well,
• 21:17
  SPEAKER_00: I mean,
• 21:17
  SPEAKER_00: I'm not saying we don't need tax subsidies,
• 21:20
  SPEAKER_00: but I'm saying that like,
• 21:21
  SPEAKER_00: I do think that the subsidy for battery manufacturing
• 21:26
  is like meaningfully more important on a dollar per dollar
• 21:30
  basis than the consumer
• 21:32
  SPEAKER_00: side subsidy.
• 21:36
  Just because like it is much more inevitable that American
• 21:41
  consumers will be buying
• 21:42
  SPEAKER_00: batteries 5,
• 21:44
  SPEAKER_00: 10,
• 21:48
  SPEAKER_00: 15,
• 21:48
  20 years from now than it is that those batteries will be made
• 21:47
  in the United
• 21:48
  SPEAKER_00: States.
• 21:49
  SPEAKER_03: Yeah, yeah.
• 21:49
  SPEAKER_03: But I mean,
• 21:50
  SPEAKER_03: look,
• 21:50
  30D also had requirements that the stuff in the vehicles was
• 21:54
  produced in the United
• 21:55
  SPEAKER_03: States.
• 21:56
  SPEAKER_03: Like these things were quite interlocking.
• 22:01
  SPEAKER_00: Right.
• 22:01
  SPEAKER_00: No, no, I mean, that's definitely true.
• 22:03
  So,
• 22:03
  you know,
• 22:03
  I mean,
• 22:04
  it does all like it's a it's a bit of a seamless vision.
• 22:09
  SPEAKER_00: But I also do think that, like, you know.
• 22:13
  SPEAKER_00: Ultimately, like Republicans control our destiny.
• 22:16
  SPEAKER_00: Yeah.
• 22:17
  SPEAKER_00: Here at this point.
• 22:18
  SPEAKER_00: And,
• 22:18
  SPEAKER_00: you know,
• 22:19
  SPEAKER_00: if they can if they can get rid of some stuff,
• 22:21
  SPEAKER_00: but but not the rest,
• 22:23
  SPEAKER_00: like we might still survive.
• 22:24
  SPEAKER_00: So like long story short, like what what happens if this is all repealed?
• 22:29
  SPEAKER_00: Right.
• 22:29
  SPEAKER_00: I mean, we have a higher emission pathway going forward.
• 22:33
  SPEAKER_00: But we would also,
• 22:35
  SPEAKER_00: because we used to have these like wind and solar investment tax credits,
• 22:41
  SPEAKER_00: we would actually be going back to a,
• 22:44
  SPEAKER_00: like not just to a lower level of investment than we had before Biden,
• 22:50
  SPEAKER_00: but to like a lower level of investment than we ever had.
• 22:53
  SPEAKER_00: Right.
• 22:54
  SPEAKER_00: They're rolling back to like less than zero.
• 22:57
  SPEAKER_03: Yeah, yeah.
• 22:57
  SPEAKER_03: I mean, it is a disaster.
• 23:00
  Like,
• 23:00
  look,
• 23:01
  I think the Senate has a couple of weeks to save us and
• 23:06
  themselves.
• 23:07
  SPEAKER_03: And they have acted wisely on clean energy in the past.
• 23:10
  SPEAKER_03: Senate Republicans have acted wisely on clean energy in the past.
• 23:14
  SPEAKER_03: And the imperative to do that today is even greater.
• 23:16
  So like one thing that I've been thinking about is if you look
• 23:19
  back at the history
• 23:20
  SPEAKER_03: of the bipartisan infrastructure law,
• 23:22
  SPEAKER_03: the
• 23:23
  Many of the Senate Republicans who were kind of like watching
• 23:27
  to see if they'll
• 23:27
  make some changes to the IRA and the Senate and the Senate
• 23:30
  version are the same
• 23:33
  folks who played a really pivotal role in like kind of
• 23:35
  developing the bipartisan
• 23:37
  SPEAKER_03: infrastructure law.
• 23:38
  So it's Cassidy,
• 23:39
  Murkowski,
• 23:40
  Capitol,
• 23:40
  Collins,
• 23:41
  Tillis,
• 23:41
  Grassley,
• 23:42
  Graham,
• 23:42
  you know,
• 23:43
  whatever.
• 23:44
  SPEAKER_03: And the bipartisan infrastructure law.
• 23:46
  SPEAKER_03: Over a third of the Republicans in the Senate voted for that bill,
• 23:51
  SPEAKER_03: while only like eight of 213 House Republicans voted for it.
• 23:55
  So that's like one of the reasons I'm more more optimistic
• 23:58
  about the Senate.
• 23:59
  SPEAKER_03: And look,
• 24:00
  SPEAKER_03: if they don't save us and save themselves,
• 24:03
  SPEAKER_03: it really is true that I think like going into 2026 and 2028,
• 24:06
  SPEAKER_03: every increase in gas prices is
• 24:10
  SPEAKER_03: every increase in electricity prices,
• 24:13
  SPEAKER_03: every closed clean energy adjacent factory,
• 24:16
  SPEAKER_03: every critical mineral project that happens in China and not in the US,
• 24:21
  every data center built in Saudi Arabia and not here can be
• 24:25
  blamed on them like
• 24:26
  SPEAKER_03: that.
• 24:27
  SPEAKER_03: That is the truth of this.
• 24:29
  The analyses we're seeing show double digit electricity rate
• 24:32
  increases in the next
• 24:33
  SPEAKER_03: few years in many of the states these senators represent.
• 24:36
  If IRA is repealed,
• 24:38
  gas prices going up as demand surges in the face of constricted
• 24:41
  supply.
• 24:43
  Billions of dollars in clean energy investments have already
• 24:45
  been canceled or delayed.
• 24:47
  That's like hundreds of factories and hundreds of thousands of
• 24:50
  jobs are at stake.
• 24:51
  SPEAKER_03: And like.
• 24:52
  SPEAKER_03: What we're asking them to do is not that crazy.
• 24:55
  Like while it's true that that changes to the House version of
• 25:00
  the IRA amount to
• 25:02
  SPEAKER_03: full repeal in terms of impact,
• 25:04
  like the actual changes that the Senate has to make to like
• 25:08
  restore the bulk of the
• 25:10
  SPEAKER_03: power of that bill are quite small.
• 25:12
  SPEAKER_03: So like
• 25:14
  SPEAKER_03: Number one,
• 25:16
  the kind of poison pill in the House version was the changes to
• 25:19
  the foreign
• 25:19
  SPEAKER_03: entities of concern language.
• 25:22
  SPEAKER_01: Okay, what does that mean?
• 25:23
  SPEAKER_03: Yeah,
• 25:24
  so foreign entities of concern language is like a very
• 25:29
  well-intended and kind of
• 25:30
  useful policy framework for ensuring that like bad actors are
• 25:35
  not deeply...
• 25:37
  SPEAKER_03: embedded in U.S.
• 25:39
  SPEAKER_03: supply chains in critical industries.
• 25:41
  SPEAKER_03: So like a lot of the FIAC,
• 25:43
  SPEAKER_03: as it's called,
• 25:44
  SPEAKER_03: fight has been about how do you ensure that like,
• 25:46
  SPEAKER_03: you know,
• 25:46
  SPEAKER_03: Chinese solar panels aren't covering the United States?
• 25:50
  SPEAKER_03: Like how do we keep China out of our supply chains?
• 25:52
  SPEAKER_03: The way,
• 25:53
  SPEAKER_03: and we've had like IRS in the Biden years,
• 25:56
  SPEAKER_03: Treasury developed some rules on this for 30D,
• 25:59
  SPEAKER_03: the EV tax credit.
• 26:00
  SPEAKER_03: Like we've had conversations about foreign entity of concern before.
• 26:03
  SPEAKER_03: And the Senate is actually like reasonably smart on this,
• 26:06
  SPEAKER_03: which is another reason I'm optimistic.
• 26:08
  SPEAKER_03: The way the House bill wrote FIOC is like,
• 26:13
  SPEAKER_03: basically insane.
• 26:14
  So you don't get the credit if you yourself are a specified
• 26:19
  foreign entity,
• 26:20
  SPEAKER_03: including China,
• 26:21
  SPEAKER_03: if you are a foreign-influenced entity,
• 26:24
  SPEAKER_03: if you have any sourcing from a foreign entity of concern,
• 26:27
  SPEAKER_03: in some cases,
• 26:28
  SPEAKER_03: if you have a licensing from a foreign entity of concern,
• 26:31
  SPEAKER_03: or if there's any payment to a foreign entity of concern.
• 26:34
  And it's just like it will take years and years to even issue
• 26:37
  guidance that would
• 26:38
  SPEAKER_03: make this workable.
• 26:40
  And at base,
• 26:40
  it is unworkable because the targets are so the constraints are
• 26:45
  so,
• 26:45
  so,
• 26:46
  so strict.
• 26:47
  So like it's totally true that we need to be tough on China,
• 26:50
  but we need to be smart there.
• 26:54
  And the House version of this just totally hamstrings industry
• 26:57
  with uncertainty
• 26:58
  SPEAKER_03: while Treasury is
• 27:00
  would write would write the um the regulations so we need
• 27:04
  changes to fiac we have
• 27:06
  an idea of what they are they're not that hard like that they
• 27:09
  should just do that
• 27:11
  if they don't do that um weirdly uh it will hobble u.s
• 27:17
  manufacturing and if we
• 27:19
  can't manufacture anything in the united states china wins so
• 27:22
  it's actually kind of
• 27:23
  SPEAKER_03: the current version is actually pretty
• 27:25
  SPEAKER_03: anti-American in my view.
• 27:29
  And the second big category of changes that we really need is
• 27:32
  like basically a
• 27:33
  SPEAKER_03: shift in the deadline.
• 27:34
  SPEAKER_03: So the House bill didn't repeal everything in its entirety.
• 27:37
  SPEAKER_03: It just said not so much.
• 27:40
  So like specifically the House bill said you have to be your
• 27:43
  project has to both
• 27:46
  start construction in the next 60 days after enactment and be
• 27:51
  placed in service by
• 27:52
  SPEAKER_03: 2028,
• 27:52
  SPEAKER_03: which is like
• 27:55
  SPEAKER_03: Like no one's going to qualify.
• 27:56
  Certainly none of the technologies the Republicans like are not
• 27:59
  going to qualify for that.
• 28:01
  SPEAKER_03: Geothermal, nuclear, CCS, like there's no way.
• 28:05
  SPEAKER_03: So we need to change that language and extend the deadline a bit.
• 28:09
  SPEAKER_03: But like those are the two big things.
• 28:11
  SPEAKER_03: And I'm talking mostly about just the clean electricity tax credits here.
• 28:15
  But like the clean electricity tax credits are 80% of the
• 28:18
  emissions reductions.
• 28:20
  SPEAKER_00: Right.
• 28:22
  SPEAKER_00: So fix it.
• 28:24
  SPEAKER_00: Well, that would be nice.
• 28:26
  SPEAKER_00: So, you know, sort of broader context here, right?
• 28:29
  We had a big kind of increase in consumer electricity prices in
• 28:37
  like 2021,
• 28:38
  SPEAKER_00: 2022,
• 28:38
  SPEAKER_00: when the price of many things was rising.
• 28:44
  SPEAKER_00: And I had kind of hoped at the time, and I think it was...
• 28:48
  SPEAKER_00: reasonable based on history,
• 28:50
  SPEAKER_00: to sort of hope that that would go away,
• 28:55
  SPEAKER_00: you know,
• 28:55
  SPEAKER_00: that the prices would actually fall.
• 28:57
  SPEAKER_00: We know that like a general fall in the price level is unusual,
• 29:03
  SPEAKER_00: but commodity prices do go up and down and fluctuate.
• 29:08
  SPEAKER_00: And so we thought,
• 29:09
  SPEAKER_00: you know,
• 29:09
  SPEAKER_00: there's this war,
• 29:11
  SPEAKER_00: maybe that'll go away,
• 29:12
  SPEAKER_00: it'll get back down,
• 29:14
  SPEAKER_00: but that hasn't happened.
• 29:15
  the kind of acceleration of prices slowed down,
• 29:20
  but it's continued to go up.
• 29:22
  SPEAKER_00: I think because we've had this tremendous boom in electricity demand,
• 29:27
  SPEAKER_00: which wasn't the case previously.
• 29:29
  SPEAKER_00: I mean,
• 29:29
  SPEAKER_00: for a long time,
• 29:30
  SPEAKER_00: it was like the population was growing,
• 29:33
  SPEAKER_00: so people used more electricity,
• 29:35
  SPEAKER_00: but also we had the more efficient light bulbs,
• 29:38
  SPEAKER_00: more efficient appliances.
• 29:39
  SPEAKER_00: And so electricity demand was pretty much
• 29:42
  SPEAKER_00: But now because of data centers,
• 29:45
  SPEAKER_00: because of electric cars,
• 29:47
  SPEAKER_00: maybe some other factor,
• 29:49
  SPEAKER_00: but I think mostly those two,
• 29:50
  SPEAKER_00: like people are using more electricity.
• 29:54
  SPEAKER_00: And so we need to generate more electricity.
• 29:58
  SPEAKER_00: Yeah.
• 29:59
  SPEAKER_00: And now we're not going to.
• 30:01
  SPEAKER_00: No,
• 30:01
  SPEAKER_03: it's like an actual,
• 30:03
  SPEAKER_03: as many of us will recall,
• 30:05
  President Trump on day one issued an executive order declaring
• 30:08
  a national energy
• 30:09
  SPEAKER_03: emergency.
• 30:10
  SPEAKER_03: Like,
• 30:10
  SPEAKER_03: This is the national energy emergency.
• 30:13
  Adding new supply to the grid fast enough to keep up with
• 30:16
  rising demand is the real
• 30:18
  SPEAKER_03: energy emergency.
• 30:19
  If we do not add supply fast enough,
• 30:22
  prices will skyrocket and we're going to screw U.S.
• 30:25
  SPEAKER_03: industries, including the race to build and control AI.
• 30:28
  SPEAKER_03: Like that is what is going to happen.
• 30:31
  SPEAKER_03: And I think that there might be some imagined world where like,
• 30:36
  SPEAKER_03: You know,
• 30:36
  without without without these without these policies will like
• 30:41
  magically just fill
• 30:43
  SPEAKER_03: the gap and meet all of the demand demand with U.S.
• 30:45
  SPEAKER_03: gas or something that that will not happen.
• 30:49
  Like,
• 30:50
  you know,
• 30:51
  some of the projections are like 150 gigawatts of new demand in
• 30:54
  the next decade.
• 30:56
  SPEAKER_03: Right now, you cannot buy and build a new gas turbine, basically.
• 31:03
  SPEAKER_03: The supply chains are not there.
• 31:05
  SPEAKER_03: It takes years and years to build.
• 31:08
  If everything went right,
• 31:10
  you could maybe meet a quarter of that demand with new gas.
• 31:14
  SPEAKER_03: But like,
• 31:14
  SPEAKER_03: that's if everything goes right,
• 31:16
  like the stuff that is affordable and can get built quickly is
• 31:20
  the stuff this bill
• 31:21
  SPEAKER_03: incentivizes,
• 31:22
  SPEAKER_03: even if you didn't care about climate at all,
• 31:24
  SPEAKER_03: which would also be stupid.
• 31:26
  SPEAKER_03: But even if you didn't care about climate at all,
• 31:28
  like the way to close the gap between supply and demand growth
• 31:31
  is through the set
• 31:32
  SPEAKER_03: of policies that the Republicans are now dismantling.
• 31:35
  SPEAKER_00: You know,
• 31:35
  SPEAKER_00: and I would also note,
• 31:36
  SPEAKER_00: I mean,
• 31:36
  SPEAKER_00: if you check it out,
• 31:37
  SPEAKER_00: right,
• 31:38
  SPEAKER_00: I mean,
• 31:38
  SPEAKER_00: when electricity prices originally spiked in 2002,
• 31:43
  SPEAKER_00: natural gas prices were spiking as well.
• 31:46
  SPEAKER_00: And I think that's like the initial impulse, right?
• 31:50
  But natural gas prices have come down since then,
• 31:53
  and electricity prices haven't.
• 31:55
  SPEAKER_00: And that's that kind of supply-demand trend.
• 31:58
  mismatch that we're talking about that you can't actually build
• 32:04
  the gas-fired power plants.
• 32:06
  I think you can't obtain the turbines that you need to make the
• 32:10
  gas power plant
• 32:11
  work fast enough to close the gap between consumer electricity
• 32:15
  prices and wholesale
• 32:17
  SPEAKER_00: price of natural gas,
• 32:19
  SPEAKER_00: right?
• 32:19
  This wedge is growing because you can't...
• 32:24
  The natural gas people would love
• 32:26
  to,
• 32:27
  you know,
• 32:28
  for them to be making more money instead of electrical
• 32:31
  utilities doing it.
• 32:33
  SPEAKER_00: And so we need, like, more pathways to get energy built.
• 32:41
  SPEAKER_00: And, you know...
• 32:43
  There's also there's also like there are all these kind of
• 32:45
  economic constraints and
• 32:47
  SPEAKER_03: I recognize that that drives much of this.
• 32:48
  But like as we start building out more new energy
• 32:51
  infrastructure in general to meet
• 32:53
  SPEAKER_03: demand,
• 32:54
  SPEAKER_03: clean or dirty,
• 32:55
  SPEAKER_03: like we're starting to see it get harder,
• 32:58
  SPEAKER_03: like citing permitting,
• 33:00
  SPEAKER_03: building this stuff.
• 33:01
  SPEAKER_03: expanding the grid the way we need to.
• 33:04
  These are difficult social and political problems,
• 33:06
  not just technical and economic ones.
• 33:08
  And so my view is that in the face of all of those challenges
• 33:13
  and all of the
• 33:14
  SPEAKER_03: uncertainty,
• 33:15
  we really ought to be pursuing an energy strategy nationally
• 33:19
  that's sufficiently
• 33:21
  SPEAKER_03: diversified so that we're more likely to be successful.
• 33:25
  SPEAKER_03: It's worth spending money to make sure that we can turn the lights on and
• 33:29
  SPEAKER_03: beat China in the AI race.
• 33:31
  SPEAKER_03: Like that feels like a worthwhile public expenditure.
• 33:34
  SPEAKER_03: Yeah,
• 33:34
  SPEAKER_00: I mean,
• 33:34
  SPEAKER_00: I'll also say for my part,
• 33:36
  SPEAKER_00: I mean,
• 33:36
  SPEAKER_00: the reason I'm like,
• 33:39
  SPEAKER_00: sincerely,
• 33:40
  SPEAKER_00: like first order and enthusiastic about the sort of,
• 33:44
  SPEAKER_00: you know,
• 33:45
  SPEAKER_00: clean baseload strategies,
• 33:49
  SPEAKER_00: and not just
• 33:50
  is that I think if you take seriously the amount of electricity
• 33:55
  that the sort of
• 33:57
  SPEAKER_00: future economy would ideally have available to it,
• 34:03
  SPEAKER_00: it's hard to imagine
• 34:05
  us just like covering the landscape in the like amount of stuff
• 34:11
  or pumping the
• 34:12
  SPEAKER_00: amount of soot into the air.
• 34:15
  SPEAKER_00: Right.
• 34:15
  SPEAKER_00: You would, you would need to do, right.
• 34:16
  SPEAKER_00: I mean,
• 34:16
  it would be a huge shame to actually like regress on the clean
• 34:21
  air progress that's
• 34:22
  SPEAKER_00: been made over the past 50 years.
• 34:25
  SPEAKER_03: A lot of people.
• 34:26
  SPEAKER_03: It's really bad.
• 34:27
  SPEAKER_00: And you know, so trying to develop like,
• 34:33
  small physical footprint,
• 34:34
  clean energy technologies is really worthwhile on the merits.
• 34:40
  SPEAKER_00: You know,
• 34:40
  SPEAKER_00: if we're going to sort of move forward on a lot of fronts,
• 34:44
  SPEAKER_00: I don't,
• 34:45
  it's like not really clear to me what's driving this on some
• 34:48
  level from the
• 34:50
  SPEAKER_00: Republican standpoint.
• 34:51
  SPEAKER_00: I mean, you had, what was it, 22?
• 34:53
  It was a non-trivial number of House Republicans where it's
• 34:56
  like signed a letter
• 34:57
  SPEAKER_00: where they were like,
• 34:58
  SPEAKER_00: don't do this.
• 34:59
  SPEAKER_00: And then they just fold it.
• 35:01
  SPEAKER_02: Yeah.
• 35:01
  SPEAKER_00: As soon as Mike Johnson put it on the table.
• 35:04
  SPEAKER_00: And now it's what it's for senators have signed a comparable letter.
• 35:07
  SPEAKER_00: Right.
• 35:08
  SPEAKER_00: Curtis Murkowski Tillis.
• 35:10
  SPEAKER_00: And I forget the fourth one.
• 35:12
  SPEAKER_02: Yeah.
• 35:12
  SPEAKER_02: Yeah.
• 35:12
  SPEAKER_00: Moran.
• 35:13
  SPEAKER_00: Moran.
• 35:15
  SPEAKER_00: And,
• 35:16
  SPEAKER_00: you know,
• 35:16
  SPEAKER_00: in the past,
• 35:17
  SPEAKER_00: Lindsey Graham and others,
• 35:19
  because existing nuclear plants are going to get hammered if
• 35:23
  this comes through.
• 35:24
  SPEAKER_00: So,
• 35:25
  SPEAKER_00: I mean,
• 35:26
  I didn't cover this angle as extensively early because it
• 35:31
  seemed like there was a
• 35:33
  SPEAKER_00: block of Republicans who were going to,
• 35:36
  SPEAKER_00: I don't know,
• 35:37
  SPEAKER_00: probably scale back to
• 35:40
  SPEAKER_00: these subsidies, but not eliminate them as entirely as the house text.
• 35:47
  SPEAKER_03: Yeah.
• 35:47
  SPEAKER_03: I mean, it's really, I was, I was surprised by how, by how bad it was.
• 35:52
  SPEAKER_03: And again,
• 35:53
  the response I get for most people as a political explanation
• 35:56
  is like the number
• 35:57
  SPEAKER_03: one thing is to deliver what the president wants.
• 35:59
  SPEAKER_03: Like they're,
• 35:59
  SPEAKER_03: they're all afraid of the president,
• 36:01
  SPEAKER_03: but like the president wants to address the energy emergency.
• 36:04
  Yeah.
• 36:05
  SPEAKER_00: Yes.
• 36:06
  SPEAKER_03: He also wants to cut taxes for really rich people.
• 36:09
  SPEAKER_03: But like, surely you guys can find a way to do both of those things.
• 36:13
  SPEAKER_00: It's also,
• 36:13
  it's hard for me to believe that the president is willing to
• 36:18
  expand the deficit by
• 36:20
  SPEAKER_00: $5.2 trillion,
• 36:23
  SPEAKER_00: but is fanatically opposed to making it $5.45 trillion,
• 36:28
  SPEAKER_00: which I mean,
• 36:28
  SPEAKER_00: I think is what we're talking about here.
• 36:30
  SPEAKER_03: And the whole thing's so absurd.
• 36:32
  SPEAKER_03: I like...
• 36:34
  SPEAKER_03: So,
• 36:35
  SPEAKER_00: you know,
• 36:35
  SPEAKER_00: I like,
• 36:35
  I'm of two minds because like this level of deficit expansion
• 36:39
  is in fact bad.
• 36:41
  And yet it's not just that like this whole thing isn't good
• 36:44
  faith,
• 36:44
  but like,
• 36:45
  I don't know.
• 36:47
  SPEAKER_00: It's weird.
• 36:48
  SPEAKER_00: It's hard for me.
• 36:49
  SPEAKER_00: It's hard for me to tease out.
• 36:50
  SPEAKER_00: Okay.
• 36:50
  SPEAKER_00: So I'm going to hit pause here, do our paywall break.
• 36:54
  And then I want to talk about some of the philosophical
• 36:56
  considerations here.
• 36:57
  SPEAKER_00: Great.