Taking stock of IRA wins and political threats

Since the Inflation Reduction Act became law in August 2022, we’ve asked ourselves a big question: could the government and the private sector actually get this sprawling set of climate programs up and running?

So far, many would answer “yes.” The IRA has already created over 170,000 jobs and supported $110 billion in new clean energy manufacturing – with a majority of that investment headed to conservative-leaning states.

Now, as we head toward November’s presidential election, many Americans are wondering whether a second Trump Administration could unravel much of the work that’s been done.

In the first episode of the new season of Political Climate, hosts Julia Pyper, Brandon Hurlbut, and Emily Domenech take stock of the IRA: they discuss how it’s been received politically, the roadblocks facing implementation, and look toward the different scenarios that could unfold after the election.

The show wraps up with our brand-new segment, “The Mark-up.” 

Transcript

Julia Pyper: If you had a billion dollars in Green Bank cash, how would you spend it?

Emily Domenech: I'd spend it on micro reactors because that's where I think you can have the most impact around the world, displacing diesel generators.

Julia Pyper: Micro nuclear reactors can replace diesel generators?

Emily Domenech: Mm-hmm. If they're the real micro reactors, 10 megawatt reactors, really cool stuff. They're designed to fit in a Connex and you could stick it on a military base and then you don't have to haul diesel all over a combat zone.

Brandon Hurlbut: I don't have a good answer, because I feel like in this new era a billion dollars is so small. As a true Democrat, I think I'd have to go back and ask that.

Emily Domenech: Always looking for more cash.

Brandon Hurlbut: It's like a rounding error. That's like a budget dust now.

Emily Domenech: I could do so much with a billion. Come on.

Julia Pyper: Welcome to Political Climate. I'm Julia Piper. For nearly two years since the passage of the Inflation Reduction Act, the big question has been, can the government and the private sector actually get this sprawling set of climate programs up and running? So far, many would answer yes. The IRA has created over 170,000 jobs and supported 110 billion in new clean energy manufacturing plants, with a majority of that investment headed to red states. Now, as we head toward the election, there's another pressing question. Could it get unraveled?

This week, we're going to take stock of the IRA. We'll discuss how it's been received politically, the roadblocks facing its implementation, and look toward the different scenarios that could unfold after the election. And after we talk all things IRA, we'll wrap up with our brand new segment, The Markup. That's all coming up on Political Climate.

I'm joined by my two co-hosts, Brandon Hurlbut and Emily Domenech. If you're just joining us for the first time, allow me to take a minute to introduce these two climate policy insiders. Brandon served as the Department of Energy's chief of staff in the Obama administration, and went on to found both the climate advisory firm Boundary Stone Partners, and Overture, a climate VC fund. Brandon, what am I missing? I know you've got a long resume.

Brandon Hurlbut: Well, I'm also still an operating partner at NGP's $700 million energy transition growth equity fund, but it felt a little bit light without political climate, so we needed to bring it back. I'm also on the board of Clean Energy for America, which will ramp up for the fall elections.

Julia Pyper: Also excited to have Emily on board as our new podcast co-host. Emily recently joined Boundary Stone after serving as the senior energy adviser to Speaker Kevin McCarthy and Speaker Mike Johnson.

Brandon Hurlbut: For now.

Julia Pyper: Drum roll. We'll see what happens there.

Emily Domenech: We can talk more about that later.

Julia Pyper: She also held positions at the Department of Energy, the Department of Defense, and was a policy adviser to Texas Governor Rick Perry during his presidential run. She's also a US Navy Reserve officer.

So let me ask you, how did your former colleagues on the hill react to your new side gig as a climate policy pundit?

Emily Domenech: I don't think I got any surprise. Anyone who knows me knows I like to talk. I have a lot of strong opinions, I'm not at all afraid to share them and I love a good debate. So it was a really good fit for me and I got a lot of laughs from my former colleagues and members of Congress who I used to work with. They're excited to listen too.

Julia Pyper: That's great. I love that. We do have to give a hat tip to Shane Skelton, our former Republican co-host on this podcast. We will miss Shane. Any shout-outs you want to give to our beloved co-host?

Brandon Hurlbut: We will definitely bring him back as a guest. We need to do that because I have to make fun of him for supporting Ron Desantis publicly.

Emily Domenech: Did he? I missed that.

Julia Pyper: Nice.

Brandon Hurlbut: He's a supporter.

Emily Domenech: That's why you don't pick your horse too early.

Julia Pyper: All right, with that, let's get to our main story.

So in February the Energy Information Administration released a stunning stat. 94% of new power capacity in 2024 will likely come from solar, wind, and batteries. Much of that activity is due to tax incentives created by the Inflation Reduction Act. And then there's the projects that have submitted requests to get connected to the grid. There's over 1000 gigawatts worth of those. The IRA has also generated so much manufacturing activity, forecasts for new power demand have doubled in recent months.

Earlier this month, the Biden administration also started a new component of the IRA, the Greenhouse Gas Reduction Fund. It's also known as a green bank, and it's the single largest component of the IRA that isn't a tax credit. The Greenhouse Gas Reduction Fund is run by the EPA. The fund works with nonprofits and local banks to dole out around $27 billion for new projects. Biden officials anticipate that this giant influx of cash will help limit risk for private investment and accelerate climate solutions. For every dollar they put into the fund, the administration believes private investment will eventually add $7 more.

So there are real changes underway, but the long rollout of the IRA begs a huge question. How much of it could survive another Trump presidency? Let's start recapping some of the biggest changes caused by the IRA so far. So Brandon, let's go to you first.

Brandon Hurlbut: Julia, you mentioned the manufacturing renaissance at the top. Let me build on that. Get the pun.

Julia Pyper: He's here all day folks.

Emily Domenech: If you have to explain it, it doesn't count.

Brandon Hurlbut: Axios this morning cited $370 billion to boost green energy and technology sectors. $250 billion of that is going to red states. We are building things again in this country. Some of these manufacturing grants and clean energy investments are going to swing states, which I think will impact the fall elections. So far, $10 billion in grants and investments have gone to both Michigan and North Carolina, and a combined $46 billion to Pennsylvania, Wisconsin, Nevada, Arizona and Georgia. As of early March, the White House has announced $478 billion worth of projects from the bipartisan infrastructure law and the Inflation Reduction Act. Joe Biden is thinking long-term about reindustrializing this country. I'm not sure he is going to get all of the political credit for that because it's going to take a while to reap all those benefits, but it's quite a change in this country.

Julia Pyper: Well to follow up on that then, the question is ... At the end of the day, you got to wrap it in a bow and sell it to the public when you're in an election year, and you saw Biden back away from Bidenomics, I wonder what the next iteration of that's going to be. I don't know if I've missed it or if they're still work-shopping what that message is going to be, but it's something that I think they're waiting to still nail down on the Democrat side.

Emily Domenech: I might back away from Bidenomics too if energy costs had climbed by 30% since 2021. That's something I might take a step back on. And I think it's something we have to address. If we want to look at the longevity of the policies that bring clean energy into the system, we can't ignore it.

Brandon Hurlbut: But Emily, it's not clean energy generation that's causing that problem because clean energy generation is cheaper than fossil fuels. Aren't those higher costs a reflection of the infrastructure costs to move those clean electrons to where the people are?

Emily Domenech: I'm so glad you said infrastructure costs, because that also kind of brings me back to some of the challenges I see with the IRA, which is it's all well and good to spend money, but if you can't build your project because you're stuck in the permitting pipeline, then you can't actually say you're causing a manufacturing renaissance, or you're right shoring these jobs, or you're actually getting clean electrons on the grid. And that's the, to me, when I look at the IRA, I think there's several places where we can see really clear growth, when we're looking in the manufacturing sector in particular, I think there's tax credits drive that work. It's why Republicans care about tax cuts and lowering costs for businesses. But I think when you look at the bigger picture, getting things on the grid, getting projects fully built, getting things that are getting federally funded to actually get through the process, there is a massive permitting backlog, and the IRA is never going to be, quote unquote, "successful." The Biden policies aren't going to be, quote unquote, "successful" unless there's a bipartisan investment in moving those permitting policies forward.

Brandon Hurlbut: What would you do there, Emily? What do you think is possible?

Emily Domenech: I think at a certain point it's going to have to take folks recognizing that we have to look at permitting from a holistic, all of the above approach. If your approach to permitting is it has to hurt fossil fuels and only help clean energy, you're probably not going to get a deal. Because a lot of the policies that impact a transmission line impact a pipeline. And you have to be willing to say, you know what? I'm okay with pipelines being built because pipelines are important for moving CO2 and they're important for moving cleaner natural gas and they're important for moving hydrogen to a certain extent. These are things we have to think about when we think about the big picture. On the Republican side, I think you have to be willing to say permitting is about more than just building projects on federal land and it's just as true for geothermal as it is for oil and gas. How do we get folks through that cumbersome process that makes it hard to develop American resources? It has to be a bigger picture that looks at how do we bring the global supply chain into a place where it's cleaner overall?

Julia Pyper: Seems to me though this is a bipartisan issue. I put the blame equally on both sides for not getting a deal done. There've been several attempts. I think even a month ago, Manchin reintroduced an effort to get a permitting deal done in Congress, and at the time he said they were so close. So I don't know if that's actually true or they're still progressing on it, but it seems like this is not a failure of the Inflation Reduction Act anyway. It's a failure of America to do big things today, I think.

Emily Domenech: Well, and I think that's something we have to take into account. The government can only do so much by spending money. If the government is the hurdle for building a project, at the end of the day, it doesn't matter how many billions of dollars we throw at it, we won't really be able to make progress. We have to be able to look at the whole process from start to finish.

Julia Pyper: I do have to ask though, Emily. It does take time to build big projects. It takes time to onshore again after decades of unraveling it, frankly. So I'm not totally surprised it's going to take a few years to reboot some of this. But in the meantime, you are seeing funds flow from the IRA into a lot of conservative states. Of course, people are still setting up their manufacturing plants and starting to build projects and getting applications into the interconnection queue, but those dollars are flowing to the red states. So how do you think that will affect, again, this larger order question of what is the future of these incentives if we have a change in the White House and potentially a Republican takeover of Congress?

Emily Domenech: So first, I love this question because people are always like, "Wow, what a shock. These projects are being built in red states." Well, of course they're being built in red states that have friendly business environments, and are right to work states and are places that like to invest in business and aren't afraid of doing big projects and building big things. It doesn't surprise me at all that we're seeing American developers want to build in Texas and Georgia and other places that have friendly business environments.

That said, I think we need to look at, number one, where things are actually getting built. Not just where the investments are going, but where projects are actually getting off the ground and getting built. And two, I think the longevity of the IRA is going to come back quite a bit to how we address some of the things that people are concerned about in that bigger process.

I think you hear a lot of Republicans say, "I want to go after the IRA with a scalpel and not a hammer." Particularly Republicans who care about the clean energy and manufacturing space. There's plenty of places where I think there's areas of agreement. The 45X manufacturing tax credit is one, I think. Hydrogen is another area where there's a lot of bipartisan agreement that that's a place we can invest. Nuclear is another place. But when you have somebody like, on the left, Senator Joe Manchin, who made the IRA possible, pushing back aggressively against the Biden administration in terms of how they've implemented the law, concerns about foreign companies, Chinese companies that might be accessing the tax credits that were made available that were supposed to be right shoring these technologies, I think that's something we have to address or it's going to have a target on its back in a Republican administration.

Brandon Hurlbut: Are there examples of that though, Emily? Where are we seeing this money going to Chinese-backed companies?

Emily Domenech: I think some of it's in the EV space particularly. That's what Manchin talks about, for example, is that his intention with the IRA was that we were going to have supply chains that, after a certain point, had to be from US or US allied countries, and the law is not being implemented in that way. Now, I can't say whether or not the behind the closed doors conversations, because Republicans were not part of that IRA discussion, what the real congressional intent was. But when Joe Manchin's saying it out loud, that's something I think we have to consider.

Now, I would say I think there's plenty of folks in the clean energy space who recognize this. I think in the ... Solar manufacturing, for example, is a place where we've seen a lot of folks on the left and the right say, "Hey, look, we need to be real honest about where we're sourcing our materials and where we're building and being cognizant of our entire supply chain." But that's not true everywhere, and some of that is not true because China controls the entire supply chain. So I think looking at ways to focus on where we expand the supply chain as opposed to throwing a tax credit at the end of the line is something that you'll get more bipartisan support on.

Brandon Hurlbut: And Emily, there's challenges in that. You don't just turn on a supply chain overnight. You don't turn on a manufacturing industry overnight. Some of these products are only made in China and we want to build that capacity here, but there are demand for these products and we don't have the capacity to meet that demand right now. We will in a couple of years once we build all these facilities.

Emily Domenech: Maybe. But I was talking to a company that does critical minerals processing the other day, and he was talking about how their last project that they built in Arizona, they started trying to get permits in 2010 and they got permits to operate that facility this year. That's not how you fix it. That's not how you fix a supply chain.

Brandon Hurlbut: We are in agreement there.

Emily Domenech: If, I think, you want to see the resiliency of some of these investments, you have to go back to the drawing board a little bit and say, "Okay Republicans, we want to work with you on the things that make it impossible for us to fix this supply chain because those concerns about China are real and they are bipartisan."

Julia Pyper: Early wins on agreeing on cutting red tape, you guys. Love it. Chalk one up on the board.

Emily Domenech: This is going to be a permitting show before I'm done with it.

Julia Pyper: Yeah. Well to the Permitting Climate.

Brandon Hurlbut: We'll lose all of our listeners.

Julia Pyper: Yeah, yeah.

Emily Domenech: Get 10 new Republican listeners.

Julia Pyper: Yeah.

Brandon Hurlbut: It'll be what they listen to fall asleep.

Julia Pyper: I don't know. There may be some passionate permitting folks out there among the listeners.

Emily Domenech: They exist, I swear. We exist.

Julia Pyper: Among the listeners. Oh yeah.

Emily Domenech: Just a big ol' pile of nerds.

Julia Pyper: Totally. I think there's a bigger question in my mind of what I anticipated onshoreing to be, and just seems a little wild to me that you could do everything soup to nuts entirely in any country, let alone America. What's the definition of domestic-

Emily Domenech: I think it's right shore, not onshore. That's where I would say most Republicans are too. There is a disconnect between the, "We need to make investments in the supply chain. We want to bring manufacturing to the United States." Most people agree on that. I think Trump would be the first person to say, "Yep, I agree. I support that. Let's get on board."

But when you have, with the same breath, folks who tell you that the climate is the biggest risk to the country in the world, say, "You know what? I don't like mining in America because its icky. I'd rather it happen somewhere else where I don't have to see it and I don't have to think about it and I'm going to push back against every effort to do mining, or critical minerals processing somewhere where I can see it, because that makes me uncomfortable."

Julia Pyper: But I want to touch on dollars real quick. So the Biden administration claims the IRA will cost around $369 billion. Folks may remember that in the news when it passed. But a Goldman Sachs analysis claims the price tag is actually over a trillion dollars. Brandon, you love that. That's where your billion dollar rounding error comes in.

Brandon Hurlbut: Yes.

Emily Domenech: Brandon thinks this is a bonus, not a glitch.

Brandon Hurlbut: Yeah. Yeah, yeah.

Julia Pyper: So the price tag is actually well over a trillion dollars because of uncapped tax credits. So Brandon, what do you make of this discrepancy and how do you think it could play politically?

Brandon Hurlbut: It's just a virtue of modeling. We don't know how many entities and people are going to use the tax credits, so they're just guessing how much of them will be used, and like you said, they're uncapped and it's over 10 years. So it depends on how many people use the tax credits as to how much it will cost. But I think these are good investments. I think the country will benefit a lot from catalyzing these entire industries and creating all these jobs and reducing pollution and having a healthier lifestyle.

Julia Pyper: We're talking about public dollars here, and it really matters because it's taxpayer dollars and people want to know where those dollars go. But to what extent is the private sector stepping up and putting their money in as well?

Brandon Hurlbut: Yes, there are lots of studies out there about how these inflation reduction act and bipartisan infrastructure law policies are leveraging significant private capital. And there are industries that are in their infancy. For instance, you have long duration storage. A way that we can match renewables to the grid to function like a fossil fuel plant, where they can function for days. And you have things like thermal batteries that can provide carbon-free heat for industrial processes like smelting iron and such. Those industries in their infancy are not at cost parity like solar and wind and such, and so they need a little bit of a boost from the government to catalyze that. And so that can bring private sector capital in when they see, "Okay, you're getting this tax credit, it can balance out some of these costs, and as those industries mature and grow, they can stand on their own and be at cost parity and that will attract even more investment.

So the government has a great history through the Recovery Act and these new historic climate policies of starting and incubating and then catalyzing entire industries. Like we did with the loan program office in Tesla. We invested in Tesla and that spurred the entire electrical vehicle market, and that wouldn't have happened without that government capital at a cheap rate.

Also, I'd like to put this in a little bit of context. Goldman Sachs estimate that you cite is at the higher end. We're talking about a trillion dollars over a decade. The annual defense budget is like $800 billion a year, and don't we think that this investment in our energy security can provide national security benefits as well to build up our own supply chain to reduce climate change so that we have a livable planet as a species. And things like mass migrations that could happen due to climate, these investments will help avoid that. So when you look in the context of what the government invests in national security, there are national security benefits to these investments in climate.

Emily Domenech: So I'd love to just jump in on the bigger picture question about the cost of the IRA and what that means for its future and longevity. I think certainly when you look at the estimations, Brandon's right to say it is an estimation of how much the law will cost. Welcome to congressional budgeting. It's a real challenge. But the reason we're seeing these estimates change, some of it is higher inflation. Some of it's larger demand for credits because of regulatory policy. Some of it's looser than expected regulations on eligibility, but no matter what, the higher the cost, the more likely those energy provisions in the IRA have a target on their back when we're looking to reauthorize that broad bipartisan tax policy, like say the small business tax cuts that were included in the tax cuts and jobs act that passed under Trump. Those are things we're going to have to look at in the next Congress. Reauthorizing that law is going to happen in the next Congress. There are bipartisan interest in it. I think the small business tax cut is a great example of one.

So when we have things that cost way more than we expected them to, that means that I think those policies have more risk in particularly a Republican administration, but probably in split government too. Those are the kinds of things that are really, really important, not just for looking at the IRA and how those policies are carried out, but also to Brandon's point, for investors who want to play in this space. If you want to be able to invest in clean energy technology, you need to have some predictability about how this stuff will shift, and that that big picture cost really matters.

Julia Pyper: Something you said about predictability makes me go back to this question of is the threat of undermining the IRA if President Trump were to win the presidency again overstated? And I think also when you think about the dynamics of Congress, to what extent do you think it matters that Republicans control both the Senate and the House? Say they have a full sweep, what do businesses expect then from a consistency perspective?

Emily Domenech: Yes, I think it's overstated because it's more complicated. This is not a binary question, I think because, again, when you have a big package like the IRA, there are bound to be some provisions in it that were already bipartisan. I think there are some things that have bipartisan support that were part of that law. Nuclear is a great example. Some of the renewable fuels space is a great example. There's long-term Republican constituencies that care about that. I think the manufacturing space is a space where the Trump populist mindset is more leaned towards right-shoring and on-shoring jobs and productivity.

So I don't think it's going to be a binary if Biden wins the IRA survives, and if Trump wins the IRA is dead. I think that's way over dramatic, and frankly, it's much more complicated than that politically. Because each one of these tax credits, taken individually, has its own individual sets of stakeholders and its own individual costs and benefits.

And looking at a tax package, a Republican sweep, I think you have a reconciliation package that says, "How do we maximize our savings and how do we maximize the extension of the Trump tax cuts?" That's one scenario. But even in that scenario, I think you have a lot of businesses that lobby Republicans and lobby the Trump administration to say, "Hey, we want to keep these manufacturing credits. We want to keep these hydrogen credits. We want to keep these nuclear credits." These are things that Republicans supported in the past. 45Q, the carbon capture credits are largely built out of a Republican constituency. They just got scooped up in the IRA. In fact, when it came out, I laughed because it was a bill that I had helped write. It's way more complicated when you start taking a law apart as opposed to when you pass it whole cloth with a only partisan majority.

So I think that's part of where that ... We have to be able to have experts who can go through and look at the political constituencies for each individual piece of the IRA to really make an estimation on it.

Julia Pyper: I think that's the tough thing about seeing headlines. Everything's trying to get whittled down to five words in a headline, and it sounds very stark and sounds like you're saying devil's in the details, policy is complicated and slow.

Emily Domenech: And also, rhetoric isn't policy. So one of the things I like to point out to people is that everybody says, "Oh, Trump was this terrible president for the climate." Well, emissions declined at about the same rate under Trump as they have under Biden. In fact, they declined more in the first two years than they did under Biden, and a lot of that was driven by US natural gas. But if we're still reducing emissions and we're essentially reducing emissions at the same rate, maybe we should be a little bit more granular in how we look at what the administration, and particularly the departments, are actually doing. There's a difference between rhetoric and policy.

Julia Pyper: Well, Brandon, since we're talking about emissions, Biden said in his state-of-the-union that he plans to cut greenhouse gas emissions by half by 2030. So Emily just pointed out that even under President Trump, emissions kept declining. That's a big goal from President Biden. Does that seem feasible to you? Can he deliver?

Brandon Hurlbut: Yeah, if we keep him in the job and we keep Democrats in power, for sure. But I'm really interested in what Emily was saying about what's more vulnerable, less vulnerable. We're getting these questions every day from companies, from investors. Boundary Stone is doing this Climate 24 project that has gone line by line through all of those historic climate policies, and it's a lot of the work I know that Emily is doing. But I think that the executive power that Trump would have if he was president, we would definitely not be hitting those goals, because he would affect the executive branch in a major way.

Julia Pyper: Tell me more about that. What can he actually do as a president that would slow down the IRA implementation? Can you give me an example?

Brandon Hurlbut: Well, the regulatory authority, the EPA has been putting out rules to clean up heavy duty trucks, emissions from power plants, ports. Those are the type of things that I think under a Trump presidency they're not going to do. I'm curious. Emily would know a lot more about this. What do you think, Emily?

Emily Domenech: Yeah, so I'll give you a counterpoint, and this is something that I like to raise with clean energy companies quite a bit, is that in a scenario where we have a Trump presidency, particularly if there's a split House and Senate, so we're still operating in a bipartisan tax environment, you could potentially see more permitting reform, because the Trump-NEPA rules really opened the door for building in America that could end up helping companies taking IRA tax credits. So I think again, this idea that it's all sunny days ahead under a Biden administration and it's all doom and gloom under Trump doesn't make sense. Because to your point earlier about, "I think Biden can reach his emissions goal," "We can meet the emissions goals by 2030 if we just keep Biden in office," well, you know what? You're not going to meet those goals if you don't do permitting reform, and I know that the folks in the White House right now aren't going to do it from the executive side, so it's going to have to come from Congress. In a Trump presidency, the executive branch is going to want to move on some of those issues because those are core Republican constituencies. So it's more nuanced than people think it is.

Brandon Hurlbut: One thing I want to call out Emily, is that my understanding is that the Trump tax credits expire next year, and so if the Congress does nothing, that's like a tax increase.

Emily Domenech: Massive.

Brandon Hurlbut: Which Republicans hate. And then the debt ceiling was punted to next year. So regardless of what happens in the elections this fall, there will be a legislative vehicle about whether to extend the Trump tax credits or not, and they have to deal with the debt ceiling, and that will cause an opportunity for a lot of this to all get sorted out. Is that right?

Emily Domenech: Yeah, that's exactly right. I would say I think the debt ceiling is something we deal with on a regular basis. We had a deal that essentially pushed it out two years. I think that's probably a longer debt deal than we've had in a long time. That's one inflection point. The tax cuts are another inflection point. I think those provide opportunities for, frankly, some good bipartisan work that can happen in those spaces. My instinct, I never want to be an election predictor, but I think no matter how the election shapes out, we're going to have these tight majorities that we've seen both under Democrats and Republicans in the house. That means that most of what we do has to either be really tight party line work like the IRA, or it's got to be bipartisan. And that opens the door, I think for a lot of these discussions that say, okay, when we look at making sure the United States is a place that people want to do business, and not just want to do, but want to do business in the cleanest, most efficient possible way, those are the kinds of policies we're going to get the chance to consider in the next administration. And that's going to be true whether it's under Biden or it's under Trump.

Julia Pyper: I think a lot of questions in Democrats' minds though is if there is a Republican sweep of the House, Senate, and the White House, will the clean energy permitting discussion still happen with the same vigor?

Emily Domenech: This is great news for clean energy advocates. Republicans approach permitting as a, "This should be across the board and fair for everyone." I say this as the person who negotiated the last permitting deal. We want to make this the most fair environment for every person who wants to build in America, which means that we don't want extra red tape for one person and not for another. We want to streamline the process for everyone that benefits clean energy, and oftentimes clean energy folks are the folks who are least prepared to deal with that regulatory burden because they haven't had to do it before. These aren't people who come from big project world. They don't have that kind of experience. They're investors, they're innovators, they're folks who have experience on the early stage, R&D and development side, and they haven't done anything with permitting. They don't have a clue. They don't have an army of lawyers like a big oil and gas company. They're out there in the streets trying to figure out how to make this happen. So streamlining the process, making it simpler, making it work just as well for a small company as it does for a big company, that's the Republican ethos when it comes to permitting reform. So I think there's a lot of positives to see there for clean energy.

Julia Pyper: So I wanted to ask you both about this quote that I found from David Pelela from Breakthrough Energy. He said, "We're entering a period of dissonance where we're losing and we're winning. We're missing targets, and we're seeing solutions accelerate faster than ever expected." Put another way, it's the best of times and the worst of times. We've talked about these permitting headaches and the slow rollout and follow through on some of the IRA related policies. What do you guys make of that outlook? It's the best of times, worst of times.

Brandon Hurlbut: The industry is fractured. That's what happens when you're in an innovation cycle. In the early 1900s, there were like 300 car companies, and then there were three. I think we're seeing a lot of new companies, a lot of new ideas. Many will fail, some will merge, others will be titans. We are in this cycle where things are still shaking out.

Electric car sales are still increasing rapidly. One in five cars sold worldwide were electric in 2023, compared to one in 25 just in 2020. It's now cheaper to build wind and solar projects than fossil fuel plants. And since 2015, the projected amount of warming expected in the coming decades has dropped from 3.7 to 2.7 degrees Celsius. So it's happening. I would like it to go faster, but we are in this cycle where things are still shaking out.

Julia Pyper: Emily, maybe looking a little bit more to the future, how do you think about this period of dissonance?

Emily Domenech: I'm very much a glass half full person, and I look at this from the perspective similar to Brandon, where we want to see more innovators in this space. We want to see more exciting new companies coming on board, trying their technology, trying to scale, trying to get engaged because that's good for the economy, and that's good for the free world, and it's good for the climate. Not everyone's going to be the next Ford. Not everyone is going to be the next major worldwide company, but we have to have an environment that allows for the economy and the market to test out what is most successful. So exciting to see some of them go from being two guys at a national lab to being people who are really actually getting into the commercial market.

Julia Pyper: Brandon, do you want the final word?

Brandon Hurlbut: Just so happy to have Emily on the show. This is going to be great. We're going to have a blast doing this every week.

Julia Pyper: It's going to be a good time. Buckle up.

So before we wrap up this show, we're going to kick off a new segment called The Markup. Markups, as folks may know, are where people take pen to paper and mark up a bill and add their thoughts and comments, and it's kind of what we're going to do here at the end of each episode. Emily, Brandon, and I will each bring a story, anecdote or observation from a recent event or interaction that we'll share and discuss and debate. So Emily, let's go to you first.

Emily Domenech: So my topic for The Markup this week is talking about the White House's decision to pause US LNG exports. The argument for the pause is that it's about climate. That's a little bit tough for me to square, mostly because we know that US LNG is some of the cleanest in the world, and it's driven our drop in domestic emissions pretty much since 2005.

Between 2008 and 2018, I think we've seen about a 25% drop in emissions from the power sector. So why don't we want to see US LNG going abroad? Especially when we know that in China coal still makes up 66% of their power generation. In India, it's 74%. And even in Germany where we always talk about them being leaders in Europe on climate it's 30%. So why are we trying to press pause on US LNG when we know it's something that can actually drive down global emissions?

Republicans try to come to the climate issue from this global perspective. What are we displacing? And if the real goal is to lower global emissions, we have to be thinking, globally, what's going to be used instead? Is it Russian gas that's 40% dirtier than US gas? Is it coal? Is it nuclear? Then we should be thinking about it in that way. Not in a what makes me feel better here at home?

Brandon Hurlbut: I think you have to look at the life cycle emissions when you're extracting that gas, the methane release, building these huge infrastructure projects around it. And the president received a letter from 180 scientists saying that when you look at those life cycle emissions, it's almost, or could be worse, than coal, and you're locking this stuff in for 40 years if you build these big export facilities. So that is the negative impacts that the science is calling out. But we do have allies in Europe, like Ukraine, that have been dependent on Russian gas. And I know when I was in the Obama administration, the State Department was always arguing for we need to get this natural gas to our allies so that they're less dependent on Russia. So there's geopolitical concerns here too. So it is a complicated topic.

Julia Pyper: So for my markup, I wanted to bring up an op-ed that I came across in Politico from Mike Murphy. He's a veteran GOP consultant. He's the founder of EVRepublicans.org. I'm honestly not super familiar with his work, but I thought he had a really interesting prompt saying why Republicans will regret their crusade against electric cars. And he goes on to talk about some of the polling that his organization has done. So he talked about how GOP voters gave electric car brands a net 40% unfavorable rating, while Democrats gave EV brands a 15% net favorable rating. And he talks about how in modern politics, the enemy of my enemy must be my enemy too. So he says, "If Joe Biden is for EVs, we must be against them," and GOP politicians have been looking for cheap applause, calling out the EV sector and turning this into one of the latest fronts on the culture war.

But he points out there's a real political downside for Republicans who embrace this easy feedback loop on EV attacks. For one thing, their polls show that independent voters look a lot more like Democrats than Republicans on this particular EV issue. He found that independents gave electric car brands a net 4% favorable rating. And then when you look at the manufacturing side, a lot of the top states for new EV-related manufacturing plants and investments are swing states. Places like Georgia, Michigan, think Arizona, and some others. In fact, 68% of swing state electoral college votes in November will come from states with very high EV manufacturing investment, he says. So he concludes, "If the GOP wants to declare war on the largest source of new manufacturing jobs in the most important electoral states, they do so at their own peril."

Emily Domenech: So I think there's this assumption that Republicans are anti-EV. I actually think it's a little bit more complex than that. We're concerned about the EV supply chain. We're concerned about the cost of EVs. We're concerned about the resiliency of EVs. Those are all things that can be answered and addressed. I don't think those are insurmountable problems for EVs whatsoever, and I don't think it's a culture war or politics only issue. But I tell you what, when I talked to a Democratic colleague the other day about this, he said, "Well, don't Republicans just hate EVs because Biden likes them?" That's the perception. And so that's a perception that I think Republicans need to do a better job of getting their message out in terms of what are the things that concern you? We don't like the federal government shoving something down our throat. We don't want something that's going to just empower China and Chinese supply chains, and we don't want something that's going to really significantly increase costs, particularly for low income Americans.

So we need to do a better job of saying those are the things we want to address, not appearing to be just blanketly opposed to something.

Brandon Hurlbut: When I was working at the DOE, Secretary Chu and I met with Eric Cantor when he was in the Republican leadership, and the first thing he told us was that he drives a Prius. He was so proud of it. But things seemed to have changed.

Emily Domenech: That's a great example though. I love a plug-in hybrid. I think plug-in hybrids are something that should be more part of the discussion there. It's way easier to integrate them into US society today. But there's some folks on the left who are like, "It's got to be all EV or nothing."

Brandon Hurlbut: I think the debate will quickly be obsolete just because it'll be like supporting DVDs over streaming, when streaming came out. It's a better machine in every way. The EV that you buy today will be the most expensive EV ever because the costs just keep coming down every single day.

Julia Pyper: Well, while you're on a roll, no pun intended, Brandon, close us out with your markup.

Brandon Hurlbut: My markup ... I don't know if it's E&E News or Political Pro. It's your old stomping grounds, Julia. I can never tell which it is.

Julia Pyper: Yep.

Brandon Hurlbut: The energy wire ran an article this week that said, "Biden's $200 billion energy loan juggernaut faces a Trump-sized threat." And Senator Heinrich, longtime friend of the pod and guest said, "It will just die on the vine." This program near and dear to my heart, I served on the investment committee for it, I think it's been an amazing program to catalyze entire industries like utility-scale solar, and EVs, and we talked about the top of the show, the influence a Trump administration would have on programs like this.

I see the program is it's a great way to compete with China. China is subsidizing all of these industries, and with the DOE loan program, we're just providing cheap loans. Those loans have been paid back. The interest on those loans the taxpayers have gotten, and the program is net positive in addition to all of the benefits it's created on catalyzing these industries, job creation, reduction in pollution. So I don't understand why Republicans hate this program so much. And what would happen under Trump with the DOE LPO?

Emily Domenech: Well, I would say Trump gave out some of the biggest LPO loans in history to nuclear companies under his administration.

Brandon Hurlbut: Well, he extended the one for [inaudible 00:37:45].

Emily Domenech: They expanded them by billions of dollars. So I think, again, I hate to be a broken record here, but I think it's a little bit more nuanced. I will say I think that the loan program has come a long way in terms of its safeguards and how it operates from when it started when we saw more loan failures and saw more bad investments. But I do think that those bad investments left a taste in Republican's mouth about how is the federal government the best vehicle for making large scale loan choices in-

Brandon Hurlbut: But I want to challenge that, because the default rate on those loans is about 3%, which is in line with a commercial bank. Yet the DOE is required by statute to take innovative technology risk. How is that not a smashing success? We should be celebrating that kind of track record.

Emily Domenech: I think there's plenty of places where it's a good track record, but I'd also say I expand DOE's, "I'm not so great at this," to broader than just a loan program, for example. I think we've made huge investments on the grant side that didn't pan out, from companies, particularly in the nuclear space, that took hundreds of millions of dollars and then never built a reactor. We've seen that happen over and over again. So there's some caution there because we want to make sure that, to your point, there's never enough money. You're always saying, "I don't want a billion dollars. I want a trillion dollars." We need to be thinking about where we put our money in the most responsible way.

But what I'll tell you is that I don't think that the Trump administration immediately comes in and reflexively never uses the loan program again. I do think that the projects that they pick to invest in might be different. You might see a heavier investment on nuclear, for example. Hydrogen, perhaps manufacturing, but I think you're going to see things that are more Republican constituencies than stakeholders. That doesn't necessarily mean the program goes away, it just means it has a different lens.

Julia Pyper: Great. So I'm glad we sorted all that out. No controversy. Everyone happy?

Well, for our first episode, I think we teed up as many topics as we actually tackled on this show, but that's a good thing because we have a lot of shows coming up this season. I'm super excited to be working with both of you. Brandon, Emily, so good to kick this off in a really important year and get the Political Climate Podcast back on the airwaves.

So that is it for this show. Political Climate is a co-production with Latitude Media and Boundary Stone Partners. Max Savage-Levinson is our producer. Sean Marquand is our technical director. Stephen Lacey is our executive editor. You can get all of our show notes and transcripts at Latitudemedia.com, and if you want us to talk about a specific topic, please email us at politicalclimatepodcast@gmail.com. We're also on X @poli_climate. Feel free to spread the word there on LinkedIn, TikTok, beyond, as long as TikTok still exists.

Emily Domenech: Not TikTok. Please don't do that.

Julia Pyper: I'm Julia Pyper. Share it on another platform of your choice. I'm Julia Pyper. Carrier pigeon anyone? I'll see you in two weeks.

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