Why electric cars are driving the auto strikes

Ongoing strikes in the auto industry are a test case for an equitable energy transition.

The Carbon Copy podcast from Latitude Media

Just as the auto industry resolves supply-chain problems stemming from the Covid pandemic, a new disruptive force has emerged: labor disputes.

Nearly 20,000 American autoworkers are on strike as they ask for higher pay, better benefits and other concessions. At the heart of their concerns is one big question: Will the shift to electric cars leave them worse off?

We’ll look at a strike that is sparking widespread debate about how to support the companies making electric vehicles for the masses — and the workers who make them.

Then, we’ll discuss the push for green steel. Are automakers a key component of the push to move low- and zero-carbon steel into mass production?

Finally, as the presidential campaign gets noisier, we look at how Republicans are talking about climate and energy.

Joining us this week are Maria Gallucci of Canary Media and Katherine Hamilton of 38 North.

Stories we mention in this episode:

  • Canary Media: DOE offers $15.5 billion to retool existing auto plants for EVs
  • New York Times: Battle over electric vehicles is central to auto strike
  • Canary Media: Major steel users band together to place first big ​“green steel” order
  • Energy Monitor op-ed: The road to clean steel runs through automakers
  • Bloomberg: Ron DeSantis pledges more fossil fuel production
  • New York Times: A roundup of what GOP candidates say about climate change

Sign up for Latitude Media’s Frontier Forum on January 31, featuring Crux CEO Alfred Johnson, who will break down the budding market for clean energy tax credits. We’ll dissect current transactions and pricing, compare buyer and seller expectations, and look at where the market is headed in 2024.

Transcript

Stephen Lacey: So Maria, what was your first car?

Maria Gallucci: Oh, my first car would've been a very old Honda Civic that I shared with my brother.

Stephen Lacey: So, not an American-made car?

Maria Gallucci: No, I guess not.

Stephen Lacey: Katherine, what about you?

Katherine Hamilton: It was American. It was a Swinger, a Dodge Swinger, and it was my grandma's car and it went through all myself as the oldest and then all my other siblings. And I don't think it was that long ago that the youngest finally got rid of it.

Stephen Lacey: What is a Dodge Swinger? Never heard of it.

Katherine Hamilton: Ooh, Google it. They're awesome.

Stephen Lacey: Let me pull it up now, Dodge Swinger. Oh, I know this car. This is an iconic car.

Katherine Hamilton: Mm-hmm, now it would be worth something. It'd be considered an antique, but at the time we were like, "Oh, grandma's car."

Stephen Lacey: I had a Dodge. I had a 1995 Dodge Caravan, and when my parents gave it to me, that was about when it stopped going in reverse, so you had to park it in such a way that you would never have to back up.

Katherine Hamilton: I had a Dodge Caravan when my four kids were young and we had two dogs and we ended up eventually just calling NPR and having them take it away. It ended up just falling apart finally.

Stephen Lacey: This is The Carbon Copy. I'm Stephen Lacey. Just as the auto industry resolves supply chain problems from COVID and ramps up electric vehicle manufacturing, a new disruptive force has emerged: labor disputes. Nearly 20,000 American auto workers are on strike as they ask for higher pay. At the heart of their concerns, will the shift to electric cars make them worse off? We'll look at a strike that's raising big questions about how to support the companies making electric vehicles for the masses and support the workers who make them. Then, the push for green steel, are automakers critical for getting low and zero carbon steel into mass production? Finally, as the presidential campaign gets noisier, we'll look at whether Republicans are saying anything on climate or energy that's worth paying attention to. Well, we're paying attention now, so that's coming right up. I am here with Katherine Hamilton and Maria Gallucci. Katherine is the co-chair of 38 North Solutions. Hello, Katherine.

Katherine Hamilton: Hey, so happy to be back here chatting with you.

Stephen Lacey: And Maria is a clean energy reporter at Canary Media. Hello, Maria.

Maria Gallucci: Hey, Stephen. Nice to be back again, too.

Stephen Lacey: So, you have both been focused on the auto strikes and it's hard not to pay attention to the many strikes ongoing around this country, the auto strike being really central to the conversation around electric vehicles, which is why we are talking about it as our top story. So, the strikes hitting the auto industry right now are wrapped up in three very big stories from the last 15 years that have come to a head: the financial crisis, the push for electric cars and the tension between labor groups and environmental groups in the green economy, and then also the alliance between those groups. So, the United Auto Workers Union is staging limited strikes at General Motors, Ford, and Stellantis that are already causing supply chain SNAFUs. The UAW is asking for a 30% pay raise and a restoration of cost of living adjustments as part of their demands.

And a big fear central to these negotiations is that the shift to mass electric vehicle production will put more workers out of jobs, and so they're asking that new factories that produce EVs and EV parts and batteries, many of which have been supported by the Inflation Reduction Act, will be covered by new labor contracts. And the conflict is rooted in the financial crisis when auto workers made these deep wage concessions to save top automakers from going under. And it was at that time when Obama really beefed up his support of electric vehicles and that set the stage for this eventual embrace of EVs by the industry's top automakers.

And so, the concerns are that EVs require fewer components and then they will require fewer jobs. So the automakers say, "Hey, these massive pay hikes are going to hurt our ability to profitably make electric vehicles." And in fact, just this week Ford said it would halt development of this $3.5 billion battery plant in Michigan on the same day that Biden joined the picket line to support striking workers. So, this is raising a lot of big questions about the future of EVs and about the relationship between progressives, environmental groups, and labor groups, and let's get into it. Katherine, why are electric vehicles such an important part of this conflict right now?

Katherine Hamilton: So, let's just talk for one second about profitability. The CEOs of these three companies make between 21 and $29 million a year in their salary, that is 300 times more than their employees. So, their employees have not had raises, as you mentioned, in a really long time. And here is an inflection point when we're building new factories, when they're retooling factories to start making electric vehicles, which are part of the new clean energy economy, and the UAW workers just want to be part of that future. It's different than when coal plants and coal mines shut down, where those workers were really kind of at a loss of, "What do we do next? Do we have to come up with different skills? There's nothing else that's really similar to this," but these are car companies. They're making the same product, they're just slightly different.

And so, it's really important that now we get it right, that you get all of the pay, but not just pay, it's also about worker safety, it's about benefits, it's about pensions, it's about supporting the communities. These are all communities on which our economy has been built, similar to the way coal communities were really the shoulders on which the industrial age was created. These are all part of communities and they want to be part of the clean energy revolution and in order... This is the time that they need to take that stand to do it. So, I think it's really important that they do it, and I think it's a positive sign that it's around electric vehicles because it really highlights the need for all of these workers to really begin to shift and learn new skills, but not in a way that is completely foreign to them.

Stephen Lacey: Maria, what's your take on the context here? You were actually in Detroit right before the strikes started, you were covering a slightly different story that we're going to talk about a bit later, but what was the mood in the lead up to these strikes?

Maria Gallucci: I was in Detroit a few days before the strikes actually started, and I was there meeting with environmental organizations and local activists to learn more about the impacts of steel production on communities, but also automotive plants and sort of the intersection of those two. So, it was a really interesting time to be there. And from the perspective of the environmental groups I was with, they're part of this larger coalition of labor, environmental social justice groups who were pushing the big three automakers to support the union's demands. And so, it was interesting because you said at the top that there's maybe a tension between the environmental and labor and also an intersection, and I think that you're really starting to see environmental groups come on board with labor organizations and say, "We need this transition to happen for the environment, for the climate, but also here's an opportunity to bring workers along and make sure we're not exacerbating problems in the workforce."

Stephen Lacey: And that's what people mean when we talk about the just transition. It's not just about decarbonization, it's about all these other benefits to workers and people who are impacted in the various industries that are transitioning. And so, there has been a long collaboration and sometimes dispute between environmental groups and labor groups. Katherine, do you want to go into that history a little bit and how that has all fed into where environmental groups and the Biden administration stand on this issue now, even though it will probably impact EV production in the short term?

Katherine Hamilton: So, we reached out to the BlueGreen Alliance, and they've been around since 2006, and their member groups include environmentalists like the Sierra Club, NRDC, National Wildlife Federation, Union of Concerned Scientists, EDF, League of Conservation Voters, all of those major environmental groups, but they also include United Steelworkers, American Federation of Teachers, the Plumbers and Pipefitters, the Bricklayers, and the UAW. And they have always worked to align the clean energy future with the unions, understanding that it's really important to have those good jobs ready to really transition us.

And I'll just give you an example of an industry that I think is interesting. I work a lot with Solar Holler in West Virginia and their CEO told me he encouraged his employees to join IBEW because he said, "Otherwise, I can't compete for the labor. This is a really tight labor market and I need those good people and if they're in unions, all the better." And so, I think that this group and others really see this as a time to align the needs of the workers in a way that really does give us a sustainable future, and I don't think that's at all at odds with our climate goals.

Stephen Lacey: Katherine, do you get a sense that there was any tension inside the environmental movement about how much to throw their weight behind the UAW's demands? Because whether or not the automakers are being totally honest about what this would do to the cost of electric vehicle manufacturing and whether these wage increases would hurt their ability to roll out mass electric vehicles, certainly there is a tension here and it could hurt production. Do environmental groups grapple with how much to support labor versus how much to just support getting as many electric vehicles on the road as possible?

Katherine Hamilton: I haven't really seen that recently at all. And just keep in mind that the UAW has a really long history of environmental activism. They were pivotal in making and planning the first Earth Day, so they have long been really engaged on environmental issues. And I think that in those large environmental groups that I mentioned are all very aware that we have to have a workforce that is able to compete with the global workforce. And that's where we, I think, see some tension is more about how workers are paid overseas rather than here. And do we really take seriously onshoring and wanting to make sure that we have a sustainable... And a workforce that won't change jobs that is really built for retention. And in order to do that, they have to support the communities, the workers, their healthcare, all of those benefits that come with it so that they can be part of the clean energy transition. And I think that will actually solidify a much faster transition and evolution to EVs than if we didn't do that. I think that's what we're seeing.

Stephen Lacey: So in September this month, the Department of Energy put together this $15.5 billion package to help automakers retool their factories to make electric cars. Maria, you wrote about this story and this funding. It's pretty critical for the industry, but also probably feeds into some of the fears from the union. Tell us about the funding itself and its intersection with this current strike.

Maria Gallucci: Sure, so the Biden administration announced this $15.5 billion package in the run-up to the strike. So, that was very much on everybody's mind. It's a mix of Inflation Reduction Act funding and Infrastructure law funding and other sources. And the goal Secretary Granholm was saying is to kind of help autoworkers and automakers transition in place was the phrase that she used, and this idea being that as we retool our factories, existing facilities and new facilities, this funding is supposed to kind of make sure those jobs stay where they already are.

And that's sort of speaking to a bigger development that we're seeing that these big three automakers from Detroit and their joint venture partners are starting to build battery plants, EV assembly plants, not just in sort of the traditional industrial Midwest, but also across the Southeast. That's also in the Southeast is where states tend to have these right to work policies, and there's concerns that automakers are shifting production south because there is less union representation, the automakers might have more leverage over their workers. So, this $15.5 billion funding, it seemed like the point was to kind of assuage some of these autoworkers' concerns to say, "Here, no, we're helping to keep these plants in place." But Secretary Granholm said she didn't know how much or if this money would factor into the negotiations, but it seemed based on the timing of this announcement, that that was front and center in everyone's mind.

Katherine Hamilton: All DOE funding has strings attached on project labor agreements or union labor community engagement. And so, every single dollar that's going out of DOE and this was all put into the statute as well, requires that fair wages are given to employees in the clean energy transition if they get government funds.

Stephen Lacey: So, the three of us come to this story mainly as experts on electric vehicles, not on labor law, but any predictions on how this may shake out?

Katherine Hamilton: I'm hopeful that they can find a resolution and give the UAW employees what they need, so that we can move forward with EVs. I want to get a new one and I want to see them coming off those assembly lines.

Maria Gallucci: I certainly don't have much of a crystal ball when it comes to this, but I also think that a great outcome could be this sort of resetting, ensuring that there is indeed a just transition and that it's not just sort of a race to produce as many EVs as quickly and as cheaply as possible, but to do it in a way that actually fulfills these claims of a green energy transition providing green energy jobs. So, it could be an important turning point.

Stephen Lacey: Let's turn to steel. As the auto industry grapples with cost and labor issues related to EVs, they've got yet another consideration buying green steel. Car makers buy a ton of steel, the average car uses 2,000 pounds of it, and the industry is second to construction in steel demand. And so, conventional steel requires a lot of coal power furnaces, making it incredibly emissions intensive. And there's a push from large purchasers to band together and buy steel made by cleaner methods, and there are also a lot more calls from environmental groups on automakers specifically to use their procurement power to buy larger quantities of green steel to clean up their cars further and move the industry forward.

And that would potentially come at a price during a fraught period for car companies, so a lot of questions about how much they're going to back that strategy. We are seeing some automakers engage with green steelmakers, which we can talk about and which is part of your reporting Maria. So, what's the current state of the market and how could large buyers help drive volume and lower costs? Maria, this is your bailiwick. You cover a lot on industrial decarbonization and steel specifically. So, what is green steel? How do we define it?

Maria Gallucci: Green steel generally could describe scrap-based steel that's made in electric arc furnaces, so different from these kind of big fiery coal burning furnaces. Ideally, that process all uses renewable energy. There's an alternate process for making primary steel that involves using green hydrogen and electric arc furnaces. And again, ideally everything in that process is done using renewable electricity. Right now there is a fair amount of scrap-based green steel, but there's very little primary green steel. And so, when you hear about groups trying to come together to increase demand, drive the market for green steel, a lot of times they're talking about this shift away from the coal fire conventional ways of making primary steel.

Stephen Lacey: Am I correct in understanding that most of the steel in the US market is coming from recycled steel?

Maria Gallucci: It's interesting, so in the United States, about 70% of steel produced every year comes from using scrap in these electric arc furnaces, and 30% comes from these coal using basic oxygen furnaces. Globally, it's the reverse. So, 70% is coming from this coal fire process and 30% is recycled and like everything, as much as the US does to clean up its steel industry, it's critical that the rest of the world does so as well, especially because actually more of these coal using furnaces are being built around the world in China and other countries.

Stephen Lacey: Katherine, how would you characterize the green steel market? Also, we're saying clean steel and green steel, we're just using them interchangeably, which is common.

Maria Gallucci: There's also near zero-emission steel. It's like hydrogen, there's a million ways to describe cleaner versions.

Katherine Hamilton: Exactly, and because this product doesn't exist at scale yet, the commodity doesn't really exist, so we don't know what the pricing is going to be. There are a lot of different ways to produce it. As Maria said, it's like, what do we share, like 50% of the DNA of banana and it's the other 50% that makes us different? There are 3,500 types of steel. 98% of the steel is iron, but the other 2% is the difference of what makes all of those 3,500 different types. So much of this is about iron and iron is 90% of the emissions that you're getting out of this, but for all industrial sectors, this all depends so much on electrification and ubiquitous clean energy. So, in order to even get the electric arc furnaces to be zero-emission, you have to have those coming from renewable energy production.

And that's not quite moving fast enough to decarbonize all of these industrial sectors, including steel. So, part of this is about making sure that we get renewables in place and intermittent renewables work for some of them. We work with a company called Electra that can adapt their processing based on the intermittency of renewables, but not all of them can. A lot of them need baseload. We need nuclear power or long-duration storage, or geothermal, some other kind of renewables out there, in addition to other more dynamic resources. So, there are a lot of pieces to this in this entire system, and a lot of this is being driven by, what are we getting on the very front end that's going to produce what we can get at the other end?

Stephen Lacey: And speaking of the immense task for renewables, there's also a question about the use of hydrogen in these blast furnaces. And in order for that hydrogen to be clean, you'd have to produce it through electrolysis, which requires a lot of renewable electricity. And so, you are just talking about gargantuan amounts of renewables to supply this process. Maria, what is the state of the market right now? Is there even a market?

Maria Gallucci: Yeah, it started producing at teeny tiny levels, but the big steelmakers are increasingly expressing interests, investing in pilot projects in this effort, especially European steelmakers are kind of leading the charge when it comes to hydrogen based steelmaking. So, you start to see some of these initiatives like the Sustainable Steel Buyers Platform that was launched last week during Climate Week First Movers Coalition. They're trying to bring together these companies that use a lot of steel: automakers, construction firms, solar module manufacturers to say, "Hey, we want this green steel, could you please make more of it?" So, trying to kind of close this big gap that exists between potential demand and potential supply. And in the United States, again, we make 70% of our steel using this scrap electric arc furnace process. But the other 30%, there's not a lot of movement on sort of the green side of things that steelmakers are making investments that they say clean up their processes and then they can characterize that as green steel, but in terms of hydrogen-based steelmaking, other efforts, it's all very, very early days.

Stephen Lacey: So, there is the Sustainable Steel Buyers Platform, this new platform, we have the First Movers Coalition, we have SteelZero. Katherine, how effective are buying coalitions and are there any other market moving policies that can supplement these efforts?

Katherine Hamilton: And one group I would mention is ResponsibleSteel, which is an NGO that's trying to figure out, what are the standards and how do you certify green steel? So, that's a whole other thing, and that's going to be really important to be able to monitor and track and really put the seal of approval on what is green steel, what can qualify for that, but a few things that are real market movers. One is certainly globally the volatility of fossil fuel prices and the energy crisis that Europe has faced, the steelmakers actually trying to do something like ArcelorMittal, Nucor has done some as well, the demand, as Maria mentioned, from corporates, from real estate in the building sector that uses a lot of steel, appliance manufacturers, car companies, and then, Stephen, as you led into the government and civil society. So civil society, trying to make sure the standards are right, the government's going to need to think about that, too.

And then we need to think about, what are the incentives? So, right now for example, the Inflation Reduction Act has Section 48C which incentivizes manufacturing. There are also requirements in some of the other provisions like 30D for domestic iron and steel production, but there's no production tax credit for green iron and steel. There really isn't anything for industrial emission reductions. There are going to be funds available for grants, but really for tax incentives, they aren't there yet.

So, I could see a future of working on the Inflation reduction Act 2.0 where you really double down on industrial emissions and try to make sure that you get production tax credits, and not just for lowering emissions because some of these technologies produce zero emissions to begin with. So, if you only get credit for the marginal differences in what you reduce, the companies that are putting out technologies like Electra is that are zero emissions to start with, aren't going to get any credits. So, we need to kind of think through as we get to the next phase of the clean energy policy evolution, we really need to think more holistically and carefully about industrial emission.

Stephen Lacey: And that is where buyer's alliances can be helpful, not just in shaping some early demand, but also pushing for those foundational policies. Let's talk about the automotive sector. There was an RMI study on the US market for green steel and RMI pointed out the automotive sector could represent about half of green steel demand. And so I wonder, Maria, what is your reporting telling you about how the car making industry could start to influence the green steel making industry?

Maria Gallucci: So, even though the construction industry uses more steel overall than the automotive industry. The automotive industry I think faces a lot more public pressure. These are vehicles that we all see on our streets, park in our driveways, and especially as automakers are making this transition to electric vehicles, it's not just sort of the way that the cars move that matters, it's the materials used to build these cars, it's important as well. And an interesting point I saw from BloombergNEF, BNEF said that they estimated that a 25% increase in the price of steel would only raise vehicle production costs by 1% because it's an important, but not massive part, I guess, of the overall car. And that's kind of interesting in terms of thinking about maybe automakers could absorb some of those price increases in a way that would be harder for real estate companies or construction firms that have much thinner margins.

Stephen Lacey: So, there are a bunch of memoranda of understanding out there, Volvo, Ford, VW, BMW, they have these sort of informal relationships with steel providers. Is that going to start to amount to real demand? Do we expect that early activity, exploratory activity to result in real contracts?

Maria Gallucci: I think there's the hope and the expectation that these memoranda do sort of move the needle. And in Europe, manufacturers and steelmakers are both kind of under more regulatory pressure than perhaps they are in the United States. And so as they start to develop the market there could potentially influence what happens to the United States as well, but I think that at this point there's still optimism that these will actually be effective, these sort of agreements between car makers and steel companies.

Katherine Hamilton: We have a lot of work to do. So, according to the International Energy Agency, we need about $1.4 trillion invested to decarbonize the iron and steel sector by 2050, so this is a first start. We need to actually make a shift and invest over time and hopefully the government will step up too and provide some incentives, so that it'll make it even more profitable for some of these new startups for low emission technologies to thrive and to scale.

Stephen Lacey: All right, speaking of the government, let's turn to politics and who will rule government. Talking about national climate politics is enough to make one nauseous, but it is election season and people are out on the campaign trail saying stuff. So, I felt like it was a good time for us to just get a sense for what is actually being discussed and where Republican candidates stand on this issue and what it reflects about what voters want or don't want. So, at the first Republican debate when asked about whether they think climate change is a threat, none of the Republican candidates raised their hand. Actually, only one person raised their hand, that's Arkansas governor Asa Hutchinson, and he's pulling in the low single digits. Businessman Vivek Ramaswamy trotted out the old hoax line and said that more people die from climate change policy than climate change itself, and he said something similar on the campaign trail.

And last week, Florida governor Ron DeSantis traveled to Texas to give a big speech on energy and he was flanked by oil rigs. He played down climate change, he blasted electric vehicles, and he promised to get $2 gas at Americans' tanks in a year. He also said he would pull America out of the Paris Climate Treaty, following what Trump did when he was in office. Meanwhile, there's this new poll from NPR PBS showing that a majority of respondents across the political spectrum said climate change should be a top priority for US policy, but if you break that down by party, 72% of Republicans said that the economy should trump climate change. And so that's not really surprising, but Republicans are out there with some nuanced takes and we want to know what they're reflecting or deviating from in terms of what voters want. So Katherine, what's your take for what we're in for this season when it comes to talking about energy and climate?

Katherine Hamilton: So two things, one is none of these people are actually running for president. I believe it would be former President Trump will be the candidate in all likelihood. And so there's some noise, they're all trying to outdo each other with the things that they say, but they're all going to look to him to set the bar on climate. And just from a baseline perspective, President Biden has focused on climate change as a priority, got two huge pieces of legislation, plus the CHIPS Act. So, you could really say three big pieces of legislation that were very climate focused, and so everything is going to be anti that.

It doesn't matter if they believe it or not, it's going to be anti whatever President Biden does, and so unfortunately it's become a political ping pong. It makes no difference whether it's true or not. Governor DeSantis has a state which has storms that in fact, he was reelected basically in the middle of a hurricane, which is partly why I think he was reelected is nobody wants to change horses when they don't have a house with electricity. 100 degree water on the coast of Florida, coral bleaching, all of this happening in Florida. Florida is on the front lines and he doesn't care because it is against whatever the Democrats are doing.

Vivek Ramaswamy just says stuff just to try to get people's goat up. I don't think that any of these people think for two seconds about what it really means. Nikki Haley does agree that it's real, but really also wants to double down on fossil fuels. There are folks like young people, young groups like the American Conservation Coalition that are like, "Wait a minute, young people actually really do care about this," but it's hard to see, at least in the messaging, that it's going to change at all.

Stephen Lacey: I took a peek at the roundup of Republican candidates on the New York Times and Trump is at the top and the first sentence describing his platform was, "His actions as president may have caused irreversible damage to the global climate."

Katherine Hamilton: I saw that too.

Stephen Lacey: Which was alarmingly simple and true, but also made me chuckle. You can't get more accurate than that. So as I dug through these candidates, I think everything you said is true, Katherine. Some days, I don't know why we talk about this, but I think it's important to talk about just because many of these candidates reflect what's happening locally in their states, some of the nuanced positions that they might take, and there are some nuanced positions here actually for some of the low-level candidates. It does reflect how different parts of America talk about this issue, and I think it's also important because if there is a Republican president, there are a lot of policies that they could start to tear down.

So, we have to kind of pay attention to how they're framing this. So as eye-rolling as it can be, I think it is important. And as I walked through some of the stances on climate change that the New York Times put together, which I thought was a pretty good account, there are some nuances here. You've got a former New Jersey governor Chris Christie, who initially supported the Northeast regional cap and trade system. He has been pretty clear that he thinks we should do something about climate change, has more of a free market approach. Asa Hutchinson, who I mentioned, who's the former governor of Arkansas, says he doesn't want government mandates, but is a supporter of renewables and says that he wants a market-driven solution toward clean energy resources. And you've got a couple more examples like this in the low-level candidates. So, I think that's kind of interesting. It's not going to influence the Republican Party platform at all, but does say something about how some of these local officials are couching this stuff around the country. Maria, what's your take?

Maria Gallucci: I think it's interesting. I looked at the New York Times roundup that you mentioned, and these lower-level candidates, a lot of them seem to acknowledge the science that climate change is happening, humans are causing it, but their focus is on adaptation. There's some cognitive dissonance there. If you're focusing on adaptation, wouldn't you want to make your job easier then by limiting global warming to the extent that you can? So, it seems like they're trying to walk this line. Younger Republican voters in particular are interested and concerned about the climate, so how these candidates are trying to walk this line of acknowledging the crisis is happening, but kind of eschewing the need to actually do anything about it.

And circling back to Governor DeSantis' speech, I guess every election cycle you sort of hear the same sort of lines trotted out and he's talking about energy dominance and lowering the price of gasoline, which the price of gasoline is not something that any single president can control. And the energy dominance aspect is really interesting because of course the United States is now the world's largest oil and gas producer. We have booming exports of liquefied natural gas, and that's happened largely under democratic presidencies, which is very complicated then for those presidents, for Obama and Biden's climate legacy, but these arguments that the candidates are making lack any of that nuance at all.

Stephen Lacey: Katherine, I'm interested in this question about how Republicans are framing the issue, partly because from what I've heard from people working on the hill, you included, there's a very big difference between how they're framing this publicly and politically and how they're actually negotiating and talking about it behind the scenes and responding to companies who come visit them in their offices and so forth. So, how big is that disconnect?

Katherine Hamilton: So just to put this in perspective, I care a lot less about what Tim Scott says as a presidential candidate because it doesn't matter, as opposed to how he votes in the Senate. South Carolina is part of the Battery Belt that Maria's written about, which is these are companies that are building factories in his state as a result of the Inflation Reduction Act and the infrastructure bill, and it's because of those that they want to build and that's it. And the issue is, can he connect the dots to show up at a ribbon cutting, which they probably will show up to a ribbon cutting whether or not they admit that it's part of this law, and vote the right way? So, I just use totally different language. I don't talk about climate change, I can't because I will pull my hair out. Instead, I talk about technology innovation, I talk about resilience, cost-effectiveness, jobs, economic growth. There's so many ways that you can talk about the clean energy transition that doesn't have to bring up something that has become a political pinball.

Stephen Lacey:

I remember right after Trump got elected, there was some very striking Republican polling that came out that showed a vast majority of Republican voters support renewable energy. They wanted to see a lot more wind and solar development and it was the vast majority. And as soon as you started bringing in climate messaging, the responses changed, and I think that that is very much reflected in what you said, Katherine. This is all about framing and the vast majority of Republicans want to see economic development in their states and they support a lot of this stuff. I do think that that has shifted since the beginning of the Trump era because there has been a major mobilization effort on Facebook in particular, and a lot of support from fossil fuel groups to support these groups. They're sort of opposing wind and solar development, and within the Republican Party, there's a bigger push to stymie local renewable energy development, but on the whole, I think the party still very much supports the economic development associated with mass scale of renewables.

Katherine Hamilton: I just want to remind everybody that the infrastructure bill was bipartisan. And so, a lot of this foundational and really necessary infrastructure that's going into the clean energy future is supported by everybody.

Stephen Lacey: Let's close with our segment called The Forecast, where we take a brief look at a current ongoing story that gives us maybe some preview of the future. Maria, what's your story?

Maria Gallucci: So, the story I wanted to share was a piece in the New York Times that came out on September 20th about how Michael Bloomberg, the former New York City mayor, is now turning his money and attention to the petrochemical industry. He spent hundreds of millions of dollars trying to get coal plants shut down, and now he's trying to do the same, I suppose, for petrochemical plants, especially those in the Gulf Coast region. And I think this will be really interesting to watch because replacing petrochemicals, reducing emissions and pollution from that industry is perhaps not as straightforward as it is with shutting down a coal plant and building renewables to replace it. So, that's something that really piqued my interest.

Stephen Lacey: I am also fascinated by this story, given Michael Bloomberg's influence in the Beyond Coal campaign, which created so much momentum for shutting down coal plants. This shift to the plastics industry, which has really come under fire in the last five years is definitely one to watch, so that's a good story.

Maria Gallucci: Petrochemicals is so interesting because there's a lot of facets. There's plastics and can we reduce plastic production? How much of this do we actually need? But then there are certain chemicals and especially those used for fertilizers or medicine, pharmaceuticals that will be difficult to replicate, but though it's great to have that sort of discussion start and start thinking about solutions, which will obviously be very complicated just like they are with steel, if not more.

Stephen Lacey: Katherine, what's your story?

Katherine Hamilton: So, I've been toiling in the vineyards forever it seems like, for distributed energy resources and trying to get state commissions and utilities to pay attention. And I feel like we're starting at least to get some love from the feds. Certainly Jigger has spent a lot of time talking about virtual power plants, which are essentially aggregating distributed energy resources, and the Department of Energy just released a big funding opportunity of $50 million that would go to distributed energy systems that are aggregated, and they're going to fund some big projects that I'm really excited that they're shining a light on this.

And I'm hoping that what this will do will help us educate state policymakers, state regulators on the benefits of distributed energy resources and how important it's for customers to have all these choices and be able to make these decisions as to whether they want to go to clean energy future or not, and also start demystifying it and de-risking it for utilities because it's so hard to just keep fighting the utilities over something that makes a lot of sense. So, I'm very hopeful that this is a trend that will continue, and I'm interested to see how that $50 million is spent.

Stephen Lacey: And we are certainly seeing more contracts between utilities and distributed energy providers who are building virtual power plants or distributed power plants. So, there is definitely market activity that's promising. I was digging through an IEA report on the hydrogen industry and a stat jumped out at me, and that is that only 4% of projects of green hydrogen projects hydrogen made by electrolysers that have been announced in the last couple of years are actually under construction or have reached final investment stage. And that is largely because of inflation and financial costs. And although we have seen a lot of political momentum, inflation is really plaguing a lot of these projects. So, there are several projects according to the IEA that have been revised by up to 50% because of inflation and rising interest rates. The cost of these projects is soaring. It could be prohibitive for many of them and I think that in combination with the amount of renewables we need to see specifically for these electrolyser projects is a major barrier to the green hydrogen industry, so that definitely jumped out at me.

Katherine Hamilton: That's interesting. I'm always conflicted about this because I feel like hydrogen is a very inefficient way to produce energy. At the same time, we may really need to double down on it and things go in cycles, so we may have another cycle where it's really a boom boom time for it, so I wouldn't write it off.

Stephen Lacey: Certainly we need hydrogen for a variety of industrial processes and we don't get mass industrial decarbonization without some role of green hydrogen. The question is how pervasive hydrogen is as a storage medium or burned in power plants or even in transportation, and I think there are many debates about that, but we certainly need a lot of green hydrogen for industrial processes. So, I would love to see these projects actually get executed.

Maria Gallucci: It's a little overwhelming sometimes when you think about something like green steel or cleaning up petrochemicals, et cetera, how much they depend on this green hydrogen and how very little, like you just said, of it is actually being built. So, it's sort of easy to write about the potential solutions and things that could work, but making them a reality is much harder.

Stephen Lacey: Maria Gallucci of Canary Media, thank you so much.

Maria Gallucci: Thank you.

Stephen Lacey: Katherine Hamilton of 38 North, good to see you.

Katherine Hamilton: You too.

Stephen Lacey: Always a pleasure to talk with you both, and that is going to wrap the show. This episode was produced with help from Dalvin Aboagye, Sean Marquand is our engineer, original music comes from Blue Dot Sessions and Sean Marquand wrote our theme. Post Script Media is supported by Prelude Ventures. Prelude is a venture capital firm that partners with entrepreneurs to address climate change across energy, food, and agriculture, transportation, logistics, advanced materials manufacturing, and advanced computing. This is a co-production between Post Script Media and Canary Media. You can find a lot of the stories that we covered in the show notes, many of which are Canary Media stories. Give us a rating and review on Apple or Spotify. Send us your reactions and thoughts on social media and definitely send this to a friend or colleague if they would get a benefit out of this show. Thanks so much for listening. I'm Stephen Lacey. This is The Carbon Copy.

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