As Political Climate marks the one-year anniversary of its re-launch, the deluge of energy sector news continues.
In today’s episode, the hosts dig into a series of recent and contentious moves from the Environmental Protection Agency (EPA) — from massive power plant deregulations and an intention to undo the 2009 endangerment finding, to the termination of $20 billion in climate grants. Which of these policies could have the most impact, and where can the hosts find some unexpected common ground?
Also in this episode — 21 House Republicans have issued a letter calling on leaders to preserve some clean energy tax credits in the upcoming Congressional reconciliation bill; they’ve suggested they might vote against the bill if the credits are repealed. But will they really die on that hill? And later, the hosts assess some of the issues that Trump’s tariffs could inflict on the energy sector.
The show wraps up with some reflections on the past year.
Credits: Hosted by Julia Pyper, Emily Domenech, and Brandon Hurlbut. Produced by Max Savage Levenson. Edited by Anne Bailey. Original music and engineering by Sean Marquand. Stephen Lacey is our executive editor.
Political Climate is co-produced by Boundary Stone Partners, a leading bipartisan climate change strategic advisory and government affairs firm. Their mission-driven approach combines innovative solutions with expertise in technology, finance, policy, federal funding, and advocacy. Learn more and get in touch today at BoundaryStone.com.
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Transcript
Julia Pyper: So Emily, we had to shuffle around the schedule a little bit on the recording front because you were out of office doing some pretty cool stuff, I think. Can you tell us where you were last couple of weeks?
Emily Domenech: I have a second job where I serve in the Navy Reserves and I like to say that I am protecting America one email and PowerPoint slide at a time.
Julia Pyper: Thank you for your service.
Welcome back to Political Climate. I’m Julia Pyper. After 23 episodes, 2 national conventions, a federal and state election, the launch of a second Trump administration and its aggressive efforts to stymie climate action, we’ve arrived at the one-year anniversary of our relaunch and the deluge of news continues. In today’s episode, we’ll dig into a grab bag of pressing questions and issues facing the energy sector from aggressive deregulatory actions at the EPA to the impacts of the President’s tariffs and a push from House Republicans to maintain clean energy tax credits. We’ll wrap up with some closing thoughts on the past year. It’s all coming up on Political Climate.
As always, I’m joined by my co-hosts Brandon Hurlbut and Emily Domenech. Brandon served as chief of staff in President Obama’s energy department and went on to found Boundary Stone Partners and Overture VC and he played host last episode at the Winterfest live show. Hey Brandon, how was that?
Brandon Hurlbut: I want your job. It’s easier to ask the hard questions than to answer them.
Julia Pyper: Hey, hey, it’s taken. It’s taken. We need your expertise, man. You’re the one who has the infield experience. Couldn’t possibly replicate that.
Brandon Hurlbut: Julia making a sports reference, infield.
Julia Pyper: Whoo, over the head. Emily served as senior energy advisor to Speakers of the House Kevin McCarthy and Mike Johnson and is now a senior vice president at Boundary Stone. Hey Emily.
Emily Domenech: Hey Julia.
Julia Pyper: All right, well we got a lot to cover today, so let’s just jump right in. I want to kick it off with this new letter signed by 21 House Republicans that calls on Ways and Means Chairman Jason Smith to preserve some clean energy tax credits in the upcoming congressional budget bill, this reconciliation bill that Republicans will be pursuing. The request follows a similar letter signed by 18 members last August. The 21 representatives have signaled they might not support the budget bill if it doesn’t include these clean energy tax credit provisions. Representative Andrew Garbarino who organized the letter had this to say to Politico, “We have 20 plus members saying, don’t just think you can repeal these things and have our support.” Garbarino added, “These credits are helping the President accomplish what he said he wanted to do in his campaign and that was to make America an energy-dominant country.”
Emily put this in perspective for us. We talked about the support last fall. Some of those members who signed that original letter were not re-elected. I think we were down to 14, but now we’ve got 21 representatives coming out saying publicly they support provisions from the Inflation Reduction Act, these energy tax credits. What do you make of the weight this letter carries in this moment?
Emily Domenech: So I think a lot of this depends on how much follow-up comes from the letter. This letter has a similar, very general tone where it doesn’t call out specific tax credits, and I think we’re really going to need to see individual member engagement from the folks who signed this letter with Chairman Smith, with Speaker Johnson to say what they can and cannot vote for in specific terms. If that doesn’t happen, then I’m very skeptical that these members will actually vote to tank a reconciliation bill based on one credit or another if they’re not really articulating what their priorities are behind closed doors. So while I think certainly it’s a great step for people who want to see more members engaged on this issue, but I wouldn’t put it as a … It’s got to really mean something. It’s going to mean a lot to vote against a bill that’s extending the Republicans’ signature tax cuts and people really need to put their money where their mouth is here.
Julia Pyper: So does that mean this is kind of the moment. I have to imagine this is when people are saying what their priorities are. We know this week that there were some long meetings among House Ways and Means Committee staff putting together PowerPoints, getting into the details, and we don’t actually have bill text yet, so this isn’t in writing. We don’t know what they are really putting on the table. There’s all sorts of discussion of where this might go. So is this kind of the crunch moment and once we have text for this reconciliation bill likely starting in the House, that’s when we’ll know if this advocacy really worked or not. In which case, when do you think we’ll know that?
Emily Domenech: Yeah, so keep in mind you have to have the Senate pass the same budget as the House before you can formally start the reconciliation bill process. So we’re not going to see any texts before then. There’s no reason to release a draft reconciliation bill when you don’t actually know what your instructions are going to be from that final budget resolution. What I will say is that we know that House Ways and Means has been preparing for this for quite some time, and much of this bill is already drafted at the staff perspective. So really it is the moment that if members were going to weigh in with Chairman Smith, they would need to do it. So again, I see this letter as a … It’s a great broad statement of support, but is it really going to indicate whether these folks decide to vote no on a major package that includes plenty of other things that they support? I think the jury’s very out on that.
Julia Pyper: Yeah, I mean we’ve heard from even supporters of clean energy that if it’s up against salt deductions that many high state tax states want to see that cap lifted, there’s also now discussions of are there going to be cuts to Medicaid, possibly Medicare, programs like that in other parts of the House budget instructions. Could that put pressure and change priorities? There’s going to be a lot I think up for discussion here and now we have to see how these members weigh their priorities. Brandon, what did you make of the letter? Are you looking for more specificity now? Do you think we’re going to get that from the Republican leaders?
Brandon Hurlbut: I agree with everything Emily said. I think it’s a good sign. You’d rather have the letter than not have letter, but I don’t want people in the industry to have false hope because if there’s one big bill you would be saying these members would veto the big bill with the Trump tax extensions at the expense of one or two of the IRA credits that they feel passionately about. And Trump and Elon are so powerful right now with Republicans in Congress. I talked to a member, a Democratic member of the Appropriations Committee and he said, “Hey, behind closed doors, Republicans say the right things about this stuff, but they walk out of that closed door and they have to say whatever they think Trump wants to hear.” Because if Trump wants to primary them, Trump, even though he’s not on the ballot, he has raised hundreds of millions of dollars.
People are going down to Mar-a-Lago right now playing golf, having dinner and ponying up big cash, and Elon is going to use his resources to support their agenda. So if you’re a Republican member of Congress and Trump puts his big beautiful bill in front of you and says, “If you oppose me, I’m going to primary you and I’m going to deploy millions of dollars against you.”
Emily Domenech: I want to push back on this a little bit because I think we look at this often. We live in this sort of … Folks who work in the energy bubble, this is the most important issue to many of the people who listen to this podcast and many of the people who we’ve had on as guests and folks who fit in that space. It’s not the top issue for lots of lawmakers. And so I think assuming that, hey, whether or not you say up or down on this bill is only because somebody wrote a check somewhere. Maybe it’s because a salt deduction is way more important for your state than a clean energy tax credit. These folks have to weigh these decisions. When we do this kind of big bill lawmaking, it’s part of why we didn’t see a single Republican vote for the IRA. It was a big bill with a ton of things in it, and maybe they liked a few of them, but they weren’t willing to say yes to the whole thing.
Right now, we’re in the reverse situation. We’re going to see members say, “Look, I may not like everything in this bill, but 80% of it is stuff that’s good for my district and my state and I’ve got to vote yes.”
Brandon Hurlbut: I don’t disagree with that at all. I’m saying it’s both. They probably support all the big things that are in that bill and it’s going to be tough to oppose Trump politically for them.
Julia Pyper: I think it is becoming clearer that America has an energy need, a major energy need in this moment. There’s a lot of consensus as we talked before, around wanting to lead on AI in America, build more in America. That is a main goal of the Trump administration frankly, and there’s some support for those clean energy projects. I think there’s a need for all energy and that’s actually resonating with a lot of offices as they say, “Show me what you can do. Show me what your technology can do,” and if you can help meet our AI energy demand needs, knowing that a lot of gas plants will take till 2028, 2030 even to get built, there’s a recognition that in this interim period of time we need all the electrons we can get. And I think that’s a really important recognition and what might win the day.
It’s not just about subsidizing one industry or another. It’s about America investing in its own economic growth and having all resources to come to bear on that. And I think that your guests at the last episode really laid it out quite well. Rich Powell at CEBA, Travis Kavulla talked about bringing all resources to bear to power businesses in America. One thing you guys talked about there was the importance of building relationships with congressional offices to actually make this case and move things forward. Don’t just talk to each other in our own little bubble, but actually get to know your leaders. Brandon, to you, how do you think clean energy advocates can best do that? We’ve talked a little bit about it, but where do they go from here? Instead of just listening to us, what do they need to go do from this moment forward?
Brandon Hurlbut: They need to be lobbying and the industry suffered a little bit of a setback in the last few days. It became public that Bill Gates has pulled out of the Breakthrough Energy climate advocacy team, like they’ve pulled back their funding and laid off the team. So Breakthrough Energy Ventures, the venture fund still exists and we’ll be investing, but the arm that did advocacy and policy does not exist anymore, and people in the industry did rely on that team to do some of their advocacy. Even though it was a very small team, we still needed more than that. That was not enough, and now we don’t have that. I think right now this debate is happening, it’s being shaped, the House bill is being put together, the Senate’s going to do their bill, the next few months are key, and you need to be lobbying and if you need some help on that, you should be talking to us (laughs).
Julia Pyper: Emily, if you had to say today, just to put a marker on it, what do you think is going to happen to the bucket of clean energy tax credits we talk about in the IRA? If you had to take a guess, have you put this down on paper, do you think what’s in, what’s out? And name them if you can.
Emily Domenech: I’ll start with I think 45Z, the clean fuels credit from the IRA is one that has really broad bipartisan support, particularly among agriculture-focused communities in Iowa, Nebraska, and other places. It’s well articulated, it’s well organized. I think that credit is very safe. One that I think is far less safe is the consumer credits for electric vehicles. I think those have broad opposition from Republicans and frankly have the easiest argument to make that you’re subsidizing the tail end of a supply chain that is largely controlled by China. I think it’s very unlikely that that credit remains in its current condition in the future bill.
Julia Pyper: Well, two buckets I know a lot of people are watching are the advanced manufacturing production tax credit bucket, that’s 45X, as well as 45Y and 45E, the clean electricity production and investment tax credits. Those were ones that Mariannette Miller-Meeks has brought up very specifically as wanting to defend. So in the spirit of getting more specific about what we need to protect here, those will be two other big buckets I think to watch.
Well, let’s move on to some big news out of EPA. First on March 11th, EPA Administrator Zeldin announced that he had terminated the remaining $20 billion of grants held in the Greenhouse Gas Reduction Fund. That’s the entire fund, aside from the $7 billion for the Solar for All program, which the EPA unfroze earlier this month, that money flows out through the states. The other 20 billion goes to other green bank style organizations. That unfreezing announcement came a few days after a coalition of nonprofit organizations sued the EPA and Citibank arguing that $7 billion from the GGRF was being unlawfully withheld from them. Zeldin argued that the termination of the $20 billion bucket was necessary because of “Substantial concerns regarding program integrity, objections to the award process, programmatic fraud, waste and abuse and misalignment with the agency’s priorities.” The EPA can legally cancel the contracts if it provides explicit examples of waste, fraud and abuse, but it did not do so. Zeldin also announced that the EPA would end its environmental justice program which seeks to limit pollution and other environmental concerns for low income communities.
In a hearing on March 12th, Judge Tanya Chutkan expressed criticism about the EPA’s justifications for the grant termination. Also, on March 12th, Zeldin announced an enormous agency-wide deregulation effort. Among other policies, it would seek to withdraw the EPA’s endangerment finding, which states that carbon dioxide pollution endangers our health and well-being. Zeldin also seeks to overturn dozens of regulations including rules to reduce pollution from power plants, tailpipe emission standards and methane leaks, and measure the social cost of carbon. The EPA will also seek to overturn limits on mercury emissions and the “Good Neighbor Plan,” which aims to reduce pollution that harms air quality in downwind states. That’s quite a list of actions just in recent days. I think this was to be expected. Emily discussed, I think, issues that Republicans have had for a long time with regulations overseen at the EPA. But let’s start with the first bucket. What do we think about the $20 billion bucket of that Greenhouse Gas Reduction Fund being now canceled, being terminated? Brandon, let’s go to you first. What do you make of the $20 billion being on hold?
Brandon Hurlbut: I just want to level set a little bit and give context for this Greenhouse Gas Reduction Fund and what the purpose of it was. So a lot of people have made money on clean energy, investors and companies, big banks and other financiers like Brookfield that have financed dozens of gigawatts of deployments, big developers that have developed these projects, public companies like First Solar and their investors and suburban homeowners that have gotten residential solar and batteries that have reduced their utility bills. But lots of disadvantaged communities have not had access to these benefits. And the idea behind the GGRF was to provide low-cost financing for projects in those communities and that could be developed by community organizations. And so that’s why they put this money at the EPA and their goal was to find groups that had some sophistication around investing and also had ties to these community organizations that could be the developers of the projects and reap the benefits of low-cost clean energy.
Now, we didn’t have anything to do with it at Boundary Stone because I thought it was going to be challenging to put $27 billion at the EPA to do this type of work. When I was at the Department of Energy, I was there standing up the Loan Programs Office. It existed before we got there with Obama. It was a small group, but then with the Recovery Act, it got a bunch of funding and I saw it was hard to scale that program up and DOE is … The technical experts there and it’s better positioned to do that type of work. The EPA is a regulator. It doesn’t really do that type of work. And so to put $27 billion, which is like almost 2X their annual budget, on that department, to stand this up I thought was going to be hard, but I think the intentions were altruistic. And so these allegations of waste, fraud and abuse, I would be surprised. I’m sure that there were some issues in standing it up, but the idea of it and the purpose of it, I think had good intentions.
Julia Pyper: Yeah. And I mean they did get the money allocated at least, they had chosen the organizations, gone through the process, got it into a bank account at Citibank, which is what’s interesting about this on a technical level, the dollars are actually at Citibank and that’s where they’re now frozen. So I think a lot of people thought that the work had sort of been done from a legal perspective to get it out the door. Emily, what do you make of this now?
Emily Domenech: So I completely agree with Brandon that I think EPA was not really the right agency to be implementing this large of a program. And that frankly, if they’d put the money at DOE, they probably still would be cooking along with grant making efforts. But what EPA did instead is they basically said, “We’re going to use NGOs as a third party to distribute this money, so we’ll give you a giant chunk of cash and we’ll let the NGO do the grant analysis and decide who gets the smaller pieces of this money.” And I think what we’re seeing from the Trump administration is that they don’t think this is an appropriate or even legal way to distribute grant funding and that there’s no ability for the EPA to conduct oversight if they proceed in this manner. And I think that’s a fair concern because I mean, if you let someone else take over that entire grant writing capacity, then how can the EPA have any accountability for how that money is spent?
Brandon Hurlbut: Is it unusual then to park money with an intermediary?
Emily Domenech: Yes, it’s very unusual and DOE doesn’t do it. I think what we saw here was that EPA was given a huge … I mean, again, EPA doesn’t work with this much money. It’s much larger than their annual budget. So instead of building up a program to really implement how they were going to get this funding out the door, they passed that responsibility off to someone else. And I think doing that takes away the ability of the agency to do oversight.
Julia Pyper: Has that been proven, I guess is the question? I imagine there’ll be more legal suits. I don’t know if they can bring something now that it’s been terminated, but I think there’s going to be an open question of proving that that is true. It doesn’t mean that agency was the best equipped to handle the money, but did they actually commit some kind of error here? I’m not sure that’s totally clear.
Emily Domenech: I think again, to me, it’s not actually a question of has there been waste, fraud and abuse in the future. It’s the fact that there is a large amount of taxpayer dollars that we have no ability to ever tell if there is wasteful spending from because we gave that responsibility over to a nonprofit. And again, in this case, I would say if you are the EPA and you are tasked with showing that this money was responsibly spent, you cannot say you know. So I think that’s the argument that we’re seeing from the Zeldin team. And I agree with you that it will probably continue in litigation because it’s a real question of whether or not they can say they adequately controlled that funding the way Congress intended.
Julia Pyper: So thinking about the deregulation effort, which of Zeldin’s proposed deregulations strike you as the most and the least significant? As an example, I mentioned the 2009 conclusion from the EPA that carbon dioxide pollution endangers human health and welfare, that is something that the EPA is now reconsidering. I think that’s been the basis of a lot of decision-making in the past decades and years. Brandon, have you taken a closer look at what’s on the chopping block here from the EPA and what you think is concerning and not?
Brandon Hurlbut: Yeah, I agree that the most concerning is the endangerment finding because it’s the underpinning of all of EPA’s authority to regulate on greenhouse gas emissions. And the endangerment finding is based on decades of scientists that is accepted. And so to revisit that is I think a little frightening because the science should prevail there. And the other thing that caught my attention is when they rolled all this out, the EPA Administrator Zeldin talked about the mission of the EPA and he said, “The new mission is to reduce costs, lower the costs of a car.” All for that. Nobody’s against lower costs, but he did not mention anything about protecting health, protecting the environment. So that has been the mission of the EPA since Republican Richard Nixon started it. So it seems like it’s taking a very different turn here, and I think the consequences of that could be really bad.
Julia Pyper: Emily, you’ve talked about different regulations that the EPA has wanted to trim for some time now. How do you think this is going to roll out from here? And are you at all concerned for some of the bedrock environmental protections?
Emily Domenech: No, I mean, I think this is very expected. We saw the previous Trump administration talk about deregulatory efforts based on rules that have been put in place by the Obama administration. The Biden administration took a totally new regulatory approach when they came in and undid many of the actions from the Trump administration, and now we’re doing it again. I think the difference here from Trump one is that frankly, they’re much more organized and they’re trying to start the process on redoing these regulations to better match the goals of the administration earlier and broader across the agency.
One quick note though, on the endangerment finding that we talked about this in a previous episode, much of Republicans’ concern with this is that it’s used to create this metric of the “social cost of carbon” that is frankly, Republicans have complained about for decades as being an arbitrary standard that doesn’t include the social benefits of fossil fuels and lower costs and things like that. I don’t think anyone on the left wants the social benefits of carbon to be a metric that’s used in rulemaking. So I think maybe we can be looking at a better way to determine the costs and benefits of these regulatory policies going forward.
Julia Pyper: How do you think they will evaluate the benefits? Will there be some other framework that comes forward?
Emily Domenech: I would expect them to do so. I mean, we’ve had a lot of discussion on the hill about how we evaluate the costs of regulatory actions and how those metrics of how much it will cost to implement a particular regulation should be considered as we put them in place. So I would expect to see quite a bit more development in this space.
Julia Pyper: It is interesting that the previous Trump administration actually rejected requests to overturn the endangerment finding during that term. So it’ll be interesting to see what happens here. And I imagine it’ll be a long-drawn-out process. I’m not a deregulatory expert here, but could it take the whole rest of the term to even get this done?
Emily Domenech: I think it reasonably will take the next two years to get through this rulemaking process. And that’s usually about the timeline for a regulation, and that’s without the inevitable lawsuits that come as you implement new rules. So I think to your point about not looking at the endangerment finding in the previous Trump administration, if I recall correctly, that request came pretty late in the administration. They likely wouldn’t have had much time to re-implement a rule. So I think what we’re seeing here is a group of people who came in far more prepared to deal with the regulations that sat in front of them and they’re looking to move quickly.
Julia Pyper: Yeah, I think Zeldin framed it as the largest deregulatory announcement in U.S. history. So going on to say it would lower energy costs and boost jobs in the automobile sector. So they very much came in and I think wanted to plant this flag quite intentionally at the outset. One last item here, Brandon, before we move on, I want to touch on that bright spot of unfreezing the Solar for All funds. Of the $27 billion Greenhouse Gas Reduction Fund, 20 billion went out through these green banks, community-based organizations, nonprofits, and the other $7 billion went straight to states to actually administer their own local grant programs for these local base clean energy projects. How are you reacting? How are you hearing people react to that becoming unfrozen? And do you think this will have a positive impact on maybe some of the other lawsuits? Anything you can take away from that?
Brandon Hurlbut: I think the fact that the money was going to the states was the differentiator. So it goes to red states and blue states. So to Emily’s point about the intermediary, there’s much more comfort in the intermediary being a state government organization where there can be oversight versus a non-profit. So that to me is probably why they released it. Now on some of these other issues, I think what people should be doing is talking about the benefits of their projects. If you’re at the GGRF, I would be talking about, “Okay, we have this money. This is how we were going to spend it. We were going to do community solar for a bunch of multi-unit housing complexes and whatnot, so people can get the benefits of lower electricity bills.” And some of these other regulatory orders that they’re pulling back, that could have an impact on clean air and clean water. And people overwhelmingly more than any other issue support clean air and clean water. And so I think that’s the case that people need to make in the court of public opinion.
Julia Pyper: Well, let’s move on to the impacts of President Trump’s tariffs on the energy sector. Just a tiny little topic we’ll cover in 10 minutes casually. Tariffs are a thorny and complicated topic. I hope we can do a deeper dive on this with a trade expert in a later episode. But in the meantime, I want to touch on a couple of dynamics that have emerged since President Trump initially proposed, delayed, implemented, and delayed again, many of these tariffs. As of this recording, 20% tariff is now in effect on Chinese goods, a 25% tariff on steel and aluminum from all countries began on March 12th. Additionally, a 25% tariff on Mexican and Canadian goods is slated to go into effect on April 2nd, including a tariff on automobiles. Those tariffs could impact several energy related products and industries, not just the steel and aluminum needed to make infrastructure projects, but also rare earth minerals as well. How do you see these tariffs affecting the build out of energy infrastructure? Emily, go to you first please.
Emily Domenech: Yeah, I’d say I think those raw materials are probably going to be the ones that are most impacted, the steel and aluminum. Do we actually have the capacity here in the United States to meet the demand? And is there work that’s done on the back end to grandfather in folks who have already made purchases or have purchase orders for foreign steel for future projects? I think a lot of the devil is in the details here, and we don’t quite have enough information on how it will be implemented going forward. And I think those have big questions and big implications not just for energy, but for other major infrastructure.
Julia Pyper: Are you surprised at all by this approach? I mean, we knew tariffs were a priority, but it does seem in conflict with keeping costs low and other priorities that President Trump himself has stated. So how do you square these?
Emily Domenech: Yeah, I mean, I will say I’m not surprised by this because I think President Trump has made it very clear over and over that he personally believes tariffs are an effective tool for both rebalancing our trade deficits with other countries and for bringing folks to the table to get more fair trade for U.S. producers and reshore some of that capacity. I think he’s … Much like he usually does, President Trump is doing what he said he was going to do and is moving forward with these tariffs, I think much faster than most of Washington assumed that he would. The question here is how much of it is that sort of negotiating tactic, which is we don’t ever actually implement the tariff because we come to an agreement that serves both parties and how much is a no, this is a permanent policy that we should expect going forward? I would expect the Chinese tariffs in particular to be permanent policy.
Julia Pyper: It was interesting that the President was in an interview where he didn’t rule out a recession kind of coming from needing to jolt the system with some of these kind of shocking changes in policy, and that was a sign at the very least of his dedication to the taking this tack, even if it does cause some economic pain. And the head of the Treasury sort of reiterated that I believe later on. So they’re quite dedicated to this path. Brandon, what do you think it means for energy?
Brandon Hurlbut: Well, it’s going to have a big impact, and I think what it means more broadly, I mean the entire industry and business communities speaking with the stock market, I mean it’s down. It’s wiped out everything, all the gains that have happened since he was elected. “So uncertainty is the enemy of progress,” as Andrew Beebe said recently, my friend from Obvious Ventures, so I think we learned in the November election, when costs are high and they go up and people are feeling not great about the economy, they punish incumbents. And so I think this is quite a risk that they’re taking.
The other thing that caught my eye, Julia on tariffs is there’s an energy analyst out there, Jeff Currie, who put out a new paper called The New Joule Order, where he discussed tariffs, and he put it in the context of countries are trying to have domestically sourced energy, not because of climate purposes, but because of risk. And he said, “If you have to have domestically produced energy, if you want to have that, it’s actually solar, wind, batteries, geothermal are the easiest because if trade is under threat, so are fossil fuels because that’s heavily traded.” So I think that’s sort of an interesting angle on this tariff debate that hasn’t been discussed as much.
Julia Pyper: Although I think when it comes to the Canadian tariffs, at least I think there was a carve-out being discussed for energy products and specifically fossil fuels. So I think-
Brandon Hurlbut: Well, you’re the Canadian here. You would know better.
Julia Pyper: Yeah, let me call home, call a friend. No, I think it’ll be interesting to see if those products are treated differently, but I hear you. That’s a good flag. Well, tariffs are a moving target, but we will be back to discuss them. I think it’d be awesome to have a trade expert on to really break it all down for us. There’s a lot of buckets of existing tariffs that the administration could also choose to change. I think there’s actually a report expected back from the various agencies that oversee trade by early April that the Trump White House has asked for. So there could be other movement on that front beyond these new tariffs he’s discussing against various countries. So lots were to come on that front and how it’ll overlap with the energy industry.
One final section here as we close out the episode, I want to talk about Trump’s calls to ax CHIPS, the CHIPS Act. When he addressed Congress on March 4th, the President called on Congress and speaker Mike Johnson to get rid of the CHIPS Act, the bipartisan 2022 bill that allocates $53 billion for semiconductor manufacturing and research. “Your CHIPS Act is horrible, a horrible thing,” the President said. Emily, why do you think President Trump has called out CHIPS, the CHIPS and Science Act. That Bill does stimulate domestic manufacturing, which was a cornerstone of the President’s campaign. It also passed with 17 GOP votes in the Senate and 24 in the House. So do you agree with the President that Congress should get rid of it?
Emily Domenech: I think the CHIPS Act has certainly had criticism from Republicans in the past, both for one, not frankly closing the door to CHIPS manufacturers continuing to operate in China while giving them sums of money to operate in the United States. And two, frankly, for all of the regulatory hurdles that have made it very difficult to actually build those fabs here in the United States. We had to pass follow-on legislation to streamline the NEPA process for these facilities that wasn’t included in the CHIPS Act, which means most of them haven’t even gotten through their permitting to be building here in the United States yet. So I think it’s a good example of something where, while I think Trump’s philosophy probably lines up with the original intent of the CHIPS Act, we didn’t say, “Stop doing business in China and do it in the United States.” We said, “We’ll pay you to do some of your business here while you continue to do business in China” and that doesn’t make a lot of sense.
Julia Pyper: Do you think that’s part of a transition that you need to get things up and running, then it’s easier to pull up the bridge like you stimulate the investment, you get the jobs going here, and you entrench that industry and make it affordable, and then it’s easier to implement more of the sticks?
Emily Domenech: I think that’s possible. But I also think for those of us who are on Capitol Hill, the folks who benefited from money from the CHIPS Act almost immediately came back to Congress and said they would need more funding to be able to actually meet the requirements of the bill. And that is something that often leaves a pretty sour taste in members of Congress’s mouth on these kinds of issues. So I do think that if we’re going to make significant investments to bring industry back to the United States, particularly this high-tech kind of industry where we’re trying to really win an AI race with China, there have to be some strings attached that say, “You can’t continue to do business in a country that steals all your IP,” because we don’t want to see the American taxpayer paying for something that then the Chinese get to take advantage of.
Julia Pyper: Yeah, it’s going to be interesting. I mean, I am a huge proponent of onshoring, and I always wonder, how do we get there? It feels like we have this Valley of Death we have to cross on this front, and it’s messy and it’s expensive, and honestly, it’s a failing of decades of policy that got us to this point. And I’m not sure how we get there, but it feels like when we have fits and starts to policy, as flawed as the policies may be, and I understand you need to make sure the policy works, but how do we … I worry it delays us further when we don’t get this rolling with stable policy that businesses can plan around for decades to come given the scale of the investments.
Emily Domenech: Certainly. And I think frankly, if Democrats had been more interested in working with Republicans on the regulatory challenges for building these fabs, you would’ve seen those numbers double for Republican support for that bill.
Julia Pyper: Brandon, what do you think?
Brandon Hurlbut: When people ask me about this role of government in the industry, I often use semiconductors as an example. I mean, the U.S. government really helped catalyze and support this industry from the very beginning because the government understood that this was a strategic industry for our national security, for our economic development. And so back in the 1940s to the 1960s, the U.S. government catalyzed the industry by funding the development of transistors, integrated circuits for radar communication, nuclear weapons. And then in the Apollo program, there was massive government contracts with Fairchild Semiconductor and Texas Instruments for semiconductors. And then in the 80s, there was Semitech, which was a public-private consortium funded by the Department of Defense and other semiconductor firms.
So there’s a long history here of support, and then we sort of lost our edge a little bit to Asia. And so the CHIPS Act was basically the 2020s version of this longstanding decades-long partnership with the U.S. government to make sure that we are the world leader on this industry. And so if there’s amendments that make sense that Emily’s suggesting, I think open mind to all that. But the spirit of the law and what they’re doing is really necessary.
Julia Pyper: I have a broader philosophical thing I’ve always wrestled with is how much do you onshore and support within your borders? And yet when you do that, it obviously creates tensions with your neighbors. That’s where the tariffs come in. Growing up in Canada, I liked that we just supported our local farmers and had Canadian dairy because it came from down the road, you had the jobs locally, and it wasn’t totally outsourced, and we had to subsidize to make that happen. But I feel like that’s a worthwhile investment to keep your farming expertise and those generations owned family farms up and running, that’s a worthwhile cost, and yet it can be perceived as then protectionist and running afoul of free trade from another perspective.
This is a conversation for another day, but I feel like they’re really running up against a tension right now of what can you onshore and how do you do that in a way that’s feasible, that sends the right signals to industry while not totally upsetting costs and free markets where they do exist? And I don’t honestly don’t know the answer and would love a smarter person to explain to me how we get through this transition phase because everyone seems to want to onshore, and yet we are very entrenched in global supply chains, particularly in energy. So it feels like, at the very least, we’re up for a lot of volatility.
Emily Domenech: The last part I can definitely agree with you on.
Brandon Hurlbut: I would say one of the other criticisms of the bill that I’ve heard about CHIPS is that the money goes to big incumbents like Intel to build something in Ohio or TSMC to build something in Arizona. That’s all great, but when you have these innovators that want to do a pilot project to test a new chip or something like that, there’s not a lot there. And that’s an area where the private sector doesn’t want to take the risk yet. So you see how the DOE has done that for some of these clean energy technologies where they incubated it a little bit and provided some money for a pilot project to prove it could be done. And then LPO could do low cost financing to scale a little bit, and then the private sector can come in and take it from there.
So if there’s anything, I think that could be also amended with the CHIPS Act, it’s to provide some funding to test some of these technologies in a pilot because we want to have more energy efficient chips. We’re all talking about the key to winning the AI race and winning this chips race is you’ve got to have the power for it. And if you can have a more energy efficient chip, that’s going to be a big win for … It’ll lower costs for these things, and it’ll use less energy. So I don’t know if there’s enough in the CHIPS Act to do some of that work.
Julia Pyper: So to wrap it up here, it has been a year since we’ve been back on the airwaves. Emily, you came on board and brought a whole bunch of new energy to the show, and we’ve had some great guests on. Would love to hear from you a year in. What’s been a highlight? What would you take away from this experience?
Emily Domenech: Yeah, I mean, I’ll say first, I’ve of course enjoyed making you all talk about permitting every single episode of this show. But I’ll say, I know the listenership of this program is a lot of tech investors, a lot of folks who probably fall in the category where they don’t know a lot of Republicans. So I’m really glad that we’ve been able to bring some more Republican voices onto this show and highlight folks at the RNC and other members who are really engaged in sort of this kind of bipartisan work to make it easier to build in America. So that’s my take.
Brandon Hurlbut: I mean, here’s what I know: our numbers are at an all-time high, so I blame Shane. Emily was a huge upgrade. So Shane, we love you buddy. But man, Emily, huge upgrade. Just kidding Shane. We love you.
Julia Pyper: Well, we’ll leave it there for this show. Political Climate is a co-production of Latitude Media and Boundary Stone Partners. Max Savage Levenson 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. If you want us to talk about a specific topic, please email us at politicalclimatepodcast@gmail.com. Please help spread the word about Political Climate on LinkedIn, X and beyond. Share it with your friends, put it in your newsletters. We love that. I’m Julia Pyper. Quick note that we’re taking a couple-week break to get back on our schedule here, but we’ll be back on the airwaves again soon. Until then, signing off.
