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Today, I want to begin with a quote.
Every few years American politics astonishes you?
Yesterday was one of those days end quote.
That’s how the Atlantic journalists Robinson Meyer began his report on the climate deal compromise between Senator, Joe manchin and Majority Leader.
Last week in a move that seemed to shock.
Literally, everybody not just journalists who’ve been following this story closely with fellow Senators as well.
The two men unveiled, a bill that would reduce the deficit lower health care costs and most importantly for our purposes.
Today invest, record-breaking sums in clean energy infrastructure.
And when I say record-breaking sums, what I mean, is this, this is the biggest green energy investment bill in American history, it would be these Will biggest one off green energy investment in European history.
Now it’s still just a bill.
It’s not a law.
It’s not a policy.
It could be revised, it could be changed, it could be scuttled.
So I don’t want to get entirely over our skis here, but in a summer of climate Doom with record-breaking heat and droughts fires throughout Europe.
We are looking at a possible extraordinary, Leap Forward.
So, what’s in the bill?
What would it actually do to the economy?
How could it realistically, transform the world?
Today’s guest is Atlanta journalist.
Rob Meyer This mini episode is our breakdown of the bill, but more than a cold explanation, I want to provide context the history of American environmentalism is.
So often a history of disappointment and doom and failure, but it is marked by significant successes and we have to cherish and celebrate, and point to them without leaning into hyperbole or pollyannish thinking. so, if you’re looking for a real glimmer of hope on the climate Horizon, I would encourage you to keep listening.
I’m Derrick Thompson.
This is plain English.
Robinson Meyer, welcome to the podcast.
Thank you for having me happy to be here.
Excellent, before we get into details, I want to just set up the context here.
Joe manchin has been bet, Noir of liberal environmentalist, for many, many years America.
Has been a laggard in, Clean energy policy for many many years.
So, for Joe manchin to be the linchpin of a major national clean energy.
Legislation is pretty shocking to a lot of people, I know that one of those people is you you were up until about 4:00 a.m. last night, poring over this thing to absorb all the details.
So before we get into the details, just tell me to start like to quote a big president.
How much of a big effing deal is this?
It is quite a big effing deal.
I mean, I I think it is the bill if it passes and we have to attach that.
If only because climate people you know, where we’ve been dragged, we’ve been, we’ve been tricked so many times.
You know you have to protect that core part of yourself and say if it passes if it passes, it would be an absolute Landmark.
It would be the largest investment that the United States has ever made in fighting climate change.
It would be the largest investment day, any Europe?
Keep their any Western country has ever made in fighting climate change, and arguably the largest investment ever from any country in fighting climate change.
But it’s a little hard to say, with how China and India, do their accounting.
However, it is a big, big, a deal.
I mean, it’s the kind of thing where yesterday, you know, even before it came out, I got a call or right after kanava, but when we didn’t have any details yet, I got a call from Sam Ricketts who used to advise Governor?
Jay Inslee of Washington, who ran an entire Climate focused presidential campaign on climate change.
This is inslee’s climate advisor, and he picks up the phone and just starts talking.
And it’s like, this is it?
We did it.
This is the real Victory.
He said, I struggle to find enough, super Lou superlatives to describe this deal.
It is the kind of if it passes again, if it passes, it would be.
It’s the kind of victory that people just call you up on the phone and want to immediately.
Start start being a few Civ over.
Well, now I have to imagine In a lot of people’s appetites have been wedded to figure out exactly what is in this deal, but it’s making all these environmentalists salivate.
Let’s go through three major components.
Number one incentives, for utilities and developers.
What is in the bill?
What does it look like and tell me why it’s so important?
So I would say the centerpiece of this bill from a climate perspective is the set of tax credits that go to utilities developers states and cities anyone who Produces electricity and sells it to Americans on the grid.
And what that, what those tax credits do is they encourage the production that they encourage investment in and the production of zero carbon electricity and I think what’s quite there’s two things I would really call out of these tax credits that are that are important.
The first is that, you know, I think listeners will recognize we’ve had tax credits like this for some time, you know, they’ve heard about maybe a solar tax credit or a wind tax.
It if they’re really wonky and advanced nuclear tax credits because that’s the Bush Administration but what all those tax credits had in common was that they called out specific Technologies, the new set of policy which is in this bill applies to any zero carbon electricity generation or production technology.
No, wind solar geothermal Advanced nuclear carbon capture Burning.
I don’t know.
Something renewable that we haven’t even thought of yet.
It applies to any of those.
It, it says, basically whatever is the most cost, efficient way to produce electricity in your area.
We are going to either help you invest in it or help or actually subsidize the production of that electricity.
Whatever is the most efficient way for you.
The other thing that’s really important about these tax credits The previous policies is that every previous subsidy.
We’ve had like, this has phased out in five years, or six years, or two years in Congress has to get back together and extend them.
And it’s a whole process.
These tax credits extend to at least, 20 32, or until when the electricity sector is 75%.
Decarbonized compared to its all-time Peak.
So these are permanent technology neutral tax credits that are meant to drive the carbon out of the power sector.
So the second component that I want to talk about is this set of policies that seem like they have a shot at revitalizing Manufacturing in the u.s. within the space of clean energy.
So tell me a little bit about this second component.
I think, you know, people at this point are used to hearing that Congress is trying to bring back manufacturing.
This is something that’s an old socks of presidents have tried, right?
This bill actually contains the level of investment necessary to do that.
And it directs that investment toward industries that the US doesn’t need to like, regain footing in like steel or Autos, but industries that are just getting built now, where we can develop a competitive advantage that kind of will extend out into the future.
So that’s clean hydrogen.
That’s carbon capture technology.
That’s Advanced nuclear, and that’s also developing a domestic solar industry.
I think what people don’t understand is that the u.s. hasn’t failed often especially on things like solar because our labor is more spensive than China’s in comparison to China.
It’s because the Chinese government subsidizes domestic Supply chains and makes it very easy for big manufacturers to get loans.
That’s the kind of policy that the u.s. is now, finally, doing in these bills.
And number three, let’s talk about the subsidies for consumers.
So like if I Derek and interested in like, Greening My Lifestyle, if that’s a verb that has ever used by people, I think I wanted my lifestyle less carbon and right now, maybe.
Well then here we go.
Using made up verbs.
I want to decarbonize my lifestyle but I’m waiting on the federal government to give me money to do the right thing by the planet.
What are the goodies that I get?
If this bill passes, there’s really two sets of goodies here that your that the bill is going to Dole out.
The first is in transportation, it’s going to have very large potentially, very large subsidies for Ev purchases, they go up to 7,500 dollars depending on how the TV is made and income level.
For a new car truck.
And there’s also for the first time ever going to be a used EV subsidy.
So you could get up to four thousand dollars to buy a used EV there’s never been a policy like that in the US.
That’s quite a big deal especially when you think about how many people buy used cars as their main car including me the second set of policy.
The second set of consumer subsidies here are for everything in people’s houses that touch the fossil fuel system so that heaters Gas stoves, even potentially in efficient air conditioners.
There’s a set of policies in this building is are meant to help people move to say, using heat pumps, which are all electric instead of heaters, which run on oil or gas to moving you to using induction stoves, which are all electric rather than gas stoves.
Those are subsidies that consumers will feel when they go in to make these purchases.
And they’re meant to encourage someone to say if they’re replacing the HVAC system in their house to go buy a heat pump next time, Or very efficient air conditioner rather than a gas-powered heater.
What’s the most important thing in this bill that could potentially affect some of the further out cleantech Technologies?
Like carbon capture carbon removal?
These are things like I mean maybe next Generation nuclear there’s like a set of technologies that are mildly futuristic.
You can’t immediately deploy them right now the same way that I can just like put you know solar panels on my roof tomorrow.
Does this bill do anything in terms of laying the groundwork for those further out?
It does so.
So, you know, the infant’s, the bipartisan infrastructure bill that passed last year, contained a lot of money to help exactly those kinds of Industries.
Do kind of first time, one-off demonstration projects, big expensive, Investments that we really need the government to help you.
Do the first time, what there wasn’t in the infrastructure bill was support to help those companies.
Move past those first big demonstration projects to becoming fully scaled, you know, large Industries.
That’s The kind of support that exists in this bill and what I think is most important in the Mansion sewer, bill on that front is what’s being called a clean tech accelerator but is actually kind of a big Bank in the government and what it could.
Let the government do is intervene with companies that almost any stage and say Hey how do you need help to keep growing at this stage?
You know you work in an industry that we think is important for the economy or four or four National Security.
Maybe it’s very hard for you to get Maybe it’s very hard for you to get a very cheap loan.
This is actually a kind of support that Tesla got early in its growth from the Affordable Care Act from the rescue actor in your bobbin, Obama administration but that has kind of phased out after the ACT died this will now bring it back at a higher level and let kind of more companies achieve that Tesla level scale with similar help.
So if I’m trying to summarize a bill like this or the environmental part of the inflation reduction, Act, it seems like this, these policies make it more cost, attractive for companies to invest in clean energy and more cost attractive for consumers to go clean as well, whether it’s two v’s or induction stove, tops just kind of another theory of environmentalism which is that rather than incentivize people and companies to move toward cleaner Tech, we should focus on punishing, the dirty stuff, right?
That’s what a carbon tax does.
That’s what cap and trade to a certain extent does that’s what ramping up regulations for coal would do, is this really a bill of all carrots and no sticks in clean tech?
Yeah, I think there’s first I just have to call out something quite interesting about this bill, which is look how far it’s gotten by being, so largely constituted of carrots.
And when we talk about, you know, previous the btu tax which was kind of a In early protocol Urban tax during the Clinton Administration or cap and trade during Obama.
These the last time that you know, Democratic Congress and a Democratic president have tried to fix climate change.
They’ve been much more stick, heavy policies and they haven’t gotten through right Joe manchin didn’t support them.
I’m usually Grandma’s old.
Yeah, Grandma’s old thing.
You can catch more flies with honey than vinegar, turned out to be extremely predictive for 21st.
Century environmentalist policy developments.
So I think I would just call that out.
As, in this long-running debate about environmental policy.
What’s more effective characteristics?
Well, we’re farther along with this.
Mostly in this 90% carrot Bill than we’ve ever been with a climate bill before, and it hasn’t passed yet, but it’s still worth noting.
You’re absolutely right though.
That there are this, this bill is mostly carrots.
There’s two things.
There’s two sticks though that are worth mentioning.
The first, is that it contains Pains what’s called a methane reduction fee and is really just a methane tax on oil and gas companies that release methane from their drilling Wells from their pipelines from any of their infrastructure as listeners may know.
Methane is not CO2, but it is a very potent greenhouse gas.
And while it doesn’t last, as long in the atmosphere, as CO2 does, it’s extremely more powerful while it is there.
And actually, a lot of the climate change we’re feeling right now is caused by methane.
So this Billed charges polluters actually Hunter.
Sorry this bill charges oil companies.
Hundreds of dollars if they release methane into the atmosphere by accident that’s quite a big stick and it will drive some real innovation in the industry.
I think there’s another part of this bill that I think is almost a ghost stick that hasn’t been talked about as much which is the same time.
The by Administration is trying to regulate climate change through Congress and push along this bill.
It is also working on these rules in the Environmental Protection.
Even the EPA to regulate carbon pollution from power plants and cars.
Every PA rule has to pass a cost-benefit analysis.
It has to show that its benefits exceed, its cost to the economy.
That’s just one of the requirements that any piece of Regulation has to meet in the US.
But the way that analysis comes together, basically, any spending that Congress does, any of these tax incentives are subsidies, that were talking about are like free money.
They’re like the government putting its finger.
It’s really, it’s like whole arm on the benefit side of the equation and the EPA Gets the count, all that for free and what that means in practice is that the EPA is going to be able to adopt much much more aggressive environmental regulations on both carbon and also on conventional are solutions than it would otherwise and it’s a big stick.
Just a tiny question about the second ghost stick that has to do with the EPA.
Does the recent Supreme Court decision?
Have any bearing on the epa’s ability to go forward with this kind of Regulation?
I don’t want to do a whole thing on the intersection of jurisprudence and the administrative State like that.
It’s another 17 episodes but like yes yes is that, is there a bump there?
You know, listener should do we live for this conversations last 10 minutes in here, we are the short answer about the recent Supreme Court decision is that does curtail.
Some of the EPA was going to do on climate.
But in some ways, it curtails kind of divide it by, didn’t administration’s larger executive powers more than it really limits, the epa’s.
And that’s because the the room court case was actually about this Obama era clean power rule that never went into effect.
And one of the reasons that never went into effect was that it was very, very complicated and that’s part of what the court was cracking down on in the ruling.
I think Regulators already, you know, climate people already learned from that defeat in a way.
Even before the court said anything.
And we’re planning much much more simple straightforward and and frankly more costly rules less efficient rules.
And this time around, then they tried in the Obama Administration for that reason.
I think the EPA, the EPA ruling from the Supreme Court is in some ways like, worse for kind of the rest of vitamins, agenda than it actually is, for climate stuff alone.
So, I want to end sort of looking at this from The Long View what the legacy of this bill might look like in 2030 2035.
And it’s interesting because this is a season of Of both tragedy and hope in the environmentalist space, you have your Europe, like, literally on fire, like southern Europe, like literally burning, while all of Northern Europe hits, a temperatures not reached in recorded history, you have an energy crisis in Europe with the Russian war in Ukraine.
You have high energy prices in the US and people really, really pissed at the administration but you also have potentially, you know, asterisks asterisks Ali, this extraordinary bill which is the largest investment in, clean energy, and the history of this country and maybe any other country on the planet optimistically.
Looking back from 2035, how might we look at the legacy of a bill like this is entirely possible?
We could look back at this bill in 2030 or 2035 and say, oh my gosh, look at how much of the economy really came into its own and was affected by this bill and how many industries that would not have existed in the United States.
Are now thriving here, just as we can look at Tesla success and say, you know, it’s very hard for me to imagine Tesla being what it is today without the Recovery Act of 2009, you’re going to be able to look at a lot of companies around the country and say, wow we wouldn’t have this Advanced nuclear company.
We wouldn’t have this Solar Company.
We wouldn’t have this this hydrogen company, or this Revitalize steelmaking. open E if we if it wasn’t for this bill, I think the us could install mostly u.s. made solar panels and solar panels and wind turbines where the whole supply chain came happened in the US.
It’s possibly go to the beach, look out at the ocean and sea, wind turbines, generating, clean energy.
That makes your car, your electric car go, right?
And that’s the that’s the world.
That is actually much much, much more imaginable.
Now, it’s possible.
Now, in a way that it was not possible before the spill Well look, man, you’re really Discerning analyst of environmentalism and green policy.
And I hope this is not just your sleep deprivation, causing a kind of, you know, wild an unrealistic optimism.
But I like this, it sounds like abundance to me.
We’ll revisit this in 15 years.
Meyer, thank you very much, man.
Thank you so much for having me.
I’m Derek Thompson.
That was plain English.
Thanks very much to our producer, Devin man.
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