Speaker 1: Hi, Mark, So are you ready to talk about US politics?
Speaker 1: Absolutely not, Danta as a DC native, all I want
Speaker 1: to talk about the Nationals. They won the World Series
Speaker 1: this past week, and I vote let's just skip energy,
Speaker 1: climate in politics and just talk about baseball. So this
Speaker 1: is the first World Series championship in d C in
Speaker 1: eighty six years, by the oldest team by age of
Speaker 1: the of any squad ever who started the season with
Speaker 1: nineteen wins and thirty one losses. The worst team start
Speaker 1: for a team that ever won the World Series animated
Speaker 1: the playoffs is a wild card and based elimination. Five
Speaker 1: times throughout talk about that. That was about as much
Speaker 1: as I've ever wanted to know about the Nationals. Thanks
Speaker 1: a lot for that, Mark. Well, how about something a
Speaker 1: little closer to my heart. Let's talk about the US
Speaker 1: pulling out of the Paris Agreement. A couple of weeks
Speaker 1: back on this show, we talked about how the US
Speaker 1: was technically still in but now it looks like we
Speaker 1: are starting to push the paper work around and the
Speaker 1: US is officially pulling out. This is uh tough, because
Speaker 1: there's just so much going on in d C these days.
Speaker 1: Let's say perhaps it was the best of times, it
Speaker 1: was the worst of times, or maybe just the most
Speaker 1: distracted of times, because it is really hard to get
Speaker 1: a sense for what is actually going on in the
Speaker 1: areas that b e F covers, because it seems pretty
Speaker 1: much everybody is distracted by the campaign and these topics
Speaker 1: aren't exactly front of mind for some of the candidates
Speaker 1: and their speeches. Hopefully we can change that. Yeah, we're
Speaker 1: in luck. So today we've got Ethan Zindler with us,
Speaker 1: who leads benef in the America's but actually, very importantly
Speaker 1: back in the day, um, we were both based in
Speaker 1: d C and we'd go to the Nationals games together
Speaker 1: when they were a brand new team. Really market you
Speaker 1: had to bring U back to the national absolutely did. Anyway,
Speaker 1: let's talk about the fact that Ethan's and there wrote
Speaker 1: a VI I P comment earlier this year for BEENF
Speaker 1: titled time is running Short for Trump's anticlimate agenda, as
Speaker 1: well as an endlest reaction that was titled Democrats go
Speaker 1: to hown on climate. You can find both of these
Speaker 1: on the Bloomberg terminal at b NF go or on
Speaker 1: BNF dot com. Also, please remember that BNF does not
Speaker 1: provide investment or strategy advice, and you can hear the
Speaker 1: full disclaimer at the end of the show. This is
Speaker 1: Dana Perkins and this is Mark Taylor and you're listening
Speaker 1: to Switch on the BNF podcast. So let's hear from
Speaker 1: Ethan on US politics and the current say to play
Speaker 1: for transport, energy, climate. Ethan, thank you for joining us today.
Speaker 1: Thanks for having me. It's nice to be here in
Speaker 1: the studio. Ethan is joining us from Washington, d C.
Speaker 1: Where I would say most people who live there no
Speaker 1: a thing or two about politics, but fortunately it's actually
Speaker 1: part of your job. UM. And today we're going to
Speaker 1: delve into three things that are the b NF side
Speaker 1: of the political spectrum. So let's dive into transportation, energy,
Speaker 1: and carbon emissions. Which one should we start with? What
Speaker 1: do you think, Mark? Transport sounds great? So what's going
Speaker 1: on in moving around in the US? Gosh, what's not where?
Speaker 1: We We like to drive big cars in the US,
Speaker 1: as you as you know, we like to drive very
Speaker 1: large vehicles and UM, as a result of that and
Speaker 1: the fact that our CEO two emissions have been declining
Speaker 1: from the power sector, the transportation sector is now the
Speaker 1: single's biggest contributor to CEO two emissions in the US.
Speaker 1: And while we have been making generally actually progress on
Speaker 1: improving mileage efficiency of the cars that people drive, that's
Speaker 1: actually started to level off a bit. Uh. And the
Speaker 1: main thing in terms of policy and politics is a
Speaker 1: giant fight between the Trump administration and the state of
Speaker 1: California about vehicle standards. UH. Tough one to say, right,
Speaker 1: I mean, basically, the what's at stake here is the
Speaker 1: you know, setting standards that would arrive eventually from thirty
Speaker 1: six to forty six miles per gallon requirement UM into
Speaker 1: about halfway into the next decade. California and a bunch
Speaker 1: of other states essentially have set the targets themselves. The
Speaker 1: federal government under Obama was syncd up with California. UH.
Speaker 1: And then Trump came along and said, to wait a second.
Speaker 1: You know, I'm the federal government. I don't like this policy,
Speaker 1: and they put the brakes on uh. And that has
Speaker 1: led to a huge fight between California and the federal
Speaker 1: government because for years California has had what's called a
Speaker 1: waiver to essentially set its own policies, and now the
Speaker 1: Trump administration is challenging that and it all appears likely
Speaker 1: to go to court. One further complication out of all
Speaker 1: this is that four major automakers have basically said that
Speaker 1: they're perfectly happy to comply with California standards. Uh. And
Speaker 1: meanwhile they and all the other automakers are saying, wait
Speaker 1: a second, we just give us one set of rules
Speaker 1: that we can abide by here. We do not like
Speaker 1: multiple sets of rules that are difficult to understand, and
Speaker 1: we don't want to make two sets of vehicles to
Speaker 1: serve the US market overall. So there's a fair amount
Speaker 1: of sort of confusion. Um, but to some degree, Um,
Speaker 1: you know, I think the smart thinking a lot of
Speaker 1: among a lot of automakers is they better continue to
Speaker 1: try to improve efficiency because a they don't know who's
Speaker 1: going to be president next and whether this is all
Speaker 1: going to change again, and be they don't know how
Speaker 1: this court case is going to shake out, and so
Speaker 1: at the end of the day, they may still end
Speaker 1: up being left with something that looks a lot like
Speaker 1: what California and the Obama administration had wanted to do. All.
Speaker 1: In reality, do automakers even make two sets of vehicles?
Speaker 1: I mean, presumably they would cater to the more stringent market,
Speaker 1: and then that would have an impact on the rest
Speaker 1: of the country, which may in fact be the argument
Speaker 1: from a policy standpoint, is that correct, that's the conservative
Speaker 1: thing to do if you're operating in a market, and
Speaker 1: presumably that's what most automakers are doing right now. I mean,
Speaker 1: I would say, you know, look, I'm not I'm not
Speaker 1: the regulatory affairs person that you know, GM or whatever,
Speaker 1: but the smartest thing to do would be to assume
Speaker 1: you're going to get the toughest set of standards and
Speaker 1: continue to plan accordingly. And of course we're seeing lots
Speaker 1: of announcements around electric vehicles and all kinds of efforts
Speaker 1: that it suggests the automakers are trying to do some
Speaker 1: of the right things. On the other hand, it's worth
Speaker 1: noting that GM and Forward in particular make huge amounts
Speaker 1: of their money off of selling pickup trucks and SUVs,
Speaker 1: which Florida F one series I believe is the most
Speaker 1: popular car in the United States. Is it not very
Speaker 1: popular car and very profitable for the manufacturer? And GM
Speaker 1: and Dodge have similar models, So yeah, they're they're being
Speaker 1: pulled in multiple directions. So this dovetails really well. With emissions,
Speaker 1: because this is a big part of the emissions pie.
Speaker 1: But then you have the part of the emissions pie
Speaker 1: that comes from the energy industry. What is happening there
Speaker 1: from a federal I guess, and maybe then to state level,
Speaker 1: well a lot. I mean, let's start with the big picture,
Speaker 1: which is the US and the power sector is rapidly decarbonizing.
Speaker 1: So we used to get about half our power from
Speaker 1: from coal really as recently as like ten twelve years ago,
Speaker 1: and now that's down this year, maybe as low as
Speaker 1: tent by the time of the year is over. So
Speaker 1: it's a huge decline in reliance on coal, and basically
Speaker 1: all of that has been made up by a combination
Speaker 1: of natural gas, wind, and solar with it most really
Speaker 1: in that order more or less in terms of the
Speaker 1: contributions that are being made. So our CEO two emissions
Speaker 1: have been going down pretty dramatically as a result of
Speaker 1: all those changes in the power sector. And that's I
Speaker 1: think generally, Um, you know, certainly from a climate perspective,
Speaker 1: very good news. Um, you know, there's then plenty of
Speaker 1: other things going on beneath the surface around all of that.
Speaker 1: As you add more renewables, it creates new complications for markets. Uh.
Speaker 1: And meanwhile, Trump, you know from the from the Washington perspective,
Speaker 1: Trump ran promising to revitalize the coal industry and that
Speaker 1: is not been an easy thing to accomplish despite his
Speaker 1: best efforts. So what is causing the volume of coal retirements?
Speaker 1: I know that we definitely have a house of view,
Speaker 1: but from the US standpoint, we'll just start with the
Speaker 1: fact that these coal plants are ancient. I mean, we
Speaker 1: have plants that are some plantses are like over forty
Speaker 1: fifty sixty years old. The average age, I think is
Speaker 1: well over thirty years old. So you know, we have
Speaker 1: these are not efficiently operateding you know, projects in many ways,
Speaker 1: and so the economics aren't great. And then you combine
Speaker 1: that with the fact that we have super cheap gas
Speaker 1: in the US, I mean really in West Texas it's
Speaker 1: almost free um at this point. And then you have
Speaker 1: the fact that when renewables participate in the grid, they've
Speaker 1: been been into essentially zero cost uh. And so those
Speaker 1: factors basically are effectively driving coal out of the market.
Speaker 1: There are certainly some regulations on coal. We have the
Speaker 1: Regional Greenhouse Gas Initiative in the Northeastern states that puts frankly,
Speaker 1: a relatively small price on c O two emissions, and
Speaker 1: we have a carbon program out in the West coast
Speaker 1: similar relatively small price on carbon. But the main thing
Speaker 1: has just been the economics are not working for coal,
Speaker 1: and now on top of that, no one's going to
Speaker 1: finance coal. That's the last thing is that, you know,
Speaker 1: banks and everybody have generally pledged not to finance coal
Speaker 1: at all. There's been a pull back on restrictions. Could
Speaker 1: you outline what some of those have been. I know
Speaker 1: some have been coming from the e p A on
Speaker 1: various aspects of kind of generally environmental things, but which
Speaker 1: of those specifically address things like carbon emissions and greenhouse
Speaker 1: gases more widely? So it's worth just before I even
Speaker 1: go all the way down this road, I just say,
Speaker 1: wasn't noting that I don't think this really even matters
Speaker 1: that much. But the reality of it is is that
Speaker 1: the Trump administration came in and immediately sought to undo
Speaker 1: what the Obama administration had done, which was a regulation
Speaker 1: that was sort of informally known as the Clean Power Plan,
Speaker 1: and the Clean Power Plan essentially set a goal of
Speaker 1: reducing CEO two emissions from the power sector. At at
Speaker 1: it requested or essentially demanded that states formulate plans to
Speaker 1: do this individually. If they didn't comply, the federal government
Speaker 1: was going to do it for them. Frankly, we at
Speaker 1: ben F and the U S were never that impressed
Speaker 1: by the ambition of that regulation to begin with, because
Speaker 1: we thought that the US power sector was going to
Speaker 1: decrbonize anyway. So then Trump came in and made a
Speaker 1: huge deal, Oh, you were getting rid of this policy.
Speaker 1: We're putting the brakes on it, and they've done that.
Speaker 1: But the reality of it is, at least an RV
Speaker 1: is it's not that big a deal because the policy
Speaker 1: itself was not what was going to be driving the
Speaker 1: market anyway. So they did put the brakes on that regulation.
Speaker 1: They are they we rewriting it um. But you know,
Speaker 1: reality marches on and basically, coal plants have continued to
Speaker 1: retire in the US, the economics continue to not make sense.
Speaker 1: Gas continues to be super cheap, renewables are getting more
Speaker 1: and more mandated, and so generally speaking, the trend is
Speaker 1: not you know been you know that you know hasn't
Speaker 1: changed very much at all. So there's the real power
Speaker 1: in the US lie with the states. It's a big
Speaker 1: part of the story. And in fact, you know, one
Speaker 1: of the things that people don't talk that much about
Speaker 1: in terms of Trump and energy is is certainly a
Speaker 1: focus on his sort of efforts to to deregulate and
Speaker 1: is very outspoken, let's just say, unconventional views about climate
Speaker 1: change um. But the reality of it is that in
Speaker 1: two thousand and eighteen there was such a backlash against
Speaker 1: Trump at the state level with Democrats a you know,
Speaker 1: first they won back you know, the House of Representatives
Speaker 1: at the federal level, but back the state level, they
Speaker 1: want to think, well over three hundred state legislative seats.
Speaker 1: They took control of an additional six state legislative chambers.
Speaker 1: And what that's meant is that a very productive twenty
Speaker 1: nineteen in terms of policies supporting clean energy. I think
Speaker 1: we have about half a dozen new states that now
Speaker 1: are aiming for renewable energy and mandating it UM. States
Speaker 1: like Colorado, Nevada, and New Mexico others that are all
Speaker 1: aiming that. Maine has passed something very recently as well.
Speaker 1: So the backlash that's taken place at the state level
Speaker 1: has been pretty strong. Um. Now, granted, not all states.
Speaker 1: You know, Oklahoma, you know, Kansas, you know, they're not
Speaker 1: you know, and by the way, those are those states
Speaker 1: are very strong for for huge states for renewables, but
Speaker 1: not because they're like necessary because they're mandating in any
Speaker 1: kind of huge way. Um. But the reality is that
Speaker 1: the gap between what the federal government's trying to do
Speaker 1: and what some states are trying to do is getting
Speaker 1: wider and wider. But in the US, states do wield
Speaker 1: a lot of power over it. They can mandate certain
Speaker 1: amounts of renewables come online, they can sign onto carbon
Speaker 1: duction goals, all kinds of things. Is it still needed
Speaker 1: to mandate these things to come online? Or is it
Speaker 1: just kind of happened? Well, I think there's certainly some
Speaker 1: particularly maybe some not quite with an environmental community, but
Speaker 1: some who Yeah, I would say some environmental community look
Speaker 1: at the power sector and are kind of starting to
Speaker 1: They won't say this out loud, but they're sort of saying, okay,
Speaker 1: power sector, check the box. Like okay, decarbonizing coals kind
Speaker 1: of on its way out. We want to make sure
Speaker 1: we get rid of that last Eventually, what will be
Speaker 1: ten of coal that will be pretty hard to take offline.
Speaker 1: So there's definitely still a focus on that, and I
Speaker 1: think some of the environmental community are also starting to
Speaker 1: point the finger up gas and not wanting to build
Speaker 1: more gas. At that point. It's a bridge fuel, right, Well,
Speaker 1: that's me. That's interesting. So well, I mean, under the
Speaker 1: Obama administration, I think, in my opinion, these gas became
Speaker 1: sort of viewed as, yeah, a big part of the solution,
Speaker 1: and I think a lot of people now are at
Speaker 1: least again on the environmental side, are starting to rethink
Speaker 1: whether they want to be supportive of that and the
Speaker 1: new sort of pivot. It's not clearly been stated, but
Speaker 1: it's just like, Okay, we've built a lot of gas.
Speaker 1: It's helped bring a lot of coal offline. And again
Speaker 1: this is the environmental community perspective, but let's not build
Speaker 1: any more gas because now we want to actually, you know,
Speaker 1: the bridge is enough bridging. Let's let's you know, renewables
Speaker 1: are cheap enough, we can do more of this. And
Speaker 1: by the way, renewables plus batteries are cheap enough that
Speaker 1: they can actually compete with gas, and so I think
Speaker 1: that's actually a fair argument for them to be making.
Speaker 1: But back to the original questions sort of, you know,
Speaker 1: on the power sector, that then isn't raised some questions.
Speaker 1: If we say, and I'm not saying entirely agree, but
Speaker 1: if we say problem solved, power sector decarbonizing, let's move
Speaker 1: on to other stuff, that does bring more of the
Speaker 1: focus back onto transportation. Because transportation is now the largest
Speaker 1: contributor to CEO two emissions in the United States, and
Speaker 1: we do like to drive big cars, and can we
Speaker 1: do more? I think that's a fair question. I mean,
Speaker 1: what do you think can be done in the transportation Well,
Speaker 1: I mean we're certainly seeing a lot of a rollout
Speaker 1: of these new electric vehicle models, and I think that
Speaker 1: are making a dent. Not really understand trucks, right, I
Speaker 1: mean not in a big way. Well on the trucking side, Um,
Speaker 1: you know, Tesla does have its own you know, the
Speaker 1: team wheeler that they they're gonna say they're gonna roll out. Yeah.
Speaker 1: Well there's Rivian Is saying that they're going to make
Speaker 1: an electric you know, pickup truck. I I'm I'm dubious
Speaker 1: that we'll see that mass adoption of that sort of
Speaker 1: any time, you know, really soon. Um, you know, if
Speaker 1: you're asking me what my prescription is for decarbonizing the
Speaker 1: transportation sector, I would say the you know, there are
Speaker 1: new efforts, certainly to support electric vehicles. U. Senator Chuck Schumer,
Speaker 1: the minority leader in the Senate, just this morning, has
Speaker 1: a piece in the New York Times about his effort
Speaker 1: to support e V rollout and um, tying it to
Speaker 1: manufacturing into jobs, into batteries and all that kind of stuff,
Speaker 1: which I think is I think can can garner support
Speaker 1: from across multiple parties, both you know, the automakers, the unions,
Speaker 1: and you know and others environmentalists as well. UM. But
Speaker 1: at the basic question of like Americans liking to to
Speaker 1: drive cars they like to drive, I would say this
Speaker 1: I have some more of a kind of qualitative answer,
Speaker 1: which is, like I having driven an electric vehicle for
Speaker 1: six years now, I would make the contention that we
Speaker 1: do all the analysis of NF all the time about
Speaker 1: the point where the economic crossover point comes and you
Speaker 1: get the total cost of ownership, blah blah blah, all
Speaker 1: that kind of stuff that makes sense. Evs are better products.
Speaker 1: They're actually better in terms of they don't break down
Speaker 1: as much much less, they're quieter, the acceleration is awesome,
Speaker 1: so they're super fun to drive, and so I think
Speaker 1: there's sort of an intangible element to this where the
Speaker 1: more people get conditioned to actually trying an evy, the
Speaker 1: more they'll like them. I think the range anxiety issue
Speaker 1: is one that people just completely over magnify in the head.
Speaker 1: What's that you have it? I don't, but I have
Speaker 1: people in my family who do have, so I think
Speaker 1: you can get over that. I think the other thing is,
Speaker 1: I guess my point that is trying to make earlier
Speaker 1: is that I think if people would look practically at
Speaker 1: how they actually use their cars. We have a lot
Speaker 1: of families with two cars in the United States, many many,
Speaker 1: which I know is a foreign concept largely here in
Speaker 1: the UK and a lot of places in Europe, but
Speaker 1: I don't know, it may not even be maybe something
Speaker 1: under a majority, but a very large percentage of American
Speaker 1: drivers have two cars. If they would stop and just think, Okay,
Speaker 1: how do I use these two cars? I think they
Speaker 1: would recognize that they could easily have one car that
Speaker 1: literally could have a range of less than a hundred
Speaker 1: miles if they were, you know, if they would just
Speaker 1: think about it, a little bit, but a hundred fifty
Speaker 1: two miles definitely to fifty plus absolutely is fine. And
Speaker 1: so I guess the point is there's a car in
Speaker 1: many people's garage that's ready to be a TV already,
Speaker 1: and they just don't they don't think about it. But
Speaker 1: if they go for a test drive and they think
Speaker 1: a little bit about it, they'll be like, wow, ay,
Speaker 1: I'll save money if I get this car ultimately because
Speaker 1: I won't be paying for gasoline. B I won't have
Speaker 1: to go to a gas station. I'll charge it at
Speaker 1: home for the most part, um, you know, and and
Speaker 1: see it'll be fun to drive. So I think people
Speaker 1: will do that. I think that is what Transport Team
Speaker 1: is actually seen that in these two car household where
Speaker 1: you are seeing e V adoption, you're seeing it as
Speaker 1: a second vehicle because that range anxiety does continue to exist,
Speaker 1: and that switching over to two cars isn't necessarily happening, um,
Speaker 1: and it's not Just be clear, it's not crazy, right, Like,
Speaker 1: you know, I gotta go see you know my folks
Speaker 1: up in Boston. It's an eight hour drive from DC
Speaker 1: to Boston or whatever it is. Yeah, I need to
Speaker 1: I don't want to. I don't want to be like
Speaker 1: stuck on a turnpike somewhere waiting for some guy, you know,
Speaker 1: finished chargings test slot. So what's in your garage, what's
Speaker 1: what's your what's your demographic on that one you got?
Speaker 1: But one of each? We we sort of we did
Speaker 1: for six years. We had a Leaf UM and we
Speaker 1: had a Honda CRV UM and the Honda CRV was
Speaker 1: the long haul vehicle and the Leaf of the short up.
Speaker 1: We have further complications because we have a kid who's
Speaker 1: going off to college now and will soon be a
Speaker 1: one car family. So our compromises. We have a plug
Speaker 1: in hybrid electric vehicle, which is a Volvo. So basically
Speaker 1: my wife commutescent electric, but then on the weekends, if
Speaker 1: we want to go much longer distance, that car can
Speaker 1: go much further than that. Let your hair down. It's
Speaker 1: a sweet Vehicle's let's talk happy place. So let's let's
Speaker 1: talk a little bit about how you're charging that vehicle
Speaker 1: and what's actually feeding into the grid. Now, I have
Speaker 1: a specific question, which I know you're a little bit
Speaker 1: passionate about. It has to do with wind. So you
Speaker 1: mentioned earlier on in this episode that natural gas wind, solar,
Speaker 1: you know, maybe having a bit momentum in the US,
Speaker 1: and I'm thinking specifically wind. When you say wind in
Speaker 1: the US, you mean on shore wind, but there is
Speaker 1: offshore wind potential. Thus far, nothing installed correct across all
Speaker 1: of the United State. Yes, we have I think five.
Speaker 1: It's okay that run around that to nothing. I think
Speaker 1: that's fair. Okay. So there have been projects that have
Speaker 1: gotten close and not worked out. My my in laws
Speaker 1: live out Cape Cod, so I'm I'm somewhat familiar with
Speaker 1: the Cape Wind projects that did not happen. But now
Speaker 1: there is this Vineyard Wind series of projects, and there
Speaker 1: is some regulatory elements that are actually quite pertinent right
Speaker 1: now at this point kind of at the end of
Speaker 1: twenty nineteen, which will impact the success or maybe lack thereof,
Speaker 1: of this project. Can you talk about that a little bit? Yeah, So,
Speaker 1: I mean that's well, first, just thanks for bringing up
Speaker 1: Cape Wind, because way back when I used to be
Speaker 1: a reporter writing about that project seventeen years ago now
Speaker 1: out on Cape Cod and and at the time that
Speaker 1: project was they eventually did to build the project for
Speaker 1: about two hundred dollars a mega one hour Vineyard Wind,
Speaker 1: which is sort of the it's not even fair to
Speaker 1: call it successor about the newer, you know, much newer project.
Speaker 1: They're looking to build that project about twenty miles south
Speaker 1: of Martha's Vineyard in a tucket, so out of basically
Speaker 1: out of eyesight for most people. UM, and they are
Speaker 1: looking to their pp A that they offered was I
Speaker 1: think sixty five actually, I mean about a third of
Speaker 1: the price, really cheap by comparison, UM and UM as
Speaker 1: you know, as luck would have it. On Tuesday, I
Speaker 1: was with our colleague Rachel Schiffman at the American Wind
Speaker 1: Energy Association's Offshore Wind Conference, which is held in Boston,
Speaker 1: which is actually really big to do. They were about
Speaker 1: people there and talking about know what they want to
Speaker 1: talk about was, you know, the potential for you know,
Speaker 1: they're talking about twenty six gigats. We're saying probably like
Speaker 1: fifteen the seventeen gig wats, but like real, real built
Speaker 1: by real build potentially in the US. And that's our view, UM.
Speaker 1: But it's all actually keying right now on Vineyard Wind,
Speaker 1: which is one project which is co owned by Copenhabien
Speaker 1: Investment Partners and Infrastructure Partners and one other and UM
Speaker 1: that project looked like it was in great shape. Uh,
Speaker 1: And they did cheap and they won contracts, and they
Speaker 1: got their environmental impact statement work done and they thought
Speaker 1: they were pretty much done. And then all of a sudden, UM,
Speaker 1: the agency that regulates ocean energy activity, said wait, wait, wait, wait,
Speaker 1: hold on, we want to do an extra review on this.
Speaker 1: And that came last summer. And now we're in a
Speaker 1: kind of a weird place because basically, this entire industry
Speaker 1: is just like ready to go prime to hire people,
Speaker 1: build ports, like do stuff and and and everybody was there.
Speaker 1: You know, we got the guys who make you know,
Speaker 1: the basis and the monitoring devices and everything like that,
Speaker 1: and um, and now everyone's waiting. And that is a
Speaker 1: decision you know, that is now effectively in the hands
Speaker 1: of the Trump administration. Now. The Bureau of Ocean Energy Management,
Speaker 1: which which oversees this, is run by someone who's actually
Speaker 1: a career person. He's not a you know, he's not
Speaker 1: someone you would call Trump guy. UM. And you know,
Speaker 1: I think he gave some pretty rational reasons for why
Speaker 1: he wants to hold the project up. But I think
Speaker 1: if there's not some action by next March, which was
Speaker 1: kind of the end of the period which they sort
Speaker 1: of regulatory period for reviewing this, I think everybody in
Speaker 1: the industry is gonna get pretty antsy and start to
Speaker 1: become very suspicious about what the delay has been here.
Speaker 1: But it sounds like tomorrow it is pretty it's pretty
Speaker 1: soon and and um, you know, just to complicate things
Speaker 1: without getting to too much detail, we have tax credits
Speaker 1: that are critically important to the economics of projects, and
Speaker 1: already this delay is going to mean that that project
Speaker 1: gets less tax credit support than they were expecting, and
Speaker 1: it makes the economics much more challenging than they were So. Um, anyways,
Speaker 1: a fascinating couple of days to hear because, like I said,
Speaker 1: the industry is really primed and ready to go. And
Speaker 1: by the industry, I'm mostly talking about like companies from
Speaker 1: over here, um, you know, like or Stead. Um, well,
Speaker 1: there is it is a global market, right and we
Speaker 1: we are certainly expecting a lot of build elsewhere in
Speaker 1: Asia and other places. Yeah, but it's on the other hand,
Speaker 1: like you know, I haven't grown up in Boston and
Speaker 1: being from New England, like there's a lot of people
Speaker 1: who'd like to work in this industry. New Bedford southern
Speaker 1: New England has been hurting at aonomically big time for
Speaker 1: a long time, and so there's a real potentially are
Speaker 1: and I think would be enormously disappointing if this doesn't
Speaker 1: come through. Is the energry picking winners in terms of technology?
Speaker 1: I mean they're pushing for coal but kind of rolling
Speaker 1: it back on offshore. When does that sound right or no?
Speaker 1: Are we talking about the means? The administration so you
Speaker 1: know they've wanted to UM and there have been various
Speaker 1: discussions and regulatory efforts to try to be supportive of
Speaker 1: coal by making the argument that you know, that represents
Speaker 1: some fundamentally critical part of energy security in the United States.
Speaker 1: But without going into all the sort of technical details
Speaker 1: and things like that, it's it's basically amounted to pretty
Speaker 1: much nothing so far. UM. There is a there is
Speaker 1: some studying going on at the Federal Energy Regulatory Commission
Speaker 1: about about these questions, but it's all very tied into
Speaker 1: a lot of different things like the rights of states
Speaker 1: to do how what they want to do, UM, the
Speaker 1: concept of free markets and how those are supposed to operate. UM.
Speaker 1: There are a lot of complications associated with trying to
Speaker 1: prop up one technology, and I think that frankly, people
Speaker 1: within the administration, you know, those who are smart and
Speaker 1: those who know the energy industry know that trying to
Speaker 1: keep a fifty five year old coal plant online, you know,
Speaker 1: it's hard to do and uh and may not be realistic.
Speaker 1: I remember the one that you and I toured in
Speaker 1: Alexandria is now luxury apartments, isn't it. No, it's not,
Speaker 1: but I wish I wish it was something, because it's
Speaker 1: an amazing facility. And I mean joking aside, Like we
Speaker 1: we took a tour and when it was that maybe
Speaker 1: over ten years ago, and you walk into these plants
Speaker 1: and you feel like you I mean even then, which
Speaker 1: was whenever that was felt like we were walking to
Speaker 1: a museum and it was a place was operating, right,
Speaker 1: I mean, the giant General Electric turbines written out in
Speaker 1: the old fashioned kind of script across them and everything.
Speaker 1: And yeah, there was a digital control room with guys
Speaker 1: but looking at a bunch of computers. But realistically the
Speaker 1: place felt like you were, I mean, had stepped way
Speaker 1: back in time. And actually I would love it if
Speaker 1: this is the it used to be the gen On plant.
Speaker 1: It's it's located right across the river from the capital. Um,
Speaker 1: it would be great if they did do something with it.
Speaker 1: I actually think they should turn it into a museum
Speaker 1: because I mean, and I mean this honestly, like coal
Speaker 1: contributed an enormous amount to the US growth in society,
Speaker 1: and we owe an incredible, you know, debt of gratitude
Speaker 1: to the folks who dug coal out of the ground,
Speaker 1: who ran the plants, who did all of these things,
Speaker 1: and we should pay homage to those people and everything
Speaker 1: that it stands for. It's it's no joke. It's certainly
Speaker 1: time to move on. But um, but you know, I
Speaker 1: think it's it's something to be practical about it. And
Speaker 1: I think as a sort of as as we kind
Speaker 1: of blithely walk by, Okay, Cole has you know, decreased
Speaker 1: from half of power to power or whatever it's going
Speaker 1: to be this year, it's worth remembering that, you know,
Speaker 1: West Virginia is really hurting and then top and on
Speaker 1: top of um, you know the demise of coal, they're
Speaker 1: hurting because of opioids. And it's so you know, these
Speaker 1: are these are real people who who who are affected
Speaker 1: by this. So so there are definitely talk there's plenty
Speaker 1: of talk in Washington workforce efforts to try to retrain
Speaker 1: people and stuff. It's hard to see how that works, um,
Speaker 1: but it's worth remembering that they're actually human beings involved
Speaker 1: in all this. Now, the natural gas industry is booming
Speaker 1: in the US, and for those who are not part
Speaker 1: of the energy industry, will first of all, congratulations for
Speaker 1: making it this far into the podcast. But if you're
Speaker 1: still here, you know, you will know that natural gas
Speaker 1: has not always been a big part of the US
Speaker 1: in terms of first of all energy, secondly exports. What
Speaker 1: does the regulatory environment look like for natural gas that
Speaker 1: is making it to have such a heyday or is
Speaker 1: it completely agnostic of that? Well, it's interesting. I mean,
Speaker 1: if you would hear the Trump administration talk a little bit,
Speaker 1: they would say, oh, whether that the Obama administration to
Speaker 1: somehow like constrained the production of gas, which is ridiculous
Speaker 1: because the amount of gas that's being produced under Obama
Speaker 1: and now under Trump has been just rising spectacularly. The
Speaker 1: US has been the number one producer of natural gas
Speaker 1: for about ten years now and now the number one
Speaker 1: producer of oil in the world as well. So to say, yes,
Speaker 1: so to say that the US, to say that the
Speaker 1: US is you know that somehow regulation has been strangling
Speaker 1: the industry, and and and and on the flip flight
Speaker 1: to say that deregulation will unleash a great deal more
Speaker 1: investment is hard for me to see because there's so
Speaker 1: much activity that's already taken place already and so much
Speaker 1: growth that's gone on. So you know, um, you know
Speaker 1: Secretary of Energy Perry, who's who's leaving now. But he
Speaker 1: coined the term molecules of freedom, and um, that's that's
Speaker 1: what he claims that we are exporting to the rest
Speaker 1: of the world. And I think that term is certainly
Speaker 1: it's a little let's just say, a little hyperbolic. But
Speaker 1: on the other hand, I mean, I do think if
Speaker 1: we can be the one who exports um to places
Speaker 1: to offset you know, supplies from Russia, that is a
Speaker 1: good thing, right, let's be I mean, at least in
Speaker 1: my opinion. I mean, I think we want to be
Speaker 1: a counterbalance to some of the other actors in the
Speaker 1: world who are who are providers of gas. So um,
Speaker 1: the US has the potentially use its its position and
Speaker 1: gas geopolitically. It also has the potential to build more
Speaker 1: of an interest industry in terms of l n G
Speaker 1: and exports, and the administration has generally been very supportive
Speaker 1: of that. I think both administrations have been the Obama
Speaker 1: administration as well, so I think this has been sort
Speaker 1: of consistent between Democrats and Republicans. If you're looking ahead,
Speaker 1: what do you see as having the biggest impact in
Speaker 1: the U S energy sector in the next five years? Um?
Speaker 1: In terms of what will happen over the next five years,
Speaker 1: I mean, it's hard for me to see the general
Speaker 1: trends that we've seen changing. I think the I think
Speaker 1: the main new thing is batteries plus renewables UM natural
Speaker 1: gas sort of. I would argue, you know, truly, on
Speaker 1: the on the costs had been cheaper than renewables in
Speaker 1: a lot of places, but if you factor in and
Speaker 1: also more effective at meeting demand more on around the
Speaker 1: clock basis very importantly. But if you factor in the
Speaker 1: idea of including a battery UM and how cheap some
Speaker 1: of the bids that we've seen around p V storage,
Speaker 1: particularly in the Southwest, why kind of counts a little less.
Speaker 1: But elsewhere, UM, I think that's something that's really worth
Speaker 1: keeping an eye on and we've seen pronouncements from folks
Speaker 1: like UM, the CEO of next Era, saying that he's
Speaker 1: more committed on, you know, on renewables plus storage, and
Speaker 1: so I think, you know, that's an area world starts.
Speaker 1: And we've seen bids in interesting places like Indiana and elsewhere,
Speaker 1: which suggests that this is a technology that's going to
Speaker 1: really kind of come along. So I think that's one.
Speaker 1: And by the way, on top of that, tying it
Speaker 1: back to policy, there is a move UM already. If
Speaker 1: you have a battery and you hook it up to
Speaker 1: your renewable energy system, that battery is essentially as long
Speaker 1: as it's not bigger than that system, UM can qualify
Speaker 1: for the Investment tax credit, meaning essentially get a thirty
Speaker 1: discount on the total cost of the battery. UM that's
Speaker 1: sort of been kind of informally blessed by the Internal
Speaker 1: Revenue Service. There is now an effort in Congress to
Speaker 1: make sure that that can sort of become more codified
Speaker 1: lo younger term, and even an effort to make sure
Speaker 1: that if you just build the battery and don't have
Speaker 1: attached to renewable energy system, it can qualify for the
Speaker 1: tax credit on its own as well, so there's a
Speaker 1: lot going on. We haven't even talked about tax credits,
Speaker 1: which are boring, I know, but are critically important to
Speaker 1: the industry, and there's an effort, you know to try
Speaker 1: and extend those. That's underwear in Congressman. They always seem
Speaker 1: to be under threat of being cut off. Is that
Speaker 1: where they sit now, Well they got it, they got
Speaker 1: an extension in and that was the last time, like
Speaker 1: there was a real battle about extension. So so it's
Speaker 1: not been quite yesterday that we've had that. UM. But
Speaker 1: every time that they have cut off, at least on
Speaker 1: the wind industry, we've seen just this collapse of activity. Yeah,
Speaker 1: every time. It happens. Every time it happens, and so
Speaker 1: we are sort of looking at another cliff kind of coming,
Speaker 1: but not quite the same cliff. I don't know. Maybe
Speaker 1: it's a dune, I don't know what you want to
Speaker 1: call it, which is like, you know, we'll see as
Speaker 1: the tax credits roll off, probably you know, a decline
Speaker 1: and activity, particularly in the wind sector. UM. But the
Speaker 1: reason why it's more of a in then the cliff
Speaker 1: is because the way Congress wrote it is that the
Speaker 1: tax credit essentially phases down it doesn't just like boom
Speaker 1: pop off, so that that helps him, makes it a
Speaker 1: little more gradual. That said, the wind industry would really
Speaker 1: like the tax credit extended, the solar industry would like
Speaker 1: it extended. I think they were not hopeful they had
Speaker 1: any chance of that happening. And then the Democrats won
Speaker 1: the House of Representatives in two thousand eighteen, and now
Speaker 1: one thinks, okay, well maybe we got a shot. But
Speaker 1: now we have this little impeachment thing going on, and
Speaker 1: so whether or not anything happens, frankly on anything else
Speaker 1: in Washington is a real open question. We haven't even
Speaker 1: you know, we're now operating in a new fiscal year
Speaker 1: in in the United States that started October one. We
Speaker 1: don't have a budget for this year. We're still operating
Speaker 1: over last year's budget, and you know, we're looking at
Speaker 1: a potential government shut down at the end of November.
Speaker 1: So you know, kind of like literally to keep the
Speaker 1: lights on, stuff needs to get done first before and
Speaker 1: then of course of the impeachment thing. And then I
Speaker 1: think there's a question of whether or not a tax
Speaker 1: it's gonna get addressed sometime before the end of the year.
Speaker 1: You know, the usual craziness and ethan. It has been
Speaker 1: a long time since I have lived in the US,
Speaker 1: or Washington, d C. For that matter, So thank you
Speaker 1: so much for joining us today and letting us know
Speaker 1: what is happening in the US. We look forward to
Speaker 1: having you back on the show sometime soon. Thanks Going Nationals.
Speaker 1: Bloomberguin e F is a service provided by Bloomberg Finance
Speaker 1: LP and its affiliates. This recording does not constitute, nor
Speaker 1: it should it be construed, as investment advice, investment recommendations,
Speaker 1: or a recommendation as to an investment or other strategy.
Speaker 1: Bloombergun ea F should not be considered as information sufficient
Speaker 1: upon which to base an investment decision. Neither Bloomberg Finance
Speaker 1: LP nor any of its affiliates makes any representation or
Speaker 1: warranty as to the accuracy or completeness of the information
Speaker 1: contained in this recording, and any liability as a result
Speaker 1: of this recording is expressly disclaimed. Ye haven't even talking
Speaker 1: about baseball yet.