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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is not the

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Speaker 1: death of the US renewable energy industry in the United States,

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Speaker 1: but it is a major setback.

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Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg.

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Speaker 2: Welcome to Trumponomics, the podcast that looks at the economic

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Speaker 2: world of Donald Trump. Now he's already shaped the global economy,

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Speaker 2: and what on earth is going to happen next? This

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Speaker 2: week we're talking about the big Beautiful assault on renewable energy.

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Speaker 2: Will the Republican megabill pass last week bring on a

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Speaker 2: new American energy crisis? What could be the impact on

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Speaker 2: electricity bills, the broader economy, and America's leadership in the

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Speaker 2: race for artificial intelligence. We're recording this on Tuesday, the

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Speaker 2: eighth of July. And of all the elements of the

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Speaker 2: one Big Beautiful Bill, as Donald Trump called it, that

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Speaker 2: he signed going into the July fourth holiday, one I

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Speaker 2: find particularly hard to get my head round is the

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Speaker 2: decision to get rid of tax credits for clean energy.

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Speaker 2: As a result of that, wind and solar projects will

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Speaker 2: cost more and more likely there will be a lot

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Speaker 2: fewer built. In fact, in an analysis this week, a

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Speaker 2: climate policy think tank called Energy Innovation forecast that the

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Speaker 2: bill would put an end to three hundred gigawatts of

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Speaker 2: wind and solar projects that would have otherwise come online

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Speaker 2: in the next fifteen years. That's the equivalent of about

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Speaker 2: three hundred nuclear reactors. Now, obviously that set back the

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Speaker 2: fight against climate change and the decarbonization of the US economy.

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Speaker 2: And that may not be much of a worry for

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Speaker 2: the supporters of the big bill, but there could be

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Speaker 2: more concern about another very likely consequence, higher electricity prices.

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Speaker 2: That matters for voters facing rising utility bills, but it

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Speaker 2: also matters for tech firms chasing the next breakthroughs in AI.

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Speaker 2: The country that reigns supreme in AI will rule the world.

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Speaker 2: Everyone seems to think that these days, including Donald Trump.

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Speaker 2: In fact, you might remember on the day after his

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Speaker 2: inauguration he announced the creation of Stargate, a project to

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Speaker 2: expand AI infrastructure in the US.

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Speaker 3: But to announce the largest AI infrastructure project by far

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Speaker 3: in history. And it's all taking place right here in America.

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Speaker 3: As you know, there's great competition for AI.

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Speaker 2: And projects like Stargate need electricity, lots of it, And

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Speaker 2: in fact, that's part of the reason electricity demand in

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Speaker 2: the US is rising faster now than it has at

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Speaker 2: anytime in the last twenty years. The tax credits in

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Speaker 2: the Inflation Reduction Act on the President Biden helped the

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Speaker 2: US keep up with that rising demand in theory by

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Speaker 2: making clean power sources cheaper. Investments in wind, solar, and

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Speaker 2: battery storage had spiked in the years after the IRA

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Speaker 2: was passed, But now the Big Bill has changed all

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Speaker 2: that and a lot of people including me, scratching their

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Speaker 2: heads wondering what the plan is now. And this week

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Speaker 2: I'm delighted to say I'm in the Washington Studio with

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Speaker 2: two guests who have a good perspective on this topic

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Speaker 2: and can help me think through the consequences for the

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Speaker 2: US economy. First up, Ethan Zindler, the head of Country

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Speaker 2: and Policy Research at Bloomberg NEF. That's the part of

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Speaker 2: Bloomberg Research that's focused on the energy transition. And we

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Speaker 2: should say that before joining US, Ethan served as Climate

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Speaker 2: Counselor to the US Treasury Secretary of Janet Yellen from

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Speaker 2: July twenty twenty three to January twenty five, so he

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Speaker 2: was across a lot of policy efforts then, including helping

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Speaker 2: to write and implement the Inflation Reduction Act.

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Speaker 1: Welcome Ethan, thanks for having.

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Speaker 2: Me and also with us Emily Bernbaut, who's a Bloomberg

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Speaker 2: reporter here in DC who covers corporate lobbying and influence.

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Speaker 2: Thank you so much for being on Trumpenomics. Emily.

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Speaker 4: Thank you.

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Speaker 2: So people will have heard quite a lot about that bill,

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Speaker 2: but it's probably useful to just take stock of how

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Speaker 2: that turned the tables for the renewable industry. What are

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Speaker 2: the species measures that are going to be painful for

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Speaker 2: that part of the US energy industry.

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Speaker 4: There was a lot of last minute wrangling over the

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Speaker 4: details of what this bill will do to the clean

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Speaker 4: energy industry. The top line is that it's very bad.

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Speaker 4: It's not as bad as it could have been. What

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Speaker 4: ended up in the bill was pretty aggressive timelines for

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Speaker 4: phasing out tax credits. But elements of the bill would

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Speaker 4: encourage companies to begin construction over the next year, and

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Speaker 4: if they're able to do so, it's likelier that they'll

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Speaker 4: be able to get some of these important tax credits.

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Speaker 4: But overall, they're going to have to begin construction very quickly,

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Speaker 4: and these tax credits are going away on a more

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Speaker 4: aggressive timeline than had initially been anticipated.

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Speaker 2: Yeah, And that was what was interesting, because when it

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Speaker 2: went from the House to the Senate, there was some

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Speaker 2: expectation that the Senate would want to extend the time

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Speaker 2: frame a little bit. The investments that drawer have been announced,

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Speaker 2: give them a bit more time to get up and running.

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Speaker 2: But if anything, the bills seemed to get worse.

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Speaker 4: Yes, and at the last minute there was something that

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Speaker 4: would have dealt a huge blow to the industry, which

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Speaker 4: was this excise tax. There was basically panic in the

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Speaker 4: industry and among moderate Republicans who said this excise tax

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Speaker 4: would so dramatically increase costs for solar and wind projects,

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Speaker 4: it would effectively make it untenable for a lot of

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Speaker 4: these projects to move forward or begin construction. So right

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Speaker 4: before the Senate passed it, they removed the excise tax,

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Speaker 4: which is a huge relief, but they still are dealing

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Speaker 4: with pretty aggressive phase outs.

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Speaker 2: Ethan, you were saying just before we started that even

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Speaker 2: though parts of the renewables industry was kind of breathing

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Speaker 2: a sigh of relief or having at least dodged that

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Speaker 2: particular bullet, not having this extra tax that the administration

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Speaker 2: has already of vindicated that it's not done with the

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Speaker 2: renewable industry. Yet what happened earlier this week.

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Speaker 1: Yeah, things have kind of gone from bad to worse,

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Speaker 1: even within the last less than twenty four hours. Basically,

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Speaker 1: there's been some real questions about whether projects could qualify

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Speaker 1: so long as they were quote unquote under construction, and

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Speaker 1: the irs historically is to find under construction fairly liberally.

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Speaker 1: And yesterday the White House issue to executive order basically

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Speaker 1: saying that they are ordering the Treasury Department within the

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Speaker 1: next forty five days to rewrite that rule, and if

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Speaker 1: they do that in such a way, they can make

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Speaker 1: it very challenging for projects to qualify. It is not

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Speaker 1: even beyond the realm of the possible that they would

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Speaker 1: write something that is essentially retroactive and effectively make it

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Speaker 1: much more challenging for projects to actually be able to

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Speaker 1: qualify for the credit. So, from our perspective at Bloomberg

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Speaker 1: f we're trying to go back and sharpen our pencils

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Speaker 1: and try and think about how much stuff is going

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Speaker 1: to get built. But I think the one thing that's

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Speaker 1: pretty clear as of this morning is that many who

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Speaker 1: are in the wind and solar and storage industry are

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Speaker 1: probably scrambling to get as much stuff as they can

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Speaker 1: essentially under construction at this very moment, while they are

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Speaker 1: concurrently probably lobbying the Treasury Department about what this new

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Speaker 1: regulation is going to look like.

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Speaker 2: I'm going to come back to you on some of

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Speaker 2: the dynamics on the hill, But Ethan, let's just step back,

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Speaker 2: and I know that's what Bloomerginny f likes doing. They

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Speaker 2: tend to do the twenty five year horizons consider to

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Speaker 2: be quite short term. But if you do take that

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Speaker 2: kind of longer term, you know what has been happening

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Speaker 2: to energy demand and electricity demand within that in recent years?

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Speaker 2: And what was you know, until this bill, what was

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Speaker 2: that basic plan for meeting it?

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Speaker 1: Yeah, So the United States, like other wealthy developed countries,

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Speaker 1: has been able to grow its economy without growing demand

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Speaker 1: for electricity. Really for twenty years, essentially, we've had flat

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Speaker 1: demand overall, largely because of energy efficiency improvements and new

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Speaker 1: technologies and the desire to save costs. The last couple

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Speaker 1: of years that started to change, and we think that's

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Speaker 1: going to continue to change going forward. The number one

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Speaker 1: driver in the short run has been AI and the

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Speaker 1: demand from new data centers. We also think electric vehicles,

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Speaker 1: as you look further out, are going to start to

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Speaker 1: play a much bigger role as well. In the US,

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Speaker 1: we think we're going to see demand for electricity double

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Speaker 1: from about forty one hundred tarawad hours at the moment

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Speaker 1: up over six thousand by the time you get to

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Speaker 1: twenty fifty overall, and by twenty thirty five, we think

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Speaker 1: that about eight percent of capacity in the United States

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Speaker 1: is going to go specifically to powering data centers, which

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Speaker 1: is a really considerable portion overall. One other quick just

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Speaker 1: note in terms of trends, is that really over the

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Speaker 1: last ten years or fifteen years or so, the US

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Speaker 1: has really been rapidly decarbonizing our power generation sector. We

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Speaker 1: went from about half our power coming from coal to

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Speaker 1: well under twenty percent as the last year, could be

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Speaker 1: even under fifteen percent this year depending on conditions. And meanwhile,

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Speaker 1: renewables have grown from almost nothing to about twenty percent

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Speaker 1: of generation. Nuclear is about twenty percent, so we're about

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Speaker 1: forty percent zero carbon here, and the natural gas is

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Speaker 1: a huge part of the story, which is a lot

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Speaker 1: cleaner than coal overall. So the general trend has been

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Speaker 1: towards cleaner sources of energy going forward. And if you

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Speaker 1: look at what's gotten built in the last several years

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Speaker 1: and what would get built in the next several years

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Speaker 1: in terms of purely cost, it's renewables. The vast majority

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Speaker 1: of new stuff that's due to come online is renewables,

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Speaker 1: and so that is why it's so questionable that you

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Speaker 1: would go out of your way to essentially raise the

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Speaker 1: cost of those technologies, which is effectively what Congress is

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Speaker 1: now done.

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Speaker 2: Those of us who kind of looked on the outside

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Speaker 2: and seen the US go from being a net consumer

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Speaker 2: of energy or oil, I should say to an exporter,

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Speaker 2: have been very familiar with a rather different story, which

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Speaker 2: is America had this fracking revolution which was not environmentally friendly,

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Speaker 2: but did bring an enormous amount of gas online, which

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Speaker 2: has brought down the price of energy for US consumers.

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Speaker 2: So I guess the story that you might tell against

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Speaker 2: your story at least be sort of well, hang on

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Speaker 2: a minute, it's fracking that has made this a kind

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Speaker 2: of golden era for US energy prices, and the renewables

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Speaker 2: is not completely reliable and is more is a sort

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Speaker 2: of side show to that basic story.

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Speaker 1: So yeah, really good points. I mean, certainly, we have

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Speaker 1: the lowest price natural gas in the world in terms

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Speaker 1: of production, and that has allowed a lot of manufacturing

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Speaker 1: to be very competitive in the United States. I would

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Speaker 1: note though, that first of all, that renewables plus storage

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Speaker 1: gets you maybe not to twenty four hours of generation,

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Speaker 1: but can get you enough production of electricity into the

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Speaker 1: sort of key hours of the evening. And we're starting

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Speaker 1: to see solar plus storage be very cost competitive in

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Speaker 1: many markets around the world. Not all markets in the

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Speaker 1: United States, but a bunch of markets. But then just

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Speaker 1: purely speaking practically in the United States in terms of

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Speaker 1: what we're going to build over the next five years,

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Speaker 1: You're absolutely right that gas is cheap, and gas is

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Speaker 1: cost competitive in a number of markets in the United States.

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Speaker 1: The problem is you just cannot get your hands on

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Speaker 1: a combined cycle gas at the moment for a number

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Speaker 1: of years, anywhere from three to seven depending on who

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Speaker 1: you asked. So in terms of what our next mega

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Speaker 1: out of capacity is going to be, it basically has

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Speaker 1: to be renewables because there isn't really any other sources,

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Speaker 1: and if we have rising demand from AI, that means

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Speaker 1: it's going to probably come from renewables. And again, if

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Speaker 1: you take away essentially what has been a long standing

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Speaker 1: tax credit and subsidy to the clean energy industry that

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Speaker 1: is effectively socialized a discounted electricity production price in the

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Speaker 1: United States, you're just simply going to concentrate it on

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Speaker 1: certain markets. So the next place where you're going to

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Speaker 1: build wind or solar project, potentially you're going to have

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Speaker 1: to sign a higher price contract in order for the

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Speaker 1: developer to make the return that they need without the

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Speaker 1: tax credit.

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Speaker 2: But if they're the only short term viable source of

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Speaker 2: additional energy, then it surely must be cost effective to build.

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Speaker 1: I mean, here's the question, and I think we're going

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Speaker 1: to find this out over the next couple of years,

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Speaker 1: is what's the breaking point for consumers? So, yes, you

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Speaker 1: can pass on some form of higher electricity prices. But

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Speaker 1: if you're a developer of a large scale data center,

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Speaker 1: you're not necessarily entirely wedded to the United States. Just

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Speaker 1: because the most AI has been built not that far

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Speaker 1: from here, maybe thirty miles from here, just outside of Washington,

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Speaker 1: doesn't mean that every next AI data center has to

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Speaker 1: be here. To some large degree, AI is some the servers,

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Speaker 1: not all To be clear, there's different types of servers

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Speaker 1: and that's not my area of expertise, but some can

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Speaker 1: really be anywhere in the world, and so they will

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Speaker 1: go where the price of electricity is most affordable and reliable,

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Speaker 1: and there are other options. Brazil is about seventy eighty

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Speaker 1: percent hydropower, low cost. They've been trying very much to

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Speaker 1: market Brazil as an AI place. Gulf States have enormous

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Speaker 1: amounts of sun, very cheap solar. They don't put big

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Speaker 1: tariffs sun solar equipment like we do, can build batteries

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Speaker 1: to go along with it. They are certainly trying to

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Speaker 1: market themselves as hubs for AI as well. So no

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Speaker 1: foregone conclusion that the United States will be the one

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Speaker 1: and only place where we build all this new capacity.

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Speaker 2: But as far as you're concerned, the only way that

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Speaker 2: this energy that we were expecting to come online, or

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Speaker 2: electricity that we were expecting to come online in the

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Speaker 2: US to meet this demand will actually come online is

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Speaker 2: through higher prices.

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Speaker 1: I mean, it seems inevitable. And I think one of

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Speaker 1: the questions we're just trying to parse out, given the

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Speaker 1: incredible complexity of what Congress has just done, is how

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Speaker 1: many projects could still qualify for the tax credit if

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Speaker 1: they get under construction basically yesterday, and how many of

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Speaker 1: them will not And those that don't obviously are going

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Speaker 1: to have to figure out some way to get compensated

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Speaker 1: correctly so that they can earn the return that they want.

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Speaker 1: The best guess at the moment is that if you

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Speaker 1: get under construction sometime in this calendar year, you'll probably

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Speaker 1: be okay. But the White House just created an additional

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Speaker 1: uncertainty with this executive order.

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Speaker 2: One I saw is that the future clean energy products

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Speaker 2: that don't have these tax credits will cost fifty percent

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Speaker 2: more to get built. Do you think that's in the

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Speaker 2: right ball part?

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Speaker 1: That feels a little on the high side of me,

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Speaker 1: But we need to do the analysis ourselves. I think historically,

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Speaker 1: if you look around the world, the history of clean

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Speaker 1: energy is you have a number of countries that have

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Speaker 1: put in place very generous supports in the form of

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Speaker 1: feed in tariffs like we've seen in countries in Europe

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Speaker 1: and elsewhere, and when they disappear, it's terrible news for

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Speaker 1: the industry. But we also find that the industry is

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Speaker 1: incredibly innovative about finding ways to reduce costs the US

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Speaker 1: is really not a low cost market when it comes

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Speaker 1: to putting solar on people's views in particular, but also

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Speaker 1: large scale projects. So there's definitely some room for cost reduction,

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Speaker 1: I think for the industry overall. But there's no question

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Speaker 1: this is going to boost costs. In the case of

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Speaker 1: a typical solar project, the tax credit is thirty percent

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Speaker 1: of CAPECK. So a billion dollar project, three hundred million

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Speaker 1: right off the top was basically disappearing because of tax credits.

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Speaker 1: That has to be dealt with somehow.

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Speaker 2: And I've seen the Energy Innovation Thing Tank from what

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Speaker 2: you're saying, suggests that maybe it'd be a little bit

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Speaker 2: on the high side, but their estimate of the impact

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Speaker 2: on bills would be that the average energy bill by

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Speaker 2: twenty thirty five could be nearly five hundred dollars higher

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Speaker 2: in Michigan, similar maybe more in Maryland, and six or

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Speaker 2: seven hundred eight hundred dollars higher in Texas than it

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Speaker 2: would have been if the credits had remained.

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Speaker 1: Yeah, I can't, I won't. I guess I want to

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Speaker 1: dispute that we haven't done that analysis ourselves. I've seen

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Speaker 1: different numbers from other research firms as well. There's no question,

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Speaker 1: particularly in a market like Texas, which is really deregulated

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Speaker 1: and where pricing can get passed along directly to large

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Speaker 1: scale consumers, there's no question this is going to have

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Speaker 1: a real impact ultimately. I think the interesting question is

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Speaker 1: what about businesses. I mean, we talk a lot about

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Speaker 1: retail consumers, and eventually they are the ones who get hit,

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Speaker 1: but more immediately and often cases it's wholesale purchases of

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Speaker 1: electricity that feel the effects. And that is one of

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Speaker 1: the puzzling things why in this debate where the utility

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Speaker 1: is not more engaged in this, because ultimately they're the

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Speaker 1: ones who are going to get bigger bills that they're

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Speaker 1: going to have to pass along to their consumers. Or

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Speaker 1: where were the manufacturers who are going to have to

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Speaker 1: pay higher prices for electricity than they would if you're

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Speaker 1: in the say Ercot market or PJM. I'm puzzled as

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Speaker 1: to why there wasn't a more engage conversation around this,

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Speaker 1: And you're.

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Speaker 2: Really my mind, even because I was thinking about your title,

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Speaker 2: Emily and the fact that you are a reporter focusing

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Speaker 2: on corporate lobbying and influence. You know, people have focused

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Speaker 2: on the impact and the influence of the fossil fuel

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Speaker 2: lobby in driving part of this bill. And we know

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Speaker 2: that there's some parts of that industry that have been

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Speaker 2: big donors to Donald Trump. But there were awful lot

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Speaker 2: of people on the other side of the argument, including

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Speaker 2: as Ethan mentions, there's the utilities and sectors that would

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Speaker 2: really be hurt by this, not to mention the tech

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Speaker 2: firms who are lobbying to get more cheap electricity. So

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Speaker 2: why is it those voices just weren't heard in the

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Speaker 2: last few weeks.

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Speaker 4: Ultimately, the reason this bill goes so aggressively against clean

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Speaker 4: energy is because of House Speaker Mike Johnson's math issue,

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Speaker 4: which was that he could only stand to lose a

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Speaker 4: very small number of Republican votes, and so that made

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Speaker 4: the House Freedom Caucus, the group of hardline conservatives in

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Speaker 4: the House, that made them very powerful in this conversation,

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Speaker 4: and a lot of them, for the most part, really

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Speaker 4: leaned towards the oil and gas industry. So thinking about

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Speaker 4: Chip roy from Texas, he was one of the most

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Speaker 4: consistent voices saying we really need to phase out these

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Speaker 4: subsidies very quickly. He was in communication very closely with

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Speaker 4: a conservative activist named Alex Epstein who actually shaped a

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Speaker 4: lot of this debate behind the scenes, and basically Alex

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Speaker 4: Epstein's arguments are in favor of natural gas. He says

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Speaker 4: that solar and wind are unreliable sources of energy. You know,

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Speaker 4: I'll let you debunk some of what he has to say,

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Speaker 4: but essentially that the subsidies artificially lowered the cost of

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Speaker 4: electricity and we're creating lee And so there is a

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Speaker 4: lot of arguments behind the scenes against the clean energy

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Speaker 4: industry and ultimately I think oil and gas just really

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Speaker 4: won in this bill.

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Speaker 1: To be clear, they're subsidized too.

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Speaker 2: Yeah, say, I was going to say, there's a hell

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Speaker 2: of a lot of subsidy on that side, but somehow

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Speaker 2: they need subs tody, but the clean energy doesn't. I mean,

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Speaker 2: even Texas is a surprise, right. I Mean that was

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Speaker 2: one of the things that we said after Donald Trump

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Speaker 2: won the election, and there was obviously this question mark

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Speaker 2: about where would he go on And there was some

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Speaker 2: pushback initially on the idea that he would completely repeal

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Speaker 2: the IRA the Biden era tax credits, in part because

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Speaker 2: of the support from the tech industry, but also because

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Speaker 2: it was noticed that partly because it's easier to build

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Speaker 2: stuff in the red states, that there were a lot

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Speaker 2: of Republican states that had actually benefited enormously from the RA,

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Speaker 2: including Texas. I think most of its new electricity supply

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Speaker 2: had come from renewables in the last couple of years.

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Speaker 2: So it's interesting that the representat different Texas just doesn't

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Speaker 2: seem to factor that in.

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Speaker 4: Yeah, it just became such a political talking point, calling

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Speaker 4: the IRA the green new Scam, making it democrat led

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Speaker 4: project essentially that Republicans had to completely nix and create

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Speaker 4: their own path forward when it comes to energy, And

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Speaker 4: an interesting element of the bill is that it's a

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Speaker 4: lot less aggressive when it comes to nuclear energy, which

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Speaker 4: is an area that I know that tech companies have

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Speaker 4: been investing a lot into. Obviously, that's a lot slower

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Speaker 4: moving and it doesn't address the immediate energy needs of

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Speaker 4: data centers. But the nuclear energy industry came out with

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Speaker 4: far less battle scars than some other parts of the industry.

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Speaker 4: And that's a part of this conversation too, is sort

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Speaker 4: of like weighing things in favor of certain kinds of

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Speaker 4: energy over others.

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Speaker 2: That was again much conversation about the political fallout from

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Speaker 2: this bill. You know, over the last few weeks people

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Speaker 2: have wondered whether the Republicans are really kind of ready

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Speaker 2: for what happens in their constituencies when the impact of

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Speaker 2: Medicaid cuts and others come through. But you would think

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Speaker 2: if there's a short term big increase in energy prices

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Speaker 2: that hits people's utility bills, they're electricity bills, is there

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Speaker 2: not a fear on the hill the finger will be

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Speaker 2: pointed to this bill when it comes to that. I mean,

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Speaker 2: it's cost of living is such a big element of

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Speaker 2: the Trump pledge, the promise if you like to voters,

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Speaker 2: do they just think they'll be able to blame other stuff? Yeah?

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Speaker 4: I think part of the sleight of hand is that

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Speaker 4: tax cuts are coming in more immediately than some of

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Speaker 4: the spending cuts, So meaning in the more immediate term,

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Speaker 4: some people are going to see their taxes decrease, whereas

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Speaker 4: some of the potential added cost to electricity bills or

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Speaker 4: some of the loss of Medicaid coverage comes farther down

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Speaker 4: the line. So it is a lot about timelines as well.

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Speaker 4: They've written it in a way that at least Republicans

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Speaker 4: hope that people don't see the more negative effects until

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Speaker 4: after the midterms in twenty twenty eight.

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Speaker 1: If I could jump in, I think you're also maybe

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Speaker 1: ascribing a much higher level of sophistication to this conversation.

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Speaker 1: Then probably actually went on, I don't know that people

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Speaker 1: on the hill understand the economics of power generation at

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Speaker 1: the moment, and the fact that renewables are the most

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Speaker 1: cost competitive, and the fact that it's impossible to get

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Speaker 1: your hands on a natural turbine. These are things that

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Speaker 1: only nerds like me know, So I don't know that

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Speaker 1: stuff that they're kind of across.

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Speaker 2: Would their argument be, Yeah, it's hard under Biden to

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Speaker 2: get this stuff built, but we're going to lift all

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Speaker 2: of these stupid restrictions, and so that natural gas power

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Speaker 2: station could go up in a year.

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Speaker 1: So that just I mean, again, hard to not get

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Speaker 1: in the rabbit hole here. But if there's three or

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Speaker 1: four companies that make these we're talking large scale turbine

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Speaker 1: and so these are big things, specialized manufacturing that goes

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Speaker 1: into them. If you're one of the three or four

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Speaker 1: companies in the world that makes them, and you are

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Speaker 1: selling them at a very high price at the moment,

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Speaker 1: and you have a back order. I guess the question

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Speaker 1: is do you ramp up your manufacturing of those turbines?

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Speaker 1: And if you do, how long is it going to

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Speaker 1: take you to ramp that up? At least a couple

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Speaker 1: of years at the very very least, and then a

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Speaker 1: few more years at least before you can get some

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Speaker 1: more turbines out. And if you're one of those companies

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Speaker 1: and you're looking at the US situation, the political situation here,

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Speaker 1: I think you might very well ask yourself, well, is

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Speaker 1: this the new world we're living in? Or are we

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Speaker 1: going to see some flip back in two or three

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Speaker 1: years back to renewables and suddenly I've got more gas

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Speaker 1: turbine capacity, manufacturing capacity than I know what to do with.

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Speaker 1: I'd be very surprised if there's big investment. But keep

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Speaker 1: an eye on GE and some of the others to

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Speaker 1: see whether they make announcements around that.

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Speaker 2: And it is true when you say is that the

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Speaker 2: world we're living in? I mean it's pretty clear that

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Speaker 2: the world we're living in looks very different, looks more

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Speaker 2: like the IRA world. As you noted, there's lots of

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Speaker 2: countries that have got strong incentives in place for renewables,

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00:23:01,359 --> 00:23:06,679
Speaker 2: and we also see developing countries moving to electrify large

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00:23:06,720 --> 00:23:10,040
Speaker 2: parts of their grid because it is it's certainly cheaper

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Speaker 2: for them if they're reliant otherwise on imported oil and gas.

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Speaker 4: Yeah.

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Speaker 1: No, I think you raise a very good question. This

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00:23:15,680 --> 00:23:18,560
Speaker 1: is not the depth of the US renewable energy industry

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00:23:18,560 --> 00:23:21,040
Speaker 1: in the United States by any means, because of the

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00:23:21,080 --> 00:23:24,080
Speaker 1: advancements that we've seen, but it is a major setback,

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00:23:24,359 --> 00:23:26,919
Speaker 1: and most importantly maybe at the bottom line, as it

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Speaker 1: means our chances of coming anywhere close to reducing our

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Speaker 1: CO two missions in line with address and climate chains

453
00:23:33,080 --> 00:23:35,119
Speaker 1: are effectively over at the moment.

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Speaker 2: I guess there's one argument, which if it's so unstoppable,

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Speaker 2: we've had this period where we've ramped up production with

456
00:23:41,119 --> 00:23:44,800
Speaker 2: these massive credits, which were extremely expensive. They blew at

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00:23:44,880 --> 00:23:48,520
Speaker 2: least a trillion dollar hole in the deficit, and of

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00:23:48,520 --> 00:23:50,240
Speaker 2: course we can say there are other things that are

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Speaker 2: now going to blow a hole in the deficit over

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00:23:52,040 --> 00:23:54,639
Speaker 2: the coming years thanks to the last week's bill. But

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Speaker 2: there is an argument that says it ought to be

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Speaker 2: able to stand on its own two feet.

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Speaker 1: No, well, two things the clean energy credits did not,

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00:24:01,520 --> 00:24:03,520
Speaker 1: on their own blow a trillion dollar hole in the deficit.

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Speaker 1: They were projected potentially to have done so, but of

466
00:24:06,320 --> 00:24:08,600
Speaker 1: course now we're living in a different world where they

467
00:24:08,640 --> 00:24:11,080
Speaker 1: certainly are not going to cost as much as was projected.

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Speaker 1: And even that number I would take a little issue

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Speaker 1: with because it made certain assumptions about hydrogen and other

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00:24:16,200 --> 00:24:18,960
Speaker 1: things that haven't really come to pass. But you're right,

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00:24:18,960 --> 00:24:20,480
Speaker 1: they were living in a new world in which these

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Speaker 1: industry is going to have to compete without the benefit

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Speaker 1: of tax credits. Unfortunately, it's going to compete against, you know,

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Speaker 1: some existing sources of generation that have been subsidized for

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Speaker 1: a very long time. And of course the administration is

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00:24:32,040 --> 00:24:34,480
Speaker 1: also going to try and take steps whatever they can

477
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Speaker 1: to try and make existing coal fire generation more cost competitive,

478
00:24:38,280 --> 00:24:40,280
Speaker 1: although it's very unclear to me like what they can

479
00:24:40,359 --> 00:24:43,120
Speaker 1: actually do that changes the economics of coal.

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00:24:43,200 --> 00:24:45,080
Speaker 2: I was going to ask you that actually that's the

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00:24:45,119 --> 00:24:47,880
Speaker 2: thing that Donald Trump has held out. You know, yes,

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00:24:47,920 --> 00:24:51,359
Speaker 2: it's hard to build a new gas power station, but

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00:24:51,920 --> 00:24:55,199
Speaker 2: if you have a coal powered station that you were

484
00:24:55,240 --> 00:24:57,600
Speaker 2: about to close down, or you've maybe just closed down,

485
00:24:57,720 --> 00:24:59,280
Speaker 2: how hard is it just to turn that back on?

486
00:24:59,400 --> 00:25:01,159
Speaker 2: And how hard is it to get the mines up

487
00:25:01,200 --> 00:25:03,040
Speaker 2: and running again, which is what he's talked about.

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00:25:03,640 --> 00:25:06,720
Speaker 1: Hard, is the short answer. You can issue executive orders

489
00:25:06,720 --> 00:25:09,719
Speaker 1: to try and order certain plants to keep online, but

490
00:25:09,760 --> 00:25:12,760
Speaker 1: the reality is that coal is not economically competitive for

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00:25:12,800 --> 00:25:15,159
Speaker 1: the most part in the United States, particularly with gas,

492
00:25:15,160 --> 00:25:17,960
Speaker 1: but also with renewable So you can try and force

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00:25:18,119 --> 00:25:20,399
Speaker 1: operators to keep running plants, but no one. I'm not

494
00:25:20,440 --> 00:25:22,160
Speaker 1: a lawyer here, but I think it's tough to force

495
00:25:22,160 --> 00:25:24,760
Speaker 1: people to lose money on every megawat hour of electricity

496
00:25:24,800 --> 00:25:27,160
Speaker 1: that they produce because you're trying to make a point

497
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Speaker 1: about what you think the world should look like in

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00:25:29,680 --> 00:25:32,920
Speaker 1: terms of energy consumption that looks something like nineteen eighty seven.

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Speaker 2: It is extraordinary to me as someone who kind of

500
00:25:36,000 --> 00:25:39,240
Speaker 2: grew up with Margaret Thatcher's defining battle in the nineteen

501
00:25:39,320 --> 00:25:44,520
Speaker 2: eighties against the uneconomic coal producing mines in the UK,

502
00:25:44,840 --> 00:25:48,640
Speaker 2: and there was obviously enormous controversy ever trying to shut

503
00:25:48,640 --> 00:25:50,800
Speaker 2: them down. But to have a republic administration trying to

504
00:25:50,840 --> 00:25:54,399
Speaker 2: reopen a lot of uneconomic coal mines is an interesting site.

505
00:25:54,440 --> 00:25:56,119
Speaker 1: I mean, the question is just is there money to

506
00:25:56,160 --> 00:25:58,879
Speaker 1: do this right? Ultimately, if you want to mobilize private

507
00:25:58,920 --> 00:26:01,880
Speaker 1: capital to go out and that then that money has

508
00:26:01,920 --> 00:26:04,000
Speaker 1: to believe that this is the world that we're going

509
00:26:04,080 --> 00:26:05,720
Speaker 1: to live in for the next five or ten or

510
00:26:05,720 --> 00:26:09,359
Speaker 1: twenty years. And I think most investors look at this

511
00:26:09,480 --> 00:26:13,359
Speaker 1: and say, Okay, certainly, this is a certainly regressive period

512
00:26:13,400 --> 00:26:15,240
Speaker 1: that we're living through, but the end of the day,

513
00:26:15,280 --> 00:26:18,159
Speaker 1: climate change isn't going anywhere. It's only going to get worse.

514
00:26:18,520 --> 00:26:21,120
Speaker 1: And so if you believe there's an inevitability that eventually

515
00:26:21,160 --> 00:26:23,720
Speaker 1: policy makers, whether they deal with climate change in the

516
00:26:23,720 --> 00:26:26,160
Speaker 1: short run of the long run, they eventually deal with it.

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00:26:26,560 --> 00:26:28,840
Speaker 1: I think many people would find it very hard to

518
00:26:28,880 --> 00:26:31,000
Speaker 1: swallow the idea of making a ten or twenty year

519
00:26:31,080 --> 00:26:32,840
Speaker 1: investment in a new coal mine.

520
00:26:33,640 --> 00:26:36,440
Speaker 2: But Emily it seems like there'd be plenty of appetite

521
00:26:36,520 --> 00:26:37,360
Speaker 2: on the hill for that.

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00:26:38,520 --> 00:26:42,400
Speaker 4: Yes, I think there will be. I think this bill

523
00:26:42,560 --> 00:26:46,760
Speaker 4: got held up in the House for just a couple

524
00:26:46,800 --> 00:26:52,040
Speaker 4: of days after leaving the Senate because this group of

525
00:26:52,240 --> 00:26:57,760
Speaker 4: Republicans said, we want to go harder against clean energy,

526
00:26:58,280 --> 00:27:03,600
Speaker 4: we want more favorable for oil and gas, and they

527
00:27:03,800 --> 00:27:07,320
Speaker 4: spent hours and hours in the White House at the

528
00:27:07,359 --> 00:27:11,480
Speaker 4: eleventh hour trying to extract as many concessions from the

529
00:27:11,520 --> 00:27:14,960
Speaker 4: administration on this as they possibly could, and they think

530
00:27:15,040 --> 00:27:18,000
Speaker 4: that is bearing out that bore out yesterday in terms

531
00:27:18,040 --> 00:27:22,399
Speaker 4: of this executive order, and we're going to continue to

532
00:27:22,440 --> 00:27:26,160
Speaker 4: see the deals that were made, the agreements that they

533
00:27:26,240 --> 00:27:31,040
Speaker 4: hashed out recreating the energy landscape in their image.

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00:27:31,400 --> 00:27:34,359
Speaker 2: So, as Ethan pointedly made clear, this is the end

535
00:27:34,359 --> 00:27:38,160
Speaker 2: of the story for any expectation that the US would

536
00:27:38,160 --> 00:27:41,560
Speaker 2: meet its climate change obligations, but apparently not the end

537
00:27:41,600 --> 00:27:44,320
Speaker 2: of the story when it comes to the assault on renewables.

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Speaker 2: Emily Ethan, thank you so much, Thank you, thanks for

539
00:27:52,960 --> 00:27:55,280
Speaker 2: listening to Trumponomics from Bloomberg. It was hosted by me

540
00:27:55,359 --> 00:27:58,280
Speaker 2: Stephanie Flanders and I was joined by Bloomberg reporter Emily

541
00:27:58,320 --> 00:28:03,399
Speaker 2: Burnbaum and Bloomberg any Ethan Zindler. Trumponomics is produced by

542
00:28:03,440 --> 00:28:06,560
Speaker 2: Summer Sadi and Moses and Am with help from Amy

543
00:28:06,680 --> 00:28:10,040
Speaker 2: Keen and special thanks this week to Rachel Lewis Chrisky.

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00:28:10,760 --> 00:28:14,159
Speaker 2: Sound design is by Blake Maples and Sage Bowman is

545
00:28:14,160 --> 00:28:19,320
Speaker 2: the head of Bloomberg Podcasts and please to help others

546
00:28:19,359 --> 00:28:21,840
Speaker 2: find this show, please rate it and review it highly

547
00:28:22,000 --> 00:28:22,879
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