Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is not the
Speaker 1: death of the US renewable energy industry in the United States,
Speaker 1: but it is a major setback.
Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg.
Speaker 2: Welcome to Trumponomics, the podcast that looks at the economic
Speaker 2: world of Donald Trump. Now he's already shaped the global economy,
Speaker 2: and what on earth is going to happen next? This
Speaker 2: week we're talking about the big Beautiful assault on renewable energy.
Speaker 2: Will the Republican megabill pass last week bring on a
Speaker 2: new American energy crisis? What could be the impact on
Speaker 2: electricity bills, the broader economy, and America's leadership in the
Speaker 2: race for artificial intelligence. We're recording this on Tuesday, the
Speaker 2: eighth of July. And of all the elements of the
Speaker 2: one Big Beautiful Bill, as Donald Trump called it, that
Speaker 2: he signed going into the July fourth holiday, one I
Speaker 2: find particularly hard to get my head round is the
Speaker 2: decision to get rid of tax credits for clean energy.
Speaker 2: As a result of that, wind and solar projects will
Speaker 2: cost more and more likely there will be a lot
Speaker 2: fewer built. In fact, in an analysis this week, a
Speaker 2: climate policy think tank called Energy Innovation forecast that the
Speaker 2: bill would put an end to three hundred gigawatts of
Speaker 2: wind and solar projects that would have otherwise come online
Speaker 2: in the next fifteen years. That's the equivalent of about
Speaker 2: three hundred nuclear reactors. Now, obviously that set back the
Speaker 2: fight against climate change and the decarbonization of the US economy.
Speaker 2: And that may not be much of a worry for
Speaker 2: the supporters of the big bill, but there could be
Speaker 2: more concern about another very likely consequence, higher electricity prices.
Speaker 2: That matters for voters facing rising utility bills, but it
Speaker 2: also matters for tech firms chasing the next breakthroughs in AI.
Speaker 2: The country that reigns supreme in AI will rule the world.
Speaker 2: Everyone seems to think that these days, including Donald Trump.
Speaker 2: In fact, you might remember on the day after his
Speaker 2: inauguration he announced the creation of Stargate, a project to
Speaker 2: expand AI infrastructure in the US.
Speaker 3: But to announce the largest AI infrastructure project by far
Speaker 3: in history. And it's all taking place right here in America.
Speaker 3: As you know, there's great competition for AI.
Speaker 2: And projects like Stargate need electricity, lots of it, And
Speaker 2: in fact, that's part of the reason electricity demand in
Speaker 2: the US is rising faster now than it has at
Speaker 2: anytime in the last twenty years. The tax credits in
Speaker 2: the Inflation Reduction Act on the President Biden helped the
Speaker 2: US keep up with that rising demand in theory by
Speaker 2: making clean power sources cheaper. Investments in wind, solar, and
Speaker 2: battery storage had spiked in the years after the IRA
Speaker 2: was passed, But now the Big Bill has changed all
Speaker 2: that and a lot of people including me, scratching their
Speaker 2: heads wondering what the plan is now. And this week
Speaker 2: I'm delighted to say I'm in the Washington Studio with
Speaker 2: two guests who have a good perspective on this topic
Speaker 2: and can help me think through the consequences for the
Speaker 2: US economy. First up, Ethan Zindler, the head of Country
Speaker 2: and Policy Research at Bloomberg NEF. That's the part of
Speaker 2: Bloomberg Research that's focused on the energy transition. And we
Speaker 2: should say that before joining US, Ethan served as Climate
Speaker 2: Counselor to the US Treasury Secretary of Janet Yellen from
Speaker 2: July twenty twenty three to January twenty five, so he
Speaker 2: was across a lot of policy efforts then, including helping
Speaker 2: to write and implement the Inflation Reduction Act.
Speaker 1: Welcome Ethan, thanks for having.
Speaker 2: Me and also with us Emily Bernbaut, who's a Bloomberg
Speaker 2: reporter here in DC who covers corporate lobbying and influence.
Speaker 2: Thank you so much for being on Trumpenomics. Emily.
Speaker 4: Thank you.
Speaker 2: So people will have heard quite a lot about that bill,
Speaker 2: but it's probably useful to just take stock of how
Speaker 2: that turned the tables for the renewable industry. What are
Speaker 2: the species measures that are going to be painful for
Speaker 2: that part of the US energy industry.
Speaker 4: There was a lot of last minute wrangling over the
Speaker 4: details of what this bill will do to the clean
Speaker 4: energy industry. The top line is that it's very bad.
Speaker 4: It's not as bad as it could have been. What
Speaker 4: ended up in the bill was pretty aggressive timelines for
Speaker 4: phasing out tax credits. But elements of the bill would
Speaker 4: encourage companies to begin construction over the next year, and
Speaker 4: if they're able to do so, it's likelier that they'll
Speaker 4: be able to get some of these important tax credits.
Speaker 4: But overall, they're going to have to begin construction very quickly,
Speaker 4: and these tax credits are going away on a more
Speaker 4: aggressive timeline than had initially been anticipated.
Speaker 2: Yeah, And that was what was interesting, because when it
Speaker 2: went from the House to the Senate, there was some
Speaker 2: expectation that the Senate would want to extend the time
Speaker 2: frame a little bit. The investments that drawer have been announced,
Speaker 2: give them a bit more time to get up and running.
Speaker 2: But if anything, the bills seemed to get worse.
Speaker 4: Yes, and at the last minute there was something that
Speaker 4: would have dealt a huge blow to the industry, which
Speaker 4: was this excise tax. There was basically panic in the
Speaker 4: industry and among moderate Republicans who said this excise tax
Speaker 4: would so dramatically increase costs for solar and wind projects,
Speaker 4: it would effectively make it untenable for a lot of
Speaker 4: these projects to move forward or begin construction. So right
Speaker 4: before the Senate passed it, they removed the excise tax,
Speaker 4: which is a huge relief, but they still are dealing
Speaker 4: with pretty aggressive phase outs.
Speaker 2: Ethan, you were saying just before we started that even
Speaker 2: though parts of the renewables industry was kind of breathing
Speaker 2: a sigh of relief or having at least dodged that
Speaker 2: particular bullet, not having this extra tax that the administration
Speaker 2: has already of vindicated that it's not done with the
Speaker 2: renewable industry. Yet what happened earlier this week.
Speaker 1: Yeah, things have kind of gone from bad to worse,
Speaker 1: even within the last less than twenty four hours. Basically,
Speaker 1: there's been some real questions about whether projects could qualify
Speaker 1: so long as they were quote unquote under construction, and
Speaker 1: the irs historically is to find under construction fairly liberally.
Speaker 1: And yesterday the White House issue to executive order basically
Speaker 1: saying that they are ordering the Treasury Department within the
Speaker 1: next forty five days to rewrite that rule, and if
Speaker 1: they do that in such a way, they can make
Speaker 1: it very challenging for projects to qualify. It is not
Speaker 1: even beyond the realm of the possible that they would
Speaker 1: write something that is essentially retroactive and effectively make it
Speaker 1: much more challenging for projects to actually be able to
Speaker 1: qualify for the credit. So, from our perspective at Bloomberg
Speaker 1: f we're trying to go back and sharpen our pencils
Speaker 1: and try and think about how much stuff is going
Speaker 1: to get built. But I think the one thing that's
Speaker 1: pretty clear as of this morning is that many who
Speaker 1: are in the wind and solar and storage industry are
Speaker 1: probably scrambling to get as much stuff as they can
Speaker 1: essentially under construction at this very moment, while they are
Speaker 1: concurrently probably lobbying the Treasury Department about what this new
Speaker 1: regulation is going to look like.
Speaker 2: I'm going to come back to you on some of
Speaker 2: the dynamics on the hill, But Ethan, let's just step back,
Speaker 2: and I know that's what Bloomerginny f likes doing. They
Speaker 2: tend to do the twenty five year horizons consider to
Speaker 2: be quite short term. But if you do take that
Speaker 2: kind of longer term, you know what has been happening
Speaker 2: to energy demand and electricity demand within that in recent years?
Speaker 2: And what was you know, until this bill, what was
Speaker 2: that basic plan for meeting it?
Speaker 1: Yeah, So the United States, like other wealthy developed countries,
Speaker 1: has been able to grow its economy without growing demand
Speaker 1: for electricity. Really for twenty years, essentially, we've had flat
Speaker 1: demand overall, largely because of energy efficiency improvements and new
Speaker 1: technologies and the desire to save costs. The last couple
Speaker 1: of years that started to change, and we think that's
Speaker 1: going to continue to change going forward. The number one
Speaker 1: driver in the short run has been AI and the
Speaker 1: demand from new data centers. We also think electric vehicles,
Speaker 1: as you look further out, are going to start to
Speaker 1: play a much bigger role as well. In the US,
Speaker 1: we think we're going to see demand for electricity double
Speaker 1: from about forty one hundred tarawad hours at the moment
Speaker 1: up over six thousand by the time you get to
Speaker 1: twenty fifty overall, and by twenty thirty five, we think
Speaker 1: that about eight percent of capacity in the United States
Speaker 1: is going to go specifically to powering data centers, which
Speaker 1: is a really considerable portion overall. One other quick just
Speaker 1: note in terms of trends, is that really over the
Speaker 1: last ten years or fifteen years or so, the US
Speaker 1: has really been rapidly decarbonizing our power generation sector. We
Speaker 1: went from about half our power coming from coal to
Speaker 1: well under twenty percent as the last year, could be
Speaker 1: even under fifteen percent this year depending on conditions. And meanwhile,
Speaker 1: renewables have grown from almost nothing to about twenty percent
Speaker 1: of generation. Nuclear is about twenty percent, so we're about
Speaker 1: forty percent zero carbon here, and the natural gas is
Speaker 1: a huge part of the story, which is a lot
Speaker 1: cleaner than coal overall. So the general trend has been
Speaker 1: towards cleaner sources of energy going forward. And if you
Speaker 1: look at what's gotten built in the last several years
Speaker 1: and what would get built in the next several years
Speaker 1: in terms of purely cost, it's renewables. The vast majority
Speaker 1: of new stuff that's due to come online is renewables,
Speaker 1: and so that is why it's so questionable that you
Speaker 1: would go out of your way to essentially raise the
Speaker 1: cost of those technologies, which is effectively what Congress is
Speaker 1: now done.
Speaker 2: Those of us who kind of looked on the outside
Speaker 2: and seen the US go from being a net consumer
Speaker 2: of energy or oil, I should say to an exporter,
Speaker 2: have been very familiar with a rather different story, which
Speaker 2: is America had this fracking revolution which was not environmentally friendly,
Speaker 2: but did bring an enormous amount of gas online, which
Speaker 2: has brought down the price of energy for US consumers.
Speaker 2: So I guess the story that you might tell against
Speaker 2: your story at least be sort of well, hang on
Speaker 2: a minute, it's fracking that has made this a kind
Speaker 2: of golden era for US energy prices, and the renewables
Speaker 2: is not completely reliable and is more is a sort
Speaker 2: of side show to that basic story.
Speaker 1: So yeah, really good points. I mean, certainly, we have
Speaker 1: the lowest price natural gas in the world in terms
Speaker 1: of production, and that has allowed a lot of manufacturing
Speaker 1: to be very competitive in the United States. I would
Speaker 1: note though, that first of all, that renewables plus storage
Speaker 1: gets you maybe not to twenty four hours of generation,
Speaker 1: but can get you enough production of electricity into the
Speaker 1: sort of key hours of the evening. And we're starting
Speaker 1: to see solar plus storage be very cost competitive in
Speaker 1: many markets around the world. Not all markets in the
Speaker 1: United States, but a bunch of markets. But then just
Speaker 1: purely speaking practically in the United States in terms of
Speaker 1: what we're going to build over the next five years,
Speaker 1: You're absolutely right that gas is cheap, and gas is
Speaker 1: cost competitive in a number of markets in the United States.
Speaker 1: The problem is you just cannot get your hands on
Speaker 1: a combined cycle gas at the moment for a number
Speaker 1: of years, anywhere from three to seven depending on who
Speaker 1: you asked. So in terms of what our next mega
Speaker 1: out of capacity is going to be, it basically has
Speaker 1: to be renewables because there isn't really any other sources,
Speaker 1: and if we have rising demand from AI, that means
Speaker 1: it's going to probably come from renewables. And again, if
Speaker 1: you take away essentially what has been a long standing
Speaker 1: tax credit and subsidy to the clean energy industry that
Speaker 1: is effectively socialized a discounted electricity production price in the
Speaker 1: United States, you're just simply going to concentrate it on
Speaker 1: certain markets. So the next place where you're going to
Speaker 1: build wind or solar project, potentially you're going to have
Speaker 1: to sign a higher price contract in order for the
Speaker 1: developer to make the return that they need without the
Speaker 1: tax credit.
Speaker 2: But if they're the only short term viable source of
Speaker 2: additional energy, then it surely must be cost effective to build.
Speaker 1: I mean, here's the question, and I think we're going
Speaker 1: to find this out over the next couple of years,
Speaker 1: is what's the breaking point for consumers? So, yes, you
Speaker 1: can pass on some form of higher electricity prices. But
Speaker 1: if you're a developer of a large scale data center,
Speaker 1: you're not necessarily entirely wedded to the United States. Just
Speaker 1: because the most AI has been built not that far
Speaker 1: from here, maybe thirty miles from here, just outside of Washington,
Speaker 1: doesn't mean that every next AI data center has to
Speaker 1: be here. To some large degree, AI is some the servers,
Speaker 1: not all To be clear, there's different types of servers
Speaker 1: and that's not my area of expertise, but some can
Speaker 1: really be anywhere in the world, and so they will
Speaker 1: go where the price of electricity is most affordable and reliable,
Speaker 1: and there are other options. Brazil is about seventy eighty
Speaker 1: percent hydropower, low cost. They've been trying very much to
Speaker 1: market Brazil as an AI place. Gulf States have enormous
Speaker 1: amounts of sun, very cheap solar. They don't put big
Speaker 1: tariffs sun solar equipment like we do, can build batteries
Speaker 1: to go along with it. They are certainly trying to
Speaker 1: market themselves as hubs for AI as well. So no
Speaker 1: foregone conclusion that the United States will be the one
Speaker 1: and only place where we build all this new capacity.
Speaker 2: But as far as you're concerned, the only way that
Speaker 2: this energy that we were expecting to come online, or
Speaker 2: electricity that we were expecting to come online in the
Speaker 2: US to meet this demand will actually come online is
Speaker 2: through higher prices.
Speaker 1: I mean, it seems inevitable. And I think one of
Speaker 1: the questions we're just trying to parse out, given the
Speaker 1: incredible complexity of what Congress has just done, is how
Speaker 1: many projects could still qualify for the tax credit if
Speaker 1: they get under construction basically yesterday, and how many of
Speaker 1: them will not And those that don't obviously are going
Speaker 1: to have to figure out some way to get compensated
Speaker 1: correctly so that they can earn the return that they want.
Speaker 1: The best guess at the moment is that if you
Speaker 1: get under construction sometime in this calendar year, you'll probably
Speaker 1: be okay. But the White House just created an additional
Speaker 1: uncertainty with this executive order.
Speaker 2: One I saw is that the future clean energy products
Speaker 2: that don't have these tax credits will cost fifty percent
Speaker 2: more to get built. Do you think that's in the
Speaker 2: right ball part?
Speaker 1: That feels a little on the high side of me,
Speaker 1: But we need to do the analysis ourselves. I think historically,
Speaker 1: if you look around the world, the history of clean
Speaker 1: energy is you have a number of countries that have
Speaker 1: put in place very generous supports in the form of
Speaker 1: feed in tariffs like we've seen in countries in Europe
Speaker 1: and elsewhere, and when they disappear, it's terrible news for
Speaker 1: the industry. But we also find that the industry is
Speaker 1: incredibly innovative about finding ways to reduce costs the US
Speaker 1: is really not a low cost market when it comes
Speaker 1: to putting solar on people's views in particular, but also
Speaker 1: large scale projects. So there's definitely some room for cost reduction,
Speaker 1: I think for the industry overall. But there's no question
Speaker 1: this is going to boost costs. In the case of
Speaker 1: a typical solar project, the tax credit is thirty percent
Speaker 1: of CAPECK. So a billion dollar project, three hundred million
Speaker 1: right off the top was basically disappearing because of tax credits.
Speaker 1: That has to be dealt with somehow.
Speaker 2: And I've seen the Energy Innovation Thing Tank from what
Speaker 2: you're saying, suggests that maybe it'd be a little bit
Speaker 2: on the high side, but their estimate of the impact
Speaker 2: on bills would be that the average energy bill by
Speaker 2: twenty thirty five could be nearly five hundred dollars higher
Speaker 2: in Michigan, similar maybe more in Maryland, and six or
Speaker 2: seven hundred eight hundred dollars higher in Texas than it
Speaker 2: would have been if the credits had remained.
Speaker 1: Yeah, I can't, I won't. I guess I want to
Speaker 1: dispute that we haven't done that analysis ourselves. I've seen
Speaker 1: different numbers from other research firms as well. There's no question,
Speaker 1: particularly in a market like Texas, which is really deregulated
Speaker 1: and where pricing can get passed along directly to large
Speaker 1: scale consumers, there's no question this is going to have
Speaker 1: a real impact ultimately. I think the interesting question is
Speaker 1: what about businesses. I mean, we talk a lot about
Speaker 1: retail consumers, and eventually they are the ones who get hit,
Speaker 1: but more immediately and often cases it's wholesale purchases of
Speaker 1: electricity that feel the effects. And that is one of
Speaker 1: the puzzling things why in this debate where the utility
Speaker 1: is not more engaged in this, because ultimately they're the
Speaker 1: ones who are going to get bigger bills that they're
Speaker 1: going to have to pass along to their consumers. Or
Speaker 1: where were the manufacturers who are going to have to
Speaker 1: pay higher prices for electricity than they would if you're
Speaker 1: in the say Ercot market or PJM. I'm puzzled as
Speaker 1: to why there wasn't a more engage conversation around this,
Speaker 1: And you're.
Speaker 2: Really my mind, even because I was thinking about your title,
Speaker 2: Emily and the fact that you are a reporter focusing
Speaker 2: on corporate lobbying and influence. You know, people have focused
Speaker 2: on the impact and the influence of the fossil fuel
Speaker 2: lobby in driving part of this bill. And we know
Speaker 2: that there's some parts of that industry that have been
Speaker 2: big donors to Donald Trump. But there were awful lot
Speaker 2: of people on the other side of the argument, including
Speaker 2: as Ethan mentions, there's the utilities and sectors that would
Speaker 2: really be hurt by this, not to mention the tech
Speaker 2: firms who are lobbying to get more cheap electricity. So
Speaker 2: why is it those voices just weren't heard in the
Speaker 2: last few weeks.
Speaker 4: Ultimately, the reason this bill goes so aggressively against clean
Speaker 4: energy is because of House Speaker Mike Johnson's math issue,
Speaker 4: which was that he could only stand to lose a
Speaker 4: very small number of Republican votes, and so that made
Speaker 4: the House Freedom Caucus, the group of hardline conservatives in
Speaker 4: the House, that made them very powerful in this conversation,
Speaker 4: and a lot of them, for the most part, really
Speaker 4: leaned towards the oil and gas industry. So thinking about
Speaker 4: Chip roy from Texas, he was one of the most
Speaker 4: consistent voices saying we really need to phase out these
Speaker 4: subsidies very quickly. He was in communication very closely with
Speaker 4: a conservative activist named Alex Epstein who actually shaped a
Speaker 4: lot of this debate behind the scenes, and basically Alex
Speaker 4: Epstein's arguments are in favor of natural gas. He says
Speaker 4: that solar and wind are unreliable sources of energy. You know,
Speaker 4: I'll let you debunk some of what he has to say,
Speaker 4: but essentially that the subsidies artificially lowered the cost of
Speaker 4: electricity and we're creating lee And so there is a
Speaker 4: lot of arguments behind the scenes against the clean energy
Speaker 4: industry and ultimately I think oil and gas just really
Speaker 4: won in this bill.
Speaker 1: To be clear, they're subsidized too.
Speaker 2: Yeah, say, I was going to say, there's a hell
Speaker 2: of a lot of subsidy on that side, but somehow
Speaker 2: they need subs tody, but the clean energy doesn't. I mean,
Speaker 2: even Texas is a surprise, right. I Mean that was
Speaker 2: one of the things that we said after Donald Trump
Speaker 2: won the election, and there was obviously this question mark
Speaker 2: about where would he go on And there was some
Speaker 2: pushback initially on the idea that he would completely repeal
Speaker 2: the IRA the Biden era tax credits, in part because
Speaker 2: of the support from the tech industry, but also because
Speaker 2: it was noticed that partly because it's easier to build
Speaker 2: stuff in the red states, that there were a lot
Speaker 2: of Republican states that had actually benefited enormously from the RA,
Speaker 2: including Texas. I think most of its new electricity supply
Speaker 2: had come from renewables in the last couple of years.
Speaker 2: So it's interesting that the representat different Texas just doesn't
Speaker 2: seem to factor that in.
Speaker 4: Yeah, it just became such a political talking point, calling
Speaker 4: the IRA the green new Scam, making it democrat led
Speaker 4: project essentially that Republicans had to completely nix and create
Speaker 4: their own path forward when it comes to energy, And
Speaker 4: an interesting element of the bill is that it's a
Speaker 4: lot less aggressive when it comes to nuclear energy, which
Speaker 4: is an area that I know that tech companies have
Speaker 4: been investing a lot into. Obviously, that's a lot slower
Speaker 4: moving and it doesn't address the immediate energy needs of
Speaker 4: data centers. But the nuclear energy industry came out with
Speaker 4: far less battle scars than some other parts of the industry.
Speaker 4: And that's a part of this conversation too, is sort
Speaker 4: of like weighing things in favor of certain kinds of
Speaker 4: energy over others.
Speaker 2: That was again much conversation about the political fallout from
Speaker 2: this bill. You know, over the last few weeks people
Speaker 2: have wondered whether the Republicans are really kind of ready
Speaker 2: for what happens in their constituencies when the impact of
Speaker 2: Medicaid cuts and others come through. But you would think
Speaker 2: if there's a short term big increase in energy prices
Speaker 2: that hits people's utility bills, they're electricity bills, is there
Speaker 2: not a fear on the hill the finger will be
Speaker 2: pointed to this bill when it comes to that. I mean,
Speaker 2: it's cost of living is such a big element of
Speaker 2: the Trump pledge, the promise if you like to voters,
Speaker 2: do they just think they'll be able to blame other stuff? Yeah?
Speaker 4: I think part of the sleight of hand is that
Speaker 4: tax cuts are coming in more immediately than some of
Speaker 4: the spending cuts, So meaning in the more immediate term,
Speaker 4: some people are going to see their taxes decrease, whereas
Speaker 4: some of the potential added cost to electricity bills or
Speaker 4: some of the loss of Medicaid coverage comes farther down
Speaker 4: the line. So it is a lot about timelines as well.
Speaker 4: They've written it in a way that at least Republicans
Speaker 4: hope that people don't see the more negative effects until
Speaker 4: after the midterms in twenty twenty eight.
Speaker 1: If I could jump in, I think you're also maybe
Speaker 1: ascribing a much higher level of sophistication to this conversation.
Speaker 1: Then probably actually went on, I don't know that people
Speaker 1: on the hill understand the economics of power generation at
Speaker 1: the moment, and the fact that renewables are the most
Speaker 1: cost competitive, and the fact that it's impossible to get
Speaker 1: your hands on a natural turbine. These are things that
Speaker 1: only nerds like me know, So I don't know that
Speaker 1: stuff that they're kind of across.
Speaker 2: Would their argument be, Yeah, it's hard under Biden to
Speaker 2: get this stuff built, but we're going to lift all
Speaker 2: of these stupid restrictions, and so that natural gas power
Speaker 2: station could go up in a year.
Speaker 1: So that just I mean, again, hard to not get
Speaker 1: in the rabbit hole here. But if there's three or
Speaker 1: four companies that make these we're talking large scale turbine
Speaker 1: and so these are big things, specialized manufacturing that goes
Speaker 1: into them. If you're one of the three or four
Speaker 1: companies in the world that makes them, and you are
Speaker 1: selling them at a very high price at the moment,
Speaker 1: and you have a back order. I guess the question
Speaker 1: is do you ramp up your manufacturing of those turbines?
Speaker 1: And if you do, how long is it going to
Speaker 1: take you to ramp that up? At least a couple
Speaker 1: of years at the very very least, and then a
Speaker 1: few more years at least before you can get some
Speaker 1: more turbines out. And if you're one of those companies
Speaker 1: and you're looking at the US situation, the political situation here,
Speaker 1: I think you might very well ask yourself, well, is
Speaker 1: this the new world we're living in? Or are we
Speaker 1: going to see some flip back in two or three
Speaker 1: years back to renewables and suddenly I've got more gas
Speaker 1: turbine capacity, manufacturing capacity than I know what to do with.
Speaker 1: I'd be very surprised if there's big investment. But keep
Speaker 1: an eye on GE and some of the others to
Speaker 1: see whether they make announcements around that.
Speaker 2: And it is true when you say is that the
Speaker 2: world we're living in? I mean it's pretty clear that
Speaker 2: the world we're living in looks very different, looks more
Speaker 2: like the IRA world. As you noted, there's lots of
Speaker 2: countries that have got strong incentives in place for renewables,
Speaker 2: and we also see developing countries moving to electrify large
Speaker 2: parts of their grid because it is it's certainly cheaper
Speaker 2: for them if they're reliant otherwise on imported oil and gas.
Speaker 4: Yeah.
Speaker 1: No, I think you raise a very good question. This
Speaker 1: is not the depth of the US renewable energy industry
Speaker 1: in the United States by any means, because of the
Speaker 1: advancements that we've seen, but it is a major setback,
Speaker 1: and most importantly maybe at the bottom line, as it
Speaker 1: means our chances of coming anywhere close to reducing our
Speaker 1: CO two missions in line with address and climate chains
Speaker 1: are effectively over at the moment.
Speaker 2: I guess there's one argument, which if it's so unstoppable,
Speaker 2: we've had this period where we've ramped up production with
Speaker 2: these massive credits, which were extremely expensive. They blew at
Speaker 2: least a trillion dollar hole in the deficit, and of
Speaker 2: course we can say there are other things that are
Speaker 2: now going to blow a hole in the deficit over
Speaker 2: the coming years thanks to the last week's bill. But
Speaker 2: there is an argument that says it ought to be
Speaker 2: able to stand on its own two feet.
Speaker 1: No, well, two things the clean energy credits did not,
Speaker 1: on their own blow a trillion dollar hole in the deficit.
Speaker 1: They were projected potentially to have done so, but of
Speaker 1: course now we're living in a different world where they
Speaker 1: certainly are not going to cost as much as was projected.
Speaker 1: And even that number I would take a little issue
Speaker 1: with because it made certain assumptions about hydrogen and other
Speaker 1: things that haven't really come to pass. But you're right,
Speaker 1: they were living in a new world in which these
Speaker 1: industry is going to have to compete without the benefit
Speaker 1: of tax credits. Unfortunately, it's going to compete against, you know,
Speaker 1: some existing sources of generation that have been subsidized for
Speaker 1: a very long time. And of course the administration is
Speaker 1: also going to try and take steps whatever they can
Speaker 1: to try and make existing coal fire generation more cost competitive,
Speaker 1: although it's very unclear to me like what they can
Speaker 1: actually do that changes the economics of coal.
Speaker 2: I was going to ask you that actually that's the
Speaker 2: thing that Donald Trump has held out. You know, yes,
Speaker 2: it's hard to build a new gas power station, but
Speaker 2: if you have a coal powered station that you were
Speaker 2: about to close down, or you've maybe just closed down,
Speaker 2: how hard is it just to turn that back on?
Speaker 2: And how hard is it to get the mines up
Speaker 2: and running again, which is what he's talked about.
Speaker 1: Hard, is the short answer. You can issue executive orders
Speaker 1: to try and order certain plants to keep online, but
Speaker 1: the reality is that coal is not economically competitive for
Speaker 1: the most part in the United States, particularly with gas,
Speaker 1: but also with renewable So you can try and force
Speaker 1: operators to keep running plants, but no one. I'm not
Speaker 1: a lawyer here, but I think it's tough to force
Speaker 1: people to lose money on every megawat hour of electricity
Speaker 1: that they produce because you're trying to make a point
Speaker 1: about what you think the world should look like in
Speaker 1: terms of energy consumption that looks something like nineteen eighty seven.
Speaker 2: It is extraordinary to me as someone who kind of
Speaker 2: grew up with Margaret Thatcher's defining battle in the nineteen
Speaker 2: eighties against the uneconomic coal producing mines in the UK,
Speaker 2: and there was obviously enormous controversy ever trying to shut
Speaker 2: them down. But to have a republic administration trying to
Speaker 2: reopen a lot of uneconomic coal mines is an interesting site.
Speaker 1: I mean, the question is just is there money to
Speaker 1: do this right? Ultimately, if you want to mobilize private
Speaker 1: capital to go out and that then that money has
Speaker 1: to believe that this is the world that we're going
Speaker 1: to live in for the next five or ten or
Speaker 1: twenty years. And I think most investors look at this
Speaker 1: and say, Okay, certainly, this is a certainly regressive period
Speaker 1: that we're living through, but the end of the day,
Speaker 1: climate change isn't going anywhere. It's only going to get worse.
Speaker 1: And so if you believe there's an inevitability that eventually
Speaker 1: policy makers, whether they deal with climate change in the
Speaker 1: short run of the long run, they eventually deal with it.
Speaker 1: I think many people would find it very hard to
Speaker 1: swallow the idea of making a ten or twenty year
Speaker 1: investment in a new coal mine.
Speaker 2: But Emily it seems like there'd be plenty of appetite
Speaker 2: on the hill for that.
Speaker 4: Yes, I think there will be. I think this bill
Speaker 4: got held up in the House for just a couple
Speaker 4: of days after leaving the Senate because this group of
Speaker 4: Republicans said, we want to go harder against clean energy,
Speaker 4: we want more favorable for oil and gas, and they
Speaker 4: spent hours and hours in the White House at the
Speaker 4: eleventh hour trying to extract as many concessions from the
Speaker 4: administration on this as they possibly could, and they think
Speaker 4: that is bearing out that bore out yesterday in terms
Speaker 4: of this executive order, and we're going to continue to
Speaker 4: see the deals that were made, the agreements that they
Speaker 4: hashed out recreating the energy landscape in their image.
Speaker 2: So, as Ethan pointedly made clear, this is the end
Speaker 2: of the story for any expectation that the US would
Speaker 2: meet its climate change obligations, but apparently not the end
Speaker 2: of the story when it comes to the assault on renewables.
Speaker 2: Emily Ethan, thank you so much, Thank you, thanks for
Speaker 2: listening to Trumponomics from Bloomberg. It was hosted by me
Speaker 2: Stephanie Flanders and I was joined by Bloomberg reporter Emily
Speaker 2: Burnbaum and Bloomberg any Ethan Zindler. Trumponomics is produced by
Speaker 2: Summer Sadi and Moses and Am with help from Amy
Speaker 2: Keen and special thanks this week to Rachel Lewis Chrisky.
Speaker 2: Sound design is by Blake Maples and Sage Bowman is
Speaker 2: the head of Bloomberg Podcasts and please to help others
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