1 00:00:00,480 --> 00:00:03,040 Speaker 1: This is Tom Rowland's Reaes and you're listening to Switched 2 00:00:03,040 --> 00:00:05,880 Speaker 1: on the b and EF podcast. On the fourth of July, 3 00:00:06,120 --> 00:00:10,280 Speaker 1: the Trump Administration's One Big Beautiful Bill Act, or OBBBA 4 00:00:10,400 --> 00:00:13,640 Speaker 1: for Sure, was signed into law, Targeting vast sways of 5 00:00:13,640 --> 00:00:18,120 Speaker 1: the Biden Administration's Inflation Reduction Act. The OBBBA scales back 6 00:00:18,239 --> 00:00:23,320 Speaker 1: major US decarbonization programs. It slashes lucrative tax credits for solar, wind, 7 00:00:23,360 --> 00:00:26,200 Speaker 1: and energy storage, and takes direct aim at the manufacture 8 00:00:26,239 --> 00:00:29,560 Speaker 1: and sale of electric vehicles. The impact on clean technologies 9 00:00:29,560 --> 00:00:32,720 Speaker 1: in the US is undeniable. B and EF now forecasts 10 00:00:32,720 --> 00:00:35,440 Speaker 1: that wind, solar, and storage installations this decade will be 11 00:00:35,479 --> 00:00:38,960 Speaker 1: twenty three percent lower than they would have been pre OBBBA. 12 00:00:39,120 --> 00:00:42,360 Speaker 1: Despite this, renewables editions are still set to rise, so 13 00:00:42,400 --> 00:00:44,400 Speaker 1: could the outcome have been even worse for the clean 14 00:00:44,479 --> 00:00:47,479 Speaker 1: energy industry. Today I'm joined by bn EF's head of 15 00:00:47,520 --> 00:00:51,120 Speaker 1: Country and Policy Research, Ethan Zindler, who previously worked as 16 00:00:51,159 --> 00:00:55,360 Speaker 1: climate counselor to the US Treasury Secretary Janet Yellen. Alongside Ethan, 17 00:00:55,440 --> 00:00:58,600 Speaker 1: we have Senior policy Associate for North America, Derek Flakol, 18 00:00:58,800 --> 00:01:01,600 Speaker 1: and together we discuss way the US energy transition now 19 00:01:01,640 --> 00:01:04,760 Speaker 1: finds itself. Their research can be found in notes including 20 00:01:05,080 --> 00:01:08,560 Speaker 1: One Big Bill, Many Impacts for US energy economy and 21 00:01:08,920 --> 00:01:11,640 Speaker 1: new US clean energy tax rules could have been worse, 22 00:01:11,800 --> 00:01:14,320 Speaker 1: which bn EF clients can find at BNF go on 23 00:01:14,319 --> 00:01:17,440 Speaker 1: the Bloomberg terminal or on BNF dot com. All right, 24 00:01:17,520 --> 00:01:19,680 Speaker 1: let's get talking to Ethan and Derek about the impact 25 00:01:19,680 --> 00:01:32,640 Speaker 1: of the One Big Beautiful Bill Act. Ethan, Welcome to 26 00:01:32,680 --> 00:01:36,520 Speaker 1: the podcast. Thanks, dam and Derek. Hello, glad to be here. 27 00:01:36,880 --> 00:01:39,240 Speaker 1: So we're here to talk about the One Big Beautiful 28 00:01:39,280 --> 00:01:43,399 Speaker 1: Bill Act, the OBBBA. And it's pretty hard to imagine 29 00:01:43,400 --> 00:01:47,240 Speaker 1: there's anyone listening that is not aware of what this is. 30 00:01:47,280 --> 00:01:51,320 Speaker 1: But maybe just to level set, what exactly is the OBBBA. 31 00:01:51,880 --> 00:01:55,920 Speaker 2: So this is basically a Republican budget bill which is 32 00:01:55,960 --> 00:01:59,680 Speaker 2: meant to enact the agenda of the Republican Party Bradley 33 00:01:59,760 --> 00:02:03,880 Speaker 2: in President Trump, specifically, anybody who followed the Inflation Reduction Act, 34 00:02:03,920 --> 00:02:06,360 Speaker 2: the sort of Biden administration's signature bill with all of 35 00:02:06,400 --> 00:02:08,720 Speaker 2: the clean energy tax credits we've been following for a 36 00:02:08,800 --> 00:02:11,440 Speaker 2: few years, that was enacted through a similar procedure called 37 00:02:11,480 --> 00:02:15,840 Speaker 2: budget reconciliation. It allows a pretty straightforwardly partisan bill to 38 00:02:16,000 --> 00:02:18,320 Speaker 2: get passed as long as its provisions are all directly 39 00:02:18,320 --> 00:02:21,200 Speaker 2: tied to the budget, because under budget reconciliation, you only 40 00:02:21,200 --> 00:02:23,960 Speaker 2: need fifty votes plus one in the Senate, whereas otherwise 41 00:02:23,960 --> 00:02:26,480 Speaker 2: you would run into the sixty vote threshold to overcome 42 00:02:26,480 --> 00:02:30,600 Speaker 2: the filibuster. So what this bill specifically does is basically 43 00:02:31,080 --> 00:02:35,519 Speaker 2: cut spending from disfavored policy programs in order to fund 44 00:02:35,520 --> 00:02:39,239 Speaker 2: favored ones like certain business tax cuts, individual income tax cuts, 45 00:02:39,360 --> 00:02:42,880 Speaker 2: and immigration enforcement. Where this intersects with energy in particular 46 00:02:43,160 --> 00:02:45,919 Speaker 2: is that it tends to cut a lot of spending 47 00:02:46,160 --> 00:02:49,000 Speaker 2: or impose restrictions that limit spending for some of the 48 00:02:49,000 --> 00:02:52,959 Speaker 2: inflation reduction acts, signature tax credits, particularly on clean power 49 00:02:52,960 --> 00:02:57,079 Speaker 2: and related manufacturing, but also to lesser extents carbon capture 50 00:02:57,480 --> 00:03:00,400 Speaker 2: and other factors like that, while at the same time 51 00:03:00,560 --> 00:03:05,200 Speaker 2: expanding spending and reducing expenses for federal oil and gas leases, 52 00:03:05,360 --> 00:03:07,600 Speaker 2: for biofuels, and for a few other related categories. 53 00:03:07,760 --> 00:03:09,400 Speaker 3: Just to add on that real quick, I mean, for 54 00:03:09,440 --> 00:03:12,840 Speaker 3: those who are not familiar intimately with the US policy 55 00:03:13,080 --> 00:03:17,360 Speaker 3: situation and how we have supported deployment of clean technologies 56 00:03:17,360 --> 00:03:20,440 Speaker 3: over the last twenty or so years, the tax credits 57 00:03:20,440 --> 00:03:24,480 Speaker 3: and the tax code has been used extensively to accelerate 58 00:03:24,880 --> 00:03:28,280 Speaker 3: the deployment of things like wind turbines and solar projects, 59 00:03:28,400 --> 00:03:31,600 Speaker 3: and also to give consumers discounts on the purchase of 60 00:03:31,639 --> 00:03:34,560 Speaker 3: electric vehicles. And by and large, for the most part, 61 00:03:34,760 --> 00:03:37,360 Speaker 3: and it's a complicated story, but most of those credits 62 00:03:37,360 --> 00:03:39,040 Speaker 3: have been scaled men in this way. 63 00:03:39,080 --> 00:03:41,320 Speaker 1: So, just to back up to the big picture of 64 00:03:41,440 --> 00:03:44,880 Speaker 1: not just the OBBBA, but the Inflation Reduction Act and 65 00:03:45,040 --> 00:03:48,200 Speaker 1: energy policy before then, a lot of it has taken 66 00:03:48,320 --> 00:03:52,320 Speaker 1: the form of fiscal measures like tax credits as opposed 67 00:03:52,360 --> 00:03:56,400 Speaker 1: to subsidies and grants. And is that a function of 68 00:03:56,440 --> 00:03:59,200 Speaker 1: this point you made around reconciliation, that there's a certain 69 00:03:59,240 --> 00:04:03,280 Speaker 1: type of legislat a budget bill where a party does 70 00:04:03,320 --> 00:04:06,720 Speaker 1: not need to have more than half the votes in 71 00:04:06,760 --> 00:04:08,960 Speaker 1: the Senate in order to pass it. And so that 72 00:04:09,000 --> 00:04:10,840 Speaker 1: has been a vehicle for a lot of what you 73 00:04:10,880 --> 00:04:14,640 Speaker 1: could call like partisan positions on energy have arisen. And 74 00:04:14,640 --> 00:04:16,520 Speaker 1: so I suppose my question is is that why so 75 00:04:16,680 --> 00:04:19,680 Speaker 1: much of this energy policy was in a fiscal form 76 00:04:19,720 --> 00:04:20,520 Speaker 1: in the first place. 77 00:04:20,839 --> 00:04:23,680 Speaker 2: Broadly speaking, yes, but you can also run grants and 78 00:04:23,720 --> 00:04:26,159 Speaker 2: loans through that program, and we've seen that both with 79 00:04:26,200 --> 00:04:28,200 Speaker 2: the IRA and the One Big Beautiful Bill Act. There 80 00:04:28,200 --> 00:04:31,640 Speaker 2: are a lot of grant programs for electrical transmission and 81 00:04:31,960 --> 00:04:34,680 Speaker 2: a loan guarantee program with the loan programs offs the 82 00:04:34,720 --> 00:04:37,440 Speaker 2: DOE that were created by the IRA and then peeled 83 00:04:37,520 --> 00:04:40,960 Speaker 2: back by OBBBA OB three, whatever you want to call it. 84 00:04:41,200 --> 00:04:43,080 Speaker 2: The real reason there's such a focus on the tax 85 00:04:43,120 --> 00:04:45,560 Speaker 2: code in the US is people have called it the 86 00:04:45,600 --> 00:04:49,520 Speaker 2: submerged welfare state of the US. It's necessarily pro business, 87 00:04:49,600 --> 00:04:54,080 Speaker 2: a fairly light administration. It's less controversial with factions that 88 00:04:54,120 --> 00:04:56,680 Speaker 2: are less comfortable with a visibly muscular government. And that's 89 00:04:56,720 --> 00:04:59,919 Speaker 2: part of why, ironically enough, some of the IRA to 90 00:05:00,279 --> 00:05:03,960 Speaker 2: credits have survived, albeit imperfectly, while a lot of grant 91 00:05:03,960 --> 00:05:06,719 Speaker 2: and loan programs have seen not only interference at the 92 00:05:07,040 --> 00:05:09,400 Speaker 2: legislative level and pulling that back through the One Beautiful 93 00:05:09,400 --> 00:05:13,080 Speaker 2: Bill Act, but also interference the administrative level, because as 94 00:05:13,120 --> 00:05:15,680 Speaker 2: we've seen, the Trump administration has tried to withhold a 95 00:05:15,760 --> 00:05:19,560 Speaker 2: revoke funding for a variety of projects, including industrial demonstrations, 96 00:05:19,640 --> 00:05:22,280 Speaker 2: transmission lines, and so forth. So you could also say 97 00:05:22,279 --> 00:05:24,360 Speaker 2: that another reason tax codes are favored as they operate 98 00:05:24,480 --> 00:05:27,000 Speaker 2: relatively automatically and in the private sphere, they're a little 99 00:05:27,000 --> 00:05:30,800 Speaker 2: bit harder to administer badly or maladaptively. 100 00:05:30,800 --> 00:05:32,719 Speaker 3: I guess you could say. Yeah. Just only one quick 101 00:05:32,720 --> 00:05:34,640 Speaker 3: thing to add is that is that this is not 102 00:05:35,000 --> 00:05:38,320 Speaker 3: unique to as Derek points out, is not unique to energy, 103 00:05:38,600 --> 00:05:42,320 Speaker 3: and historically the US tax code has been used in 104 00:05:42,360 --> 00:05:45,640 Speaker 3: a variety of ways to try to achieve various social goals. 105 00:05:45,760 --> 00:05:48,279 Speaker 3: In fact, some of the people who have been financing 106 00:05:48,320 --> 00:05:51,279 Speaker 3: wind farms through tax equity in the United States their 107 00:05:51,360 --> 00:05:55,039 Speaker 3: tax equity shops. Originally we're financing low income housing because 108 00:05:55,080 --> 00:05:57,400 Speaker 3: you could get tax credits for financing that kind of thing. 109 00:05:57,440 --> 00:05:59,400 Speaker 3: So this is not entirely new. This is the way 110 00:05:59,440 --> 00:06:01,160 Speaker 3: a lot of things get done in the United States. 111 00:06:01,640 --> 00:06:05,360 Speaker 1: So the OBBBA and the Inflation Reduction Act we very 112 00:06:05,400 --> 00:06:09,360 Speaker 1: much the same type of legislation, albeit with a very 113 00:06:09,360 --> 00:06:13,320 Speaker 1: different flavor to them. Is it like the Inflation Reduction 114 00:06:13,440 --> 00:06:14,880 Speaker 1: Act never existed? 115 00:06:15,240 --> 00:06:16,520 Speaker 2: No, A short version. 116 00:06:16,560 --> 00:06:16,600 Speaker 1: No. 117 00:06:17,000 --> 00:06:19,440 Speaker 2: So, first of all, a lot of the tax credits 118 00:06:19,440 --> 00:06:22,280 Speaker 2: in the Inflation Reduction Act were substantial modifications of things 119 00:06:22,320 --> 00:06:24,919 Speaker 2: that had existed for a long time beforehand. And second 120 00:06:24,960 --> 00:06:28,159 Speaker 2: of all, some of those credits that were not ended 121 00:06:28,400 --> 00:06:31,680 Speaker 2: by this one beautiful bill Act were substantially modified. Yet 122 00:06:31,720 --> 00:06:34,960 Speaker 2: still accessible for certain categories of technology. The key example 123 00:06:34,960 --> 00:06:38,279 Speaker 2: to look at here is the pair of clean Electricity 124 00:06:38,320 --> 00:06:41,239 Speaker 2: Production and Investment tax credits forty five Y and forty 125 00:06:41,279 --> 00:06:45,560 Speaker 2: eight E. Those phase out earlier. Any wind or solar 126 00:06:45,600 --> 00:06:50,120 Speaker 2: projects that begin construction after a certain date effectively can't 127 00:06:50,160 --> 00:06:52,680 Speaker 2: access those credits anymore, or have a very short deadline 128 00:06:52,680 --> 00:06:53,120 Speaker 2: to do so. 129 00:06:53,240 --> 00:06:54,200 Speaker 3: But if you're a. 130 00:06:54,520 --> 00:06:58,560 Speaker 2: Storage project, nuclear, geothermal, or hydropower, you still have the 131 00:06:58,600 --> 00:07:01,040 Speaker 2: ability to do so. I'll be it with some restrictions 132 00:07:01,080 --> 00:07:05,640 Speaker 2: based around where you source your equipment. Similarly, credits for nuclear, 133 00:07:05,800 --> 00:07:09,279 Speaker 2: for biofuels, et cetera, remain relatively intact, or in the 134 00:07:09,320 --> 00:07:12,239 Speaker 2: case of biofuels, in the forty five Q carbon capture 135 00:07:12,320 --> 00:07:15,440 Speaker 2: tax credit, they're more generous or have less restrictions. It's 136 00:07:15,640 --> 00:07:18,160 Speaker 2: just that their rules are somewhat different. But with respect 137 00:07:18,200 --> 00:07:20,680 Speaker 2: to certain areas like electric vehicles, which were a little 138 00:07:20,680 --> 00:07:23,760 Speaker 2: bit more politically unpopular or controversial with the Republican Party, 139 00:07:23,840 --> 00:07:25,760 Speaker 2: it is a little bit like those benefits have been 140 00:07:25,800 --> 00:07:27,320 Speaker 2: wiped away, or at least they will be as of 141 00:07:27,320 --> 00:07:28,800 Speaker 2: September thirtieth of this year. 142 00:07:29,000 --> 00:07:31,920 Speaker 3: Just to take your question a slightly different direction, Tom, 143 00:07:31,960 --> 00:07:34,360 Speaker 3: in terms of you know, stepping away from the answering 144 00:07:34,400 --> 00:07:36,720 Speaker 3: it from a policy perspective and thinking about it more 145 00:07:36,760 --> 00:07:38,720 Speaker 3: in a market perspective, which I think we'll talk a 146 00:07:38,720 --> 00:07:40,800 Speaker 3: bit more about in a bit Too's just look that 147 00:07:40,800 --> 00:07:43,840 Speaker 3: the IRA was passed in twenty twenty two. There's a 148 00:07:43,880 --> 00:07:47,440 Speaker 3: lot of regulatory work that went on after that, obviously, 149 00:07:47,920 --> 00:07:49,600 Speaker 3: but there's a lot of money that moved in, a 150 00:07:49,640 --> 00:07:52,560 Speaker 3: lot of investment that took place in those three years, 151 00:07:52,760 --> 00:07:55,880 Speaker 3: and so that is, you know, it changed the landscape 152 00:07:55,960 --> 00:07:58,880 Speaker 3: quite dramatically, and so what happens next is a big 153 00:07:58,880 --> 00:08:01,760 Speaker 3: open question. And obviously, but nonetheless, like we saw a 154 00:08:01,920 --> 00:08:05,520 Speaker 3: surge of investment directly, you could say, directly attributable to 155 00:08:05,560 --> 00:08:05,960 Speaker 3: the IRA. 156 00:08:06,400 --> 00:08:08,800 Speaker 1: I remember at our summit in San Francisco, I was 157 00:08:08,840 --> 00:08:12,640 Speaker 1: moderating a panel with some automakers that were investing in 158 00:08:12,720 --> 00:08:15,080 Speaker 1: you know, electro vehicles, and this was of course before 159 00:08:15,120 --> 00:08:17,720 Speaker 1: the OBBBA. But I remember someone saying, we're not going 160 00:08:17,760 --> 00:08:21,000 Speaker 1: to change our strategy because we've already made commitments to invest, 161 00:08:21,160 --> 00:08:22,880 Speaker 1: like in a way, we've put our money down on 162 00:08:22,880 --> 00:08:25,600 Speaker 1: the table. Now, it's no take these back seats for 163 00:08:25,720 --> 00:08:28,320 Speaker 1: some of these investments that were made in response to 164 00:08:28,320 --> 00:08:30,480 Speaker 1: some of the provisions of the Inflation Reduction Act. 165 00:08:30,520 --> 00:08:32,560 Speaker 3: And yeah, and I mean just to jump in on 166 00:08:32,600 --> 00:08:34,200 Speaker 3: that though time. I mean, I think that was one 167 00:08:34,240 --> 00:08:37,280 Speaker 3: of the reasons why people were assuming that if there 168 00:08:37,360 --> 00:08:39,719 Speaker 3: was going to be legislation, it would not be as 169 00:08:39,800 --> 00:08:43,120 Speaker 3: harmful to the industry as it has been, because there 170 00:08:43,160 --> 00:08:45,199 Speaker 3: was the belief that there's a lot of money that 171 00:08:45,320 --> 00:08:48,600 Speaker 3: been deployed into a lot of Republican parts of the 172 00:08:48,640 --> 00:08:51,000 Speaker 3: country and that that would shape the politics. That was 173 00:08:51,000 --> 00:08:54,080 Speaker 3: certainly my view, I confess is is that it felt 174 00:08:54,120 --> 00:08:57,880 Speaker 3: like that there was so much money all politics as local, 175 00:08:57,920 --> 00:09:00,959 Speaker 3: as Tip O'Neil, House Speaker once missly said, and I 176 00:09:01,240 --> 00:09:03,680 Speaker 3: think I am many others figured that that would mean 177 00:09:03,760 --> 00:09:07,160 Speaker 3: that this bill would be less damaging than that it 178 00:09:07,240 --> 00:09:08,480 Speaker 3: ultimately ended up being. 179 00:09:08,720 --> 00:09:11,239 Speaker 2: We have seen, I think a sort of intermediate realization 180 00:09:11,320 --> 00:09:13,480 Speaker 2: of that, in that some of these tax credits couldn't 181 00:09:13,480 --> 00:09:17,000 Speaker 2: be repealed overtly for that reason. And at the same time, 182 00:09:17,040 --> 00:09:19,280 Speaker 2: on the business community, you see that there are underlying 183 00:09:19,280 --> 00:09:21,520 Speaker 2: conditions that are still pushing them to invest, like Ford, 184 00:09:21,600 --> 00:09:24,800 Speaker 2: for example, is still doing big splashy announcements about building 185 00:09:24,840 --> 00:09:27,160 Speaker 2: out its ev manufacturing capacity in the US, even though 186 00:09:27,200 --> 00:09:30,599 Speaker 2: that's a pretty explicitly disfavored sector by the current administration. 187 00:09:30,840 --> 00:09:34,400 Speaker 2: So I think it's a complicated reality where this was 188 00:09:34,840 --> 00:09:37,160 Speaker 2: less protection than many people expected, in part because the 189 00:09:37,200 --> 00:09:39,400 Speaker 2: factories have not necessarily been built yet or they haven't 190 00:09:39,400 --> 00:09:41,520 Speaker 2: shown up, and most people don't work in manufacturing anyway. 191 00:09:41,600 --> 00:09:45,040 Speaker 2: Yet at the same time, there is maybe some minor 192 00:09:45,040 --> 00:09:48,240 Speaker 2: effective that driven both by the politics but also market 193 00:09:48,280 --> 00:09:50,760 Speaker 2: realities where you know, Ford and GM are aware that 194 00:09:50,840 --> 00:09:53,800 Speaker 2: BYD and other Chinese ev makers are very formidable competition 195 00:09:54,080 --> 00:09:56,360 Speaker 2: abroad and maybe eventually in the US, and they don't 196 00:09:56,360 --> 00:09:58,520 Speaker 2: want to be caught when the tide goes out, so 197 00:09:58,559 --> 00:09:58,960 Speaker 2: to speak. 198 00:09:59,080 --> 00:10:03,320 Speaker 1: It's interesting this point because speaking specific about electric vehicles, 199 00:10:03,360 --> 00:10:06,400 Speaker 1: because I mean you and me, Derek, I was editing 200 00:10:06,440 --> 00:10:09,400 Speaker 1: and you were writing the pieces that we wrote before 201 00:10:09,440 --> 00:10:12,839 Speaker 1: the election, looking at, you know, potential consequences for different 202 00:10:12,840 --> 00:10:17,120 Speaker 1: parts of the energy transition, for different electoral outcomes, and 203 00:10:17,440 --> 00:10:19,080 Speaker 1: one of the things we talked about was when we 204 00:10:19,080 --> 00:10:21,440 Speaker 1: looked at things from the perspective of electric vehicles, and 205 00:10:21,480 --> 00:10:24,719 Speaker 1: I remember us writing and talking about how the thing 206 00:10:24,760 --> 00:10:27,560 Speaker 1: that really would drive the electric vehicle market is actually 207 00:10:27,559 --> 00:10:31,640 Speaker 1: the fuel economy standards and the tax credits were what 208 00:10:31,920 --> 00:10:36,360 Speaker 1: was going to help make that economically work for the 209 00:10:36,520 --> 00:10:40,560 Speaker 1: US automotive industry, and so for them that you know, 210 00:10:40,640 --> 00:10:43,440 Speaker 1: one positive outcome was having the fuel economy standards and 211 00:10:43,480 --> 00:10:46,680 Speaker 1: the tax credits. Another palatable outcome is no more fuel 212 00:10:46,679 --> 00:10:49,680 Speaker 1: economy standards but no more tax credits. And the kind 213 00:10:49,679 --> 00:10:52,120 Speaker 1: of the worst case scenario for them was We've still 214 00:10:52,160 --> 00:10:54,840 Speaker 1: got the fuel economy standards, you don't have the tax credits. 215 00:10:54,880 --> 00:10:57,360 Speaker 1: Now I know that there are very likely to be 216 00:10:57,440 --> 00:10:59,800 Speaker 1: changes in fuel economy standards, so maybe they'll end up 217 00:10:59,840 --> 00:11:02,440 Speaker 1: in I guess what I would describe the purgatory of 218 00:11:02,480 --> 00:11:04,839 Speaker 1: this picture. But right now they're in hell because they 219 00:11:04,880 --> 00:11:07,320 Speaker 1: do have the few economy standards and they don't have 220 00:11:07,360 --> 00:11:08,080 Speaker 1: the tax credits. 221 00:11:08,240 --> 00:11:11,839 Speaker 2: So it's about that they actually don't because the One 222 00:11:11,840 --> 00:11:14,480 Speaker 2: Big Beautiful Bill Act somehow managed to get past the 223 00:11:14,480 --> 00:11:18,320 Speaker 2: Senate parliamentarian the ability to change the fee structure for 224 00:11:18,800 --> 00:11:21,880 Speaker 2: violations of the Corporate Avatuel Economy standards from a certain 225 00:11:21,920 --> 00:11:25,320 Speaker 2: dollar value to zero dollars. So effectively, the standards are 226 00:11:25,360 --> 00:11:28,120 Speaker 2: still on the books, but they've been effectively repealed because 227 00:11:28,120 --> 00:11:31,719 Speaker 2: there's no punishment for violating them. Now there's another set 228 00:11:31,760 --> 00:11:35,079 Speaker 2: of standards that are related to emissions from tailpipes carbon 229 00:11:35,120 --> 00:11:39,360 Speaker 2: dioxide emissions. The Trump administration is trying to simultaneously remove 230 00:11:39,440 --> 00:11:42,640 Speaker 2: any regulations at the federal level from the Environmental Protection Agency, 231 00:11:42,679 --> 00:11:45,880 Speaker 2: but also argue that it is still in the Environmental 232 00:11:45,880 --> 00:11:49,400 Speaker 2: Protection Agency's jurisdiction to regulate that gas, so that say, 233 00:11:49,679 --> 00:11:53,920 Speaker 2: states like California, for example, cannot do so themselves. The 234 00:11:53,960 --> 00:11:56,240 Speaker 2: background here is that in the US there's something called 235 00:11:56,280 --> 00:11:59,000 Speaker 2: federal preemption, where if something is regulated to the federal level, 236 00:11:59,040 --> 00:12:00,640 Speaker 2: it cannot be at the state level, and conversely, if 237 00:12:00,640 --> 00:12:02,880 Speaker 2: it's not regulated at the federal level, states can, And 238 00:12:02,920 --> 00:12:04,880 Speaker 2: so there's a theory that a really large market like 239 00:12:04,920 --> 00:12:07,840 Speaker 2: California could still drive things forward, as we discussed in 240 00:12:07,840 --> 00:12:10,160 Speaker 2: that research note, by doing its own regulations. The Trump 241 00:12:10,200 --> 00:12:13,840 Speaker 2: administration is currently actively challenging that through a variety of mechanisms, 242 00:12:13,840 --> 00:12:15,960 Speaker 2: firstly by saying that states don't have the right to 243 00:12:16,080 --> 00:12:20,079 Speaker 2: regulate greenhouse gasses. Secondly, they've even used the Federal Trade Commission, 244 00:12:20,080 --> 00:12:22,920 Speaker 2: which mostly does antitrust, to try and avoid a voluntary 245 00:12:22,920 --> 00:12:25,320 Speaker 2: agreement between the State of California and truck makers over 246 00:12:25,400 --> 00:12:29,720 Speaker 2: continuing to enforce some standards irrespective of the underlying law. 247 00:12:29,920 --> 00:12:31,880 Speaker 2: So it's a bit of a full court press on 248 00:12:31,920 --> 00:12:34,040 Speaker 2: both sides right now, and we're kind of waiting for 249 00:12:34,200 --> 00:12:36,720 Speaker 2: the courts in question, not basketball courts, but legal courts 250 00:12:36,720 --> 00:12:39,160 Speaker 2: to determine what the rules of the game are, so 251 00:12:39,280 --> 00:12:39,720 Speaker 2: to speak. 252 00:12:39,960 --> 00:12:43,640 Speaker 1: Wow, I had not fully realized that they'd managed to 253 00:12:43,840 --> 00:12:47,680 Speaker 1: make these changes, you know, effectively to fuel economy standards 254 00:12:47,720 --> 00:12:50,680 Speaker 1: and taking away the sort of ability to penalize. It 255 00:12:50,720 --> 00:12:53,880 Speaker 1: doesn't just weaken fuel economy standards, it just basically throws 256 00:12:53,880 --> 00:12:56,840 Speaker 1: the concept out of the door completely. Is that a 257 00:12:56,840 --> 00:12:57,480 Speaker 1: fair statement? 258 00:12:57,760 --> 00:13:00,840 Speaker 3: You will not get penalized for violating them because that's 259 00:13:00,880 --> 00:13:05,440 Speaker 3: been negated. So yes, that's effectively correct for cafe standards, right, Derek, 260 00:13:05,480 --> 00:13:08,240 Speaker 3: unless I'm getting my standards wrong, But yes, that's right. 261 00:13:08,280 --> 00:13:10,520 Speaker 2: And there's the separate emission standards which are in a 262 00:13:10,520 --> 00:13:11,840 Speaker 2: bit of a legal limbo right now. 263 00:13:12,000 --> 00:13:13,640 Speaker 1: And so I suppose, you know, depending on what happens 264 00:13:13,720 --> 00:13:16,920 Speaker 1: in California for the ev industry, they're somewhere in between 265 00:13:16,960 --> 00:13:20,120 Speaker 1: Helen purgatory, I guess, depending on how that plays out, 266 00:13:20,200 --> 00:13:22,040 Speaker 1: But it's you know, one of the questions we're going 267 00:13:22,120 --> 00:13:23,920 Speaker 1: to ask is who's winning and who's losing in all 268 00:13:23,960 --> 00:13:26,560 Speaker 1: of this. It seems that for the automotive industry this 269 00:13:26,640 --> 00:13:30,559 Speaker 1: is probably not good news, particularly given that other countries 270 00:13:30,559 --> 00:13:34,640 Speaker 1: around the world are electrifying at different paces and the 271 00:13:34,760 --> 00:13:37,680 Speaker 1: US is increasingly not at the table as a manufacturer. 272 00:13:37,720 --> 00:13:39,160 Speaker 1: Would that be a fair statement. 273 00:13:39,400 --> 00:13:41,360 Speaker 2: I think that's fair. I would say there was one 274 00:13:41,400 --> 00:13:44,240 Speaker 2: place where they sort of managed to snatch a small 275 00:13:44,320 --> 00:13:46,920 Speaker 2: victory from the jaws of defeat, which was they managed 276 00:13:46,920 --> 00:13:50,120 Speaker 2: to maintain the forty five X Advanced Manufacturing credits, which 277 00:13:50,120 --> 00:13:52,920 Speaker 2: seem to be their biggest legislative priority, even though the 278 00:13:52,960 --> 00:13:56,040 Speaker 2: consumer demand side incentives or buying electric vehicles are now gone. 279 00:13:56,200 --> 00:13:58,800 Speaker 2: That said, they come with big new complications. There's a 280 00:13:58,800 --> 00:14:02,560 Speaker 2: lot of complicated illustrative burdens around proving that you didn't 281 00:14:02,600 --> 00:14:07,839 Speaker 2: source a certain very high percentage of Chinese or Russian runia. 282 00:14:07,840 --> 00:14:10,960 Speaker 2: In North Korean it mostly Chinese manufactured components or intellectual 283 00:14:11,000 --> 00:14:13,440 Speaker 2: property in the manufacturing of your battery. And there's also 284 00:14:13,480 --> 00:14:16,480 Speaker 2: some rules about vertically integrated manufacturing as well, so that 285 00:14:16,520 --> 00:14:18,760 Speaker 2: makes it harder to claim these things in practice. Going 286 00:14:18,800 --> 00:14:21,720 Speaker 2: back to the for example, they famously had a licensing 287 00:14:21,760 --> 00:14:25,800 Speaker 2: deal with the Chinese battery maker CATL very controversial, but 288 00:14:26,200 --> 00:14:30,680 Speaker 2: they currently think that that is a viable licensing deal. 289 00:14:30,880 --> 00:14:32,520 Speaker 2: We think that's still where they're going to get the 290 00:14:32,520 --> 00:14:35,920 Speaker 2: bulk of their LFP within pherophosphate batteries, which are meant 291 00:14:35,920 --> 00:14:38,160 Speaker 2: to reduce the cost of the cars they're making. But 292 00:14:38,240 --> 00:14:41,320 Speaker 2: at the same time, there's some retroactivity rules and other 293 00:14:41,320 --> 00:14:43,920 Speaker 2: complications that make it kind of hard to tell if 294 00:14:44,120 --> 00:14:47,320 Speaker 2: this licensing deal will ultimately be considered kosher, and that 295 00:14:47,360 --> 00:14:49,680 Speaker 2: has pretty big financial implications for them. 296 00:14:50,080 --> 00:14:52,400 Speaker 1: So there's kind of a lifeline in here for the 297 00:14:52,440 --> 00:14:55,000 Speaker 1: automotive industry. And you know, the other big topic with 298 00:14:55,080 --> 00:14:58,000 Speaker 1: this administration is tariffs, and I'm really interested to think 299 00:14:58,040 --> 00:15:00,800 Speaker 1: about how the combination of the OBB and everything we're 300 00:15:00,800 --> 00:15:04,400 Speaker 1: talking about in relation to electric vehicles intersects with tariffs 301 00:15:04,440 --> 00:15:07,640 Speaker 1: and in particular the overall picture for the US automotive 302 00:15:07,840 --> 00:15:12,800 Speaker 1: industry and market. So obviously, the removal of the consumer 303 00:15:12,840 --> 00:15:17,040 Speaker 1: facing tax credits maybe diminishes the demand for electric vehicles, 304 00:15:17,080 --> 00:15:19,720 Speaker 1: as well as a few economy standards also diminished the demand. 305 00:15:19,840 --> 00:15:23,040 Speaker 1: There is still a tax credit for manufacturing, albeit with 306 00:15:23,120 --> 00:15:25,800 Speaker 1: strings attached. But the other thing we've talked about is 307 00:15:25,960 --> 00:15:30,960 Speaker 1: how tariffs may impact the manufacturing conventional vehicles because the 308 00:15:31,000 --> 00:15:34,120 Speaker 1: components of internal combustion engine cross the border so many times. 309 00:15:34,120 --> 00:15:36,040 Speaker 1: And I mean, I don't think we've necessarily fully figured 310 00:15:36,080 --> 00:15:37,920 Speaker 1: out where we sit in all of that. But is 311 00:15:37,920 --> 00:15:41,480 Speaker 1: there a scenario where just cars generally are more expensive 312 00:15:41,480 --> 00:15:44,600 Speaker 1: and it's not necessarily the case the electric vehicles will 313 00:15:44,640 --> 00:15:47,880 Speaker 1: be less competitive or is that a little bit simplistic. 314 00:15:48,320 --> 00:15:51,360 Speaker 2: I think it's complicated to map out. We are definitely 315 00:15:51,360 --> 00:15:54,480 Speaker 2: seeing tariffs on a lot of different automotive components that 316 00:15:54,560 --> 00:15:57,320 Speaker 2: move across borders quite a bit. But also there has 317 00:15:57,320 --> 00:16:00,760 Speaker 2: been complexities involving steel and aluminum terror and whether there 318 00:16:00,760 --> 00:16:03,000 Speaker 2: are associated products that are terrified that rate. It's sometimes 319 00:16:03,040 --> 00:16:04,920 Speaker 2: it's a difficult to even figure out what rate should 320 00:16:04,920 --> 00:16:07,480 Speaker 2: be applied to a specific opponent. I think it's worth 321 00:16:07,520 --> 00:16:11,320 Speaker 2: thinking about the other restriction on the ev boom in 322 00:16:11,360 --> 00:16:13,880 Speaker 2: the US, which is charging. We've seen a lot of 323 00:16:13,880 --> 00:16:16,960 Speaker 2: investment in charging moving forward and planned and more to 324 00:16:17,000 --> 00:16:19,400 Speaker 2: the point, there are even some court victories on this 325 00:16:19,480 --> 00:16:24,080 Speaker 2: point where the anev I New Energy Vehicle Infrastructure Charging 326 00:16:24,160 --> 00:16:26,640 Speaker 2: program that was a grand program from the Infrastructure Investment 327 00:16:26,640 --> 00:16:29,480 Speaker 2: of Jobs act IJ or the bipartis and Infrastructure Law 328 00:16:29,560 --> 00:16:32,320 Speaker 2: BIL that was withheld by the Department of Transportation for 329 00:16:32,360 --> 00:16:34,760 Speaker 2: a long time. Eventually they lost a court case and 330 00:16:34,800 --> 00:16:37,600 Speaker 2: now they're basically distributing it again, but with fewer restrictions 331 00:16:37,640 --> 00:16:39,960 Speaker 2: on how it's deployed. So between the federal funding and 332 00:16:39,960 --> 00:16:41,880 Speaker 2: a lot of action by the private market, you could 333 00:16:41,960 --> 00:16:46,560 Speaker 2: see some of these restraints on ev adoption be removed, 334 00:16:46,680 --> 00:16:49,400 Speaker 2: in part because you know, electricity rates, while they're going up, 335 00:16:49,480 --> 00:16:51,400 Speaker 2: in some cases, it can be cheaper to charge a 336 00:16:51,480 --> 00:16:54,040 Speaker 2: car with that to fuel it at any rate. The 337 00:16:54,040 --> 00:16:56,160 Speaker 2: point is there's a lot of restrictions outside of the 338 00:16:56,200 --> 00:16:59,320 Speaker 2: pure price dimension that might be getting loose into the 339 00:16:59,360 --> 00:17:00,000 Speaker 2: next few years. 340 00:17:00,320 --> 00:17:03,359 Speaker 3: I mean, already we are seeing prices up for vehicles, 341 00:17:03,560 --> 00:17:06,199 Speaker 3: but across the board as I understand, including for used cars, 342 00:17:06,280 --> 00:17:08,919 Speaker 3: So it'll take time, I think. On the EV side, 343 00:17:09,040 --> 00:17:11,440 Speaker 3: one of the interesting things to watch is I believe 344 00:17:11,440 --> 00:17:13,920 Speaker 3: it's the start of next month, Derek, or September third, 345 00:17:13,960 --> 00:17:14,359 Speaker 3: something like that. 346 00:17:14,359 --> 00:17:16,040 Speaker 2: September third is when the credits run out, so there 347 00:17:16,040 --> 00:17:17,440 Speaker 2: should be a big boom right before. 348 00:17:17,200 --> 00:17:20,760 Speaker 3: That at this very moment. Now, maybe there may be 349 00:17:20,800 --> 00:17:24,280 Speaker 3: a very strong run on this Labor Day weekend. Maybe 350 00:17:24,280 --> 00:17:27,119 Speaker 3: a lot of specials at auto dealers, of people looking 351 00:17:27,160 --> 00:17:30,240 Speaker 3: to get an EV before they can't get that tax credit. 352 00:17:30,240 --> 00:17:32,399 Speaker 3: That's seventy five hundred dollars tax credit. Especially since you 353 00:17:32,400 --> 00:17:34,840 Speaker 3: can get the tax credit basically at the point of sale, 354 00:17:34,920 --> 00:17:38,159 Speaker 3: like in the form of a discountant car right on site, 355 00:17:38,440 --> 00:17:41,719 Speaker 3: they're very well, maybe scramble, and then the question is 356 00:17:41,760 --> 00:17:43,440 Speaker 3: sort of I would say, you probably want to wait 357 00:17:43,480 --> 00:17:45,560 Speaker 3: three to six months for the dust to clear on that, 358 00:17:45,640 --> 00:17:47,239 Speaker 3: and then we'll start to get a better sense as 359 00:17:47,280 --> 00:17:51,200 Speaker 3: to what demand looks like for EV's unsubsidized. 360 00:17:50,800 --> 00:17:52,880 Speaker 2: Especially since federal data, as far as I can tell, 361 00:17:52,920 --> 00:17:55,480 Speaker 2: show that a minority of consumers were actually even able 362 00:17:55,480 --> 00:17:57,040 Speaker 2: to take or qualify for the credit. There were a 363 00:17:57,080 --> 00:17:59,400 Speaker 2: lot of strings attached, and so most EV sales didn't 364 00:17:59,400 --> 00:18:00,880 Speaker 2: even have that we nerve before. 365 00:18:01,280 --> 00:18:03,120 Speaker 1: Interesting. I mean, I'd be curious to know if any 366 00:18:03,160 --> 00:18:05,960 Speaker 1: of our listeners did manage to snag a good deal 367 00:18:06,040 --> 00:18:08,000 Speaker 1: on an electric vehicle over the weekend. 368 00:18:08,240 --> 00:18:10,600 Speaker 3: Yeah, as Derek mentioned, they have to meet certain income 369 00:18:10,680 --> 00:18:13,280 Speaker 3: standards and things like that, so not everyone qualifies. 370 00:18:13,480 --> 00:18:16,280 Speaker 1: It's a really interesting observation. You know, you made Ethan 371 00:18:16,359 --> 00:18:19,760 Speaker 1: that the cost of vehicles is rising, right, now in 372 00:18:19,760 --> 00:18:22,840 Speaker 1: the US. But let's talk about wind, solar, and batteries, 373 00:18:23,080 --> 00:18:26,080 Speaker 1: and then I'm talking about good scale batteries here. How 374 00:18:26,119 --> 00:18:28,920 Speaker 1: do all of these changes impact those and how does 375 00:18:28,960 --> 00:18:32,399 Speaker 1: it intersect with the administration's trade policies. 376 00:18:32,920 --> 00:18:37,600 Speaker 2: So wind is one of the most on shore, domestically 377 00:18:37,600 --> 00:18:41,320 Speaker 2: based supply chains, at least for the onshore wind part ironically, 378 00:18:41,480 --> 00:18:45,639 Speaker 2: so that's relatively less affected by trade policy, including a 379 00:18:45,720 --> 00:18:48,399 Speaker 2: recent tariff probe launch under Resection two three two of 380 00:18:48,480 --> 00:18:51,919 Speaker 2: the Trade Expansion Act. But that also means that's partly 381 00:18:51,920 --> 00:18:54,399 Speaker 2: why they've been phasing out subsidies for that faster. So 382 00:18:54,640 --> 00:18:58,240 Speaker 2: there's no manufacturing tax credits for wind parts after two years, 383 00:18:58,400 --> 00:19:01,400 Speaker 2: and wind, along with solars, tax credits basically go away 384 00:19:01,440 --> 00:19:04,680 Speaker 2: after two years. Solar is more trade exposed, but also 385 00:19:04,800 --> 00:19:07,960 Speaker 2: conveniently has already largely moved to Southeast Asia, which has 386 00:19:08,080 --> 00:19:10,080 Speaker 2: had higher tariffs now but is tariffed at a lower 387 00:19:10,160 --> 00:19:12,560 Speaker 2: rate than China, and we're also seeing some of that 388 00:19:12,640 --> 00:19:16,840 Speaker 2: pop up in India Middle East. The sector that's most 389 00:19:17,160 --> 00:19:20,720 Speaker 2: exposed to this sort of intersection of new supply chain 390 00:19:20,800 --> 00:19:24,680 Speaker 2: rules and tariff rules is battery storage because the sort 391 00:19:24,720 --> 00:19:28,240 Speaker 2: of standard LFP batteries overwhelmingly come from China. Their components 392 00:19:28,240 --> 00:19:30,720 Speaker 2: overwhelmingly come from China, even if they're assembled in the US, 393 00:19:30,880 --> 00:19:33,320 Speaker 2: and the critical minerals that are key to the functioning 394 00:19:33,359 --> 00:19:35,879 Speaker 2: of that battery, particularly like graphite for an and out, 395 00:19:35,920 --> 00:19:39,119 Speaker 2: overwhelmingly over ninety percent in many cases come from China. 396 00:19:39,280 --> 00:19:43,239 Speaker 2: So there's a real risk that these restrictions, which are 397 00:19:43,359 --> 00:19:46,640 Speaker 2: higher for batteries by the way, there's even lower percentages 398 00:19:46,640 --> 00:19:49,439 Speaker 2: of Chinese content that you're permitted to use to qualify 399 00:19:49,440 --> 00:19:51,520 Speaker 2: for credit for energy storage in any other technology, those 400 00:19:51,520 --> 00:19:54,080 Speaker 2: could really bite. And we still don't really know how 401 00:19:54,119 --> 00:19:58,320 Speaker 2: they're going to calculate those content percentages. As tariffs increase 402 00:19:58,440 --> 00:20:01,480 Speaker 2: the cost of some of the components and the critical 403 00:20:01,480 --> 00:20:04,400 Speaker 2: minerals within those batteries, it's possible that that could sort 404 00:20:04,400 --> 00:20:08,560 Speaker 2: of change the calculation of what percentage of your costs 405 00:20:08,600 --> 00:20:11,600 Speaker 2: as either a manufacturer or developer come from China. We 406 00:20:11,640 --> 00:20:13,239 Speaker 2: don't really know what the rules are going to be 407 00:20:13,280 --> 00:20:15,160 Speaker 2: for that yet, but that's a thing I would keep 408 00:20:15,200 --> 00:20:15,639 Speaker 2: in mind. 409 00:20:16,160 --> 00:20:18,639 Speaker 3: There's really two sort of things that are going on 410 00:20:18,920 --> 00:20:23,480 Speaker 3: that really affect international trade of these goods, and certainly 411 00:20:23,600 --> 00:20:26,720 Speaker 3: the tariffs are getting a lot of publicity. The numbers 412 00:20:26,760 --> 00:20:28,600 Speaker 3: and the rates are kind of all over the map. 413 00:20:28,640 --> 00:20:31,600 Speaker 3: They literally are changing week to week by country and 414 00:20:31,680 --> 00:20:34,440 Speaker 3: sometimes by sector as well, and they're very squarely and 415 00:20:34,480 --> 00:20:36,359 Speaker 3: hard to keep track of, although we are doing our 416 00:20:36,400 --> 00:20:39,280 Speaker 3: best to do that and publish updates. But then beneath that, 417 00:20:39,359 --> 00:20:43,680 Speaker 3: as Derek mentions, there is within the Big Beautiful Bill Act, 418 00:20:43,960 --> 00:20:48,800 Speaker 3: specific foreign entity rules that are legislated and basically will 419 00:20:48,880 --> 00:20:53,440 Speaker 3: mandate that of your say, battery, a certain share of 420 00:20:53,520 --> 00:20:56,800 Speaker 3: the equipment that goes into that battery must be made 421 00:20:56,880 --> 00:20:59,800 Speaker 3: domestically essentially or not, let's put it must not be 422 00:20:59,800 --> 00:21:03,240 Speaker 3: made from a foreign entity of concern country i e. China, 423 00:21:03,560 --> 00:21:07,400 Speaker 3: And those percentages go up quickly over time and really 424 00:21:07,400 --> 00:21:09,480 Speaker 3: will have a real effect on the market. And frankly, 425 00:21:09,600 --> 00:21:11,280 Speaker 3: in some ways, if I were trying to think about, 426 00:21:11,400 --> 00:21:14,040 Speaker 3: you know, as an international player, like which policies out 427 00:21:14,040 --> 00:21:16,399 Speaker 3: of Washington I need to keep track of and be 428 00:21:16,520 --> 00:21:19,080 Speaker 3: most aware of, those are sort of inevitable, and as 429 00:21:19,119 --> 00:21:22,200 Speaker 3: Derek points out, there's some real questions about exactly how 430 00:21:22,200 --> 00:21:24,200 Speaker 3: the details on some of that's going to get implemented, 431 00:21:24,200 --> 00:21:27,040 Speaker 3: But there's an inevitability of that because it's legislation. There 432 00:21:27,080 --> 00:21:30,160 Speaker 3: are a lot of complications associated with all these trade 433 00:21:30,160 --> 00:21:33,680 Speaker 3: announcements from Trump that would lead one to question whether 434 00:21:33,760 --> 00:21:36,200 Speaker 3: or not they really will have longevity. I certainly wonder 435 00:21:36,280 --> 00:21:37,240 Speaker 3: that myself, and. 436 00:21:37,200 --> 00:21:38,760 Speaker 2: I think this also sets up a bit of a 437 00:21:38,800 --> 00:21:41,720 Speaker 2: trade off for developers and manufacturers. On the one hand, 438 00:21:42,160 --> 00:21:45,560 Speaker 2: you need to avoid Chinese or Russian or other sourceing 439 00:21:45,600 --> 00:21:47,680 Speaker 2: in order to qualify for subsidies. On the other hand, 440 00:21:47,840 --> 00:21:51,119 Speaker 2: often that's the most accessible and often the lowest cost 441 00:21:51,200 --> 00:21:53,919 Speaker 2: and frankly often high quality supply you can get. So 442 00:21:54,119 --> 00:21:57,440 Speaker 2: at which point, basically do you say the subsidy is 443 00:21:57,480 --> 00:21:58,560 Speaker 2: not even worth it. I'm not going to be able 444 00:21:58,560 --> 00:22:00,480 Speaker 2: to get it. I might as well just shift my 445 00:22:00,520 --> 00:22:02,840 Speaker 2: supply chain back to China, which was one of the 446 00:22:02,840 --> 00:22:05,240 Speaker 2: things that the IRA as a policy was trying to avoid. 447 00:22:05,400 --> 00:22:05,520 Speaker 1: Right. 448 00:22:05,560 --> 00:22:08,080 Speaker 3: But there's this other interesting phenomenon going on, which is 449 00:22:08,119 --> 00:22:10,400 Speaker 3: I think that a lot of folks assumed that if 450 00:22:10,440 --> 00:22:14,560 Speaker 3: you removed or lessened the forty five x manufacturing tax credit, 451 00:22:14,800 --> 00:22:17,719 Speaker 3: which they have now they have certainly reduced and created 452 00:22:17,720 --> 00:22:20,080 Speaker 3: all kinds of new requirements around it, that if you 453 00:22:20,240 --> 00:22:22,720 Speaker 3: scaled that back, then you might see a halt on 454 00:22:22,800 --> 00:22:25,399 Speaker 3: all the manufacturing investment that we've seen, and I'm not 455 00:22:25,480 --> 00:22:28,720 Speaker 3: ready to say that that's necessarily happening across the board. 456 00:22:28,920 --> 00:22:31,520 Speaker 3: And I think one of the reasons why that is 457 00:22:31,760 --> 00:22:34,439 Speaker 3: the case is that if you're a multinational manufacturer of 458 00:22:34,440 --> 00:22:36,800 Speaker 3: equipment and you've already committed let's say a billion or 459 00:22:36,800 --> 00:22:39,200 Speaker 3: two billion dollars in the United States, and you look 460 00:22:39,240 --> 00:22:41,760 Speaker 3: around at what Trump is doing on tariffs, you may 461 00:22:41,840 --> 00:22:43,760 Speaker 3: very well feel that it's just wise to have some 462 00:22:43,840 --> 00:22:46,600 Speaker 3: manufacturing on US soil, period, because you don't know where 463 00:22:46,600 --> 00:22:48,959 Speaker 3: this whole tariff stuff is going to end up in 464 00:22:49,000 --> 00:22:52,359 Speaker 3: the long run. So I think it's a very unclear situation, 465 00:22:52,600 --> 00:22:55,280 Speaker 3: something we're definitely looking more closely at in the next 466 00:22:55,280 --> 00:22:57,880 Speaker 3: couple months. But I would caution folks against just sort 467 00:22:57,880 --> 00:23:00,840 Speaker 3: of assuming that there's like the the cause and effects. 468 00:23:00,880 --> 00:23:02,840 Speaker 3: Sometimes a policy is not as clear as people think 469 00:23:02,840 --> 00:23:04,560 Speaker 3: it's going to be. Don't get me wrong. As far 470 00:23:04,560 --> 00:23:07,159 Speaker 3: as the industry is concerned, this bill is terrible. I 471 00:23:07,160 --> 00:23:09,720 Speaker 3: think we need to be clear, but there's going to 472 00:23:09,720 --> 00:23:11,560 Speaker 3: be some unexpected consequences. 473 00:23:12,480 --> 00:23:15,399 Speaker 1: Yeah, it's a really interesting thought that it might be 474 00:23:15,520 --> 00:23:19,800 Speaker 1: that in some cases developers just end up sourcing their 475 00:23:19,800 --> 00:23:22,639 Speaker 1: batteries from the places that they're not supposed to source 476 00:23:22,680 --> 00:23:26,240 Speaker 1: them from and forego all of the government economic benefits, 477 00:23:26,520 --> 00:23:29,000 Speaker 1: and they just do it at a higher cost, which 478 00:23:29,080 --> 00:23:31,920 Speaker 1: I suppose, you know, speaks to a broader issue, which 479 00:23:31,960 --> 00:23:35,520 Speaker 1: is with both the OBBBA Acts undoing a lot of 480 00:23:35,560 --> 00:23:38,359 Speaker 1: the Inflation Reduction Act and then the tariffs, we're seeing 481 00:23:38,440 --> 00:23:43,439 Speaker 1: a lot of undermining of supply of renewables to the US, 482 00:23:43,720 --> 00:23:47,720 Speaker 1: and if there is an sufficient, say, opportunity to build, 483 00:23:47,960 --> 00:23:51,800 Speaker 1: say gas capacity to compensate for that, then it probably 484 00:23:51,840 --> 00:23:54,960 Speaker 1: just means electricity gets more expensive for everyone, and then 485 00:23:55,040 --> 00:23:58,800 Speaker 1: maybe the market decides whether it's best to import solar, 486 00:23:59,000 --> 00:24:03,040 Speaker 1: albeit with a huge at the border, or to focus 487 00:24:03,200 --> 00:24:06,399 Speaker 1: on developing gas capacity, which you know, one of the 488 00:24:06,400 --> 00:24:08,880 Speaker 1: things we're looking into right now is the supply chain 489 00:24:08,920 --> 00:24:11,639 Speaker 1: constraints there. But it kind of leads on to the 490 00:24:11,640 --> 00:24:14,960 Speaker 1: next question. Because we've talked about how this Act has 491 00:24:15,119 --> 00:24:16,680 Speaker 1: taken a lot of the wind out of the sales 492 00:24:16,960 --> 00:24:21,000 Speaker 1: of a lot of energy transition technologies electric vehicles in particular, 493 00:24:21,400 --> 00:24:24,160 Speaker 1: wind and solar, and batteries in the power sector in particular, 494 00:24:24,359 --> 00:24:26,879 Speaker 1: Does it put the wind into the sales of some 495 00:24:27,000 --> 00:24:32,280 Speaker 1: of the alternatives, So I'm talking oil and gas specifically. 496 00:24:31,800 --> 00:24:35,479 Speaker 2: Well, mechanically, oil and gas now have a large number 497 00:24:35,560 --> 00:24:38,600 Speaker 2: of le sales the federal government is required to hold, 498 00:24:38,800 --> 00:24:42,280 Speaker 2: and that's at lower royalty rates, so that's considerably less 499 00:24:42,280 --> 00:24:45,240 Speaker 2: expensive as an option for oil and gas players to take. 500 00:24:45,280 --> 00:24:48,199 Speaker 2: But ultimately their production is really determined by macroeconomics, and 501 00:24:48,240 --> 00:24:50,359 Speaker 2: so firstly you see like a bit of a divergence 502 00:24:50,400 --> 00:24:52,680 Speaker 2: between oil and gas. The sort of global oil price 503 00:24:52,680 --> 00:24:54,679 Speaker 2: has been a bit depressed recently, and so I think 504 00:24:54,680 --> 00:24:57,040 Speaker 2: we're seeing fewer well completions and things like that. At 505 00:24:57,119 --> 00:24:59,480 Speaker 2: the same time, there is growing demand for gas because 506 00:24:59,480 --> 00:25:00,959 Speaker 2: if it's use in the power sector, as well as 507 00:25:00,960 --> 00:25:04,280 Speaker 2: a new set of approvals for loquified natural gas export terminals. 508 00:25:04,359 --> 00:25:07,520 Speaker 2: But also a very large portion of gas in the 509 00:25:07,680 --> 00:25:10,199 Speaker 2: US is associated gas that comes from oil production, so 510 00:25:10,200 --> 00:25:12,600 Speaker 2: it's a complicated and tril linkage of there. And lastly, 511 00:25:12,760 --> 00:25:14,920 Speaker 2: the majority of oil and gas production in the US 512 00:25:15,000 --> 00:25:17,800 Speaker 2: does not happen on federal land, so there is some 513 00:25:17,920 --> 00:25:20,919 Speaker 2: wind in the sales. And in particular because now forty 514 00:25:20,960 --> 00:25:24,000 Speaker 2: five q A carbon capture subsidy has an equal rate 515 00:25:24,080 --> 00:25:26,719 Speaker 2: for simply storing carbon in the ground and using it 516 00:25:26,760 --> 00:25:29,080 Speaker 2: to extract more oil from the ground. It's called enhanced 517 00:25:29,080 --> 00:25:31,040 Speaker 2: oil recovery. So there is some wind in the sales, 518 00:25:31,080 --> 00:25:33,560 Speaker 2: but it's very uncertain how much of a boost that 519 00:25:33,600 --> 00:25:36,719 Speaker 2: will actually be a in availability of these resources and 520 00:25:36,720 --> 00:25:38,200 Speaker 2: be in ultimate energy prices. 521 00:25:38,480 --> 00:25:40,320 Speaker 3: Yeah, I would just say that the sales I think 522 00:25:40,400 --> 00:25:43,560 Speaker 3: are actually kind of luffing at this point for oil 523 00:25:43,560 --> 00:25:45,960 Speaker 3: and gas, they haven't really picked up. I think, yeah, 524 00:25:45,960 --> 00:25:48,679 Speaker 3: these are policy changes that they're the industry's pleased with. 525 00:25:48,800 --> 00:25:52,080 Speaker 3: But look, West Texas Intermedia i'm looking at is treading 526 00:25:52,119 --> 00:25:54,760 Speaker 3: at sixty four dollars a barrel, and Henry Hub is 527 00:25:54,800 --> 00:25:57,320 Speaker 3: at about three bucks per million BTU at the moment. 528 00:25:57,440 --> 00:26:01,359 Speaker 3: Those are not prices that generally incentivize a tremendous amount 529 00:26:01,400 --> 00:26:04,720 Speaker 3: of new activity overall. And so I think this is 530 00:26:04,720 --> 00:26:07,800 Speaker 3: one of these cases where, having been in Washington for 531 00:26:07,840 --> 00:26:10,399 Speaker 3: a while, where I think there's sometimes and this is 532 00:26:10,440 --> 00:26:12,639 Speaker 3: actually between both parties, there's sort of a view that 533 00:26:12,760 --> 00:26:15,359 Speaker 3: if you just turn a policy dial in one direction, 534 00:26:15,520 --> 00:26:18,159 Speaker 3: then you immediately get this result. And so you know, 535 00:26:18,359 --> 00:26:21,080 Speaker 3: Trump is very interested in having more drilling and more production, 536 00:26:21,320 --> 00:26:23,159 Speaker 3: but it you know, if the prices aren't right, and 537 00:26:23,240 --> 00:26:26,359 Speaker 3: it's not clear exactly what the demand is it's not 538 00:26:26,560 --> 00:26:30,080 Speaker 3: necessarily going to happen. That said, if you eliminate the 539 00:26:30,240 --> 00:26:33,280 Speaker 3: tax credits for electric vehicles, which they've done on a 540 00:26:33,320 --> 00:26:37,359 Speaker 3: short timeline, that means you will likely put fewer cars 541 00:26:37,359 --> 00:26:39,440 Speaker 3: with plugs on the road. We in fact, be enough, 542 00:26:39,560 --> 00:26:43,120 Speaker 3: reduced its projections and forecasts for USCV adoption by about 543 00:26:43,200 --> 00:26:46,520 Speaker 3: half through twenty thirty, actually earlier this spring, even before 544 00:26:46,560 --> 00:26:49,239 Speaker 3: the bill passed, So that means, you know that a 545 00:26:49,240 --> 00:26:53,080 Speaker 3: potential reduction in demand for gasoline is going to be 546 00:26:53,359 --> 00:26:56,119 Speaker 3: less severe as a result of that, So there's no 547 00:26:56,200 --> 00:26:58,439 Speaker 3: question about that. And then the other aspect of this, 548 00:26:58,480 --> 00:27:01,280 Speaker 3: of course is on the power side and demand you 549 00:27:01,320 --> 00:27:04,480 Speaker 3: know for natural gas, both from domestic US power and 550 00:27:04,520 --> 00:27:08,360 Speaker 3: potentially from exports through liquid natural gas. And even there 551 00:27:08,359 --> 00:27:11,720 Speaker 3: I would argue though that the situation is not entirely clear. First, 552 00:27:11,720 --> 00:27:14,760 Speaker 3: on the LNG side, this administration is very keen to 553 00:27:15,160 --> 00:27:18,960 Speaker 3: green light export terminals, but you know, we are projecting 554 00:27:19,000 --> 00:27:21,920 Speaker 3: a potential overhang of capacity on lergy over the next 555 00:27:21,960 --> 00:27:24,480 Speaker 3: you know, I think five years or so, and we're 556 00:27:24,480 --> 00:27:27,680 Speaker 3: seeing some alternatives emerge in other parts of the world 557 00:27:27,760 --> 00:27:30,480 Speaker 3: in terms of adoption of other technologies like wind and 558 00:27:30,520 --> 00:27:34,080 Speaker 3: solar and then domestically, and I think this is an 559 00:27:34,080 --> 00:27:37,120 Speaker 3: interesting story is that, yes, we still we have cheap 560 00:27:37,160 --> 00:27:40,800 Speaker 3: gas here, but what we don't have in great availability 561 00:27:40,840 --> 00:27:43,800 Speaker 3: at the moment are natural gas turbines, turbines to use 562 00:27:43,880 --> 00:27:48,480 Speaker 3: in combined cycle natural gas power plants, and a backlog 563 00:27:48,560 --> 00:27:51,960 Speaker 3: for those at the moment. And so even though the 564 00:27:52,480 --> 00:27:55,240 Speaker 3: subsidies for wind and solar are being phased out, it's 565 00:27:55,280 --> 00:27:58,280 Speaker 3: not like gas is entirely ready to just jump in 566 00:27:58,320 --> 00:28:01,479 Speaker 3: and fill the gap that winds we're filling. 567 00:28:02,080 --> 00:28:05,359 Speaker 1: So when we I think it was after Trump's at 568 00:28:05,359 --> 00:28:08,840 Speaker 1: first hundred days in office, I hosted Derek on this 569 00:28:08,920 --> 00:28:12,679 Speaker 1: podcast and I asked him if there was anything that 570 00:28:12,800 --> 00:28:16,879 Speaker 1: had surprised him so far. And if I recall correctly, 571 00:28:16,960 --> 00:28:19,119 Speaker 1: but I think that Derek, you said that we knew 572 00:28:19,119 --> 00:28:21,680 Speaker 1: that this administration was not going to be pro the 573 00:28:21,800 --> 00:28:25,600 Speaker 1: energy transition, but you were quite surprised with how aggressively 574 00:28:25,680 --> 00:28:29,120 Speaker 1: they were going after things. Ethan, for your part, you 575 00:28:29,160 --> 00:28:32,120 Speaker 1: said earlier on this podcast that this has been terrible 576 00:28:32,280 --> 00:28:37,240 Speaker 1: for electric vehicles, wind, solar batteries overall. So then there's 577 00:28:37,280 --> 00:28:39,600 Speaker 1: a question, with all of that context in mind, is 578 00:28:39,600 --> 00:28:41,720 Speaker 1: there any way that for those industries this could have 579 00:28:41,760 --> 00:28:42,240 Speaker 1: been worse. 580 00:28:42,720 --> 00:28:44,959 Speaker 2: Well, from my point of view, there are some ways. 581 00:28:45,240 --> 00:28:47,800 Speaker 2: Right after the One Big Beautiful Bill Act passed, Trump 582 00:28:47,880 --> 00:28:51,240 Speaker 2: put out a very dramatic executive order saying that he 583 00:28:51,280 --> 00:28:55,400 Speaker 2: would change some underlying regulations in order to basically get 584 00:28:55,480 --> 00:28:57,760 Speaker 2: rid of a loophole that had been added in at 585 00:28:57,760 --> 00:28:59,880 Speaker 2: the last minute the legislative process and make it harder 586 00:28:59,880 --> 00:29:02,680 Speaker 2: for wind and solar projects who get tax credits. There 587 00:29:02,680 --> 00:29:04,480 Speaker 2: were two piece of guidance Who's supposed to put out 588 00:29:04,480 --> 00:29:06,480 Speaker 2: on that one on feign inchies of concern that we 589 00:29:06,560 --> 00:29:08,960 Speaker 2: haven't seen yet it's overdue, but another on beginning of 590 00:29:08,960 --> 00:29:13,160 Speaker 2: construction that was slightly early, and that one piece didn't 591 00:29:13,360 --> 00:29:16,360 Speaker 2: actually do anything retroactive, which we were worried about, nor 592 00:29:16,520 --> 00:29:20,360 Speaker 2: did it shorten the placed in service deadline for certain 593 00:29:20,400 --> 00:29:24,160 Speaker 2: projects being placed under construction before July fifth next year. 594 00:29:24,240 --> 00:29:26,800 Speaker 2: In other words, that one could have been worse. But 595 00:29:27,040 --> 00:29:29,280 Speaker 2: also we're waiting to see what the foreign Enerities of 596 00:29:29,320 --> 00:29:31,520 Speaker 2: Concern rule does, and that might be where the really 597 00:29:31,840 --> 00:29:34,320 Speaker 2: the real wallup comes. So I guess I would say 598 00:29:34,320 --> 00:29:38,040 Speaker 2: I've been surprised by the inconsistency as much as anything. Similarly, 599 00:29:38,200 --> 00:29:40,840 Speaker 2: there was a pause on an offshore wind project earlier 600 00:29:40,840 --> 00:29:43,720 Speaker 2: in the year that was reversed over a deal to 601 00:29:43,840 --> 00:29:46,280 Speaker 2: build a gas pipeline more expeditiously in New York. We've 602 00:29:46,560 --> 00:29:49,000 Speaker 2: seen another wind turbine halt off of New England this time, 603 00:29:49,120 --> 00:29:50,959 Speaker 2: and we don't know how that's going to be resolved. 604 00:29:50,960 --> 00:29:53,719 Speaker 2: I would say the unpredictability is the real watchword, and 605 00:29:53,960 --> 00:29:56,000 Speaker 2: it's hard to say whether things are better or worse 606 00:29:56,040 --> 00:29:58,480 Speaker 2: than we expected at any given point in time. 607 00:29:58,880 --> 00:30:03,480 Speaker 3: For me, I'm surprised that they seem to have such 608 00:30:03,640 --> 00:30:07,760 Speaker 3: disregard for the potential for raising energy costs in the 609 00:30:07,840 --> 00:30:10,520 Speaker 3: United States when you look at the whole of what 610 00:30:10,600 --> 00:30:13,440 Speaker 3: they are up to at the moment, and we're already 611 00:30:13,440 --> 00:30:17,600 Speaker 3: seeing signs, and particularly on electricity pricing in the PGM market, 612 00:30:17,640 --> 00:30:19,840 Speaker 3: which is you know, the mid Atlantic into the Midwest 613 00:30:19,960 --> 00:30:23,400 Speaker 3: and other parts, we're already seeing signs that prices are rising. 614 00:30:23,560 --> 00:30:27,080 Speaker 3: And I mean, it's not really that complicated. The tax 615 00:30:27,120 --> 00:30:31,000 Speaker 3: credits that support wind, solar and storage, if you take 616 00:30:31,040 --> 00:30:33,680 Speaker 3: them away for wind and solars as they're doing, these 617 00:30:33,680 --> 00:30:38,160 Speaker 3: are essentially direct subsidies to wind and solar producers that 618 00:30:38,240 --> 00:30:40,479 Speaker 3: the American tax payer has been paying for so you're 619 00:30:40,560 --> 00:30:45,280 Speaker 3: essentially socializing a discounted cost of electricity. If you get 620 00:30:45,360 --> 00:30:47,240 Speaker 3: rid of that, which is what they're doing, then you 621 00:30:47,400 --> 00:30:50,280 Speaker 3: just focus those costs elsewhere. So in other words, you're 622 00:30:50,400 --> 00:30:53,040 Speaker 3: just going to have higher priced power contracts that are 623 00:30:53,040 --> 00:30:55,320 Speaker 3: going to need to get signed for projects to get built. 624 00:30:55,360 --> 00:30:59,040 Speaker 3: Because on the demand side of things, demand for electricity 625 00:30:59,040 --> 00:31:00,920 Speaker 3: in the United States, for the first time in about 626 00:31:00,960 --> 00:31:04,560 Speaker 3: fifteen twenty years, is actually rising, and it's rising pretty quickly, 627 00:31:04,560 --> 00:31:07,400 Speaker 3: so we have to add more capacity. So I don't 628 00:31:07,400 --> 00:31:11,120 Speaker 3: really understand the thinking around some of the combined policies 629 00:31:11,120 --> 00:31:13,720 Speaker 3: that they've put into place that they're directly going to 630 00:31:13,760 --> 00:31:16,800 Speaker 3: lead to higher energy costs for business and for retail consumers. 631 00:31:16,960 --> 00:31:20,520 Speaker 3: I live in Virginia. Dominion has already announced that they 632 00:31:20,560 --> 00:31:23,000 Speaker 3: are seeking to raise with the average electricity bill in 633 00:31:23,120 --> 00:31:25,840 Speaker 3: Virginia by twenty dollars a month starting in twenty twenty six. 634 00:31:26,000 --> 00:31:28,960 Speaker 3: This is an administration that won an election in part 635 00:31:28,960 --> 00:31:32,760 Speaker 3: because people were pretty unhappy about inflation. So I don't 636 00:31:32,800 --> 00:31:36,440 Speaker 3: really understand this policy, this sort of lack of understanding 637 00:31:36,440 --> 00:31:39,240 Speaker 3: of what the cost implications are. There was some news 638 00:31:39,280 --> 00:31:42,200 Speaker 3: the other day that the Energy Secretary sort of controversially 639 00:31:42,240 --> 00:31:46,920 Speaker 3: acknowledged that electricity prices are rising, and of course immediately 640 00:31:47,080 --> 00:31:50,160 Speaker 3: you know the blame is getting shifted onto renewables, but 641 00:31:50,240 --> 00:31:51,280 Speaker 3: that is not the cause here. 642 00:31:51,640 --> 00:31:54,360 Speaker 1: One final question, and this again kind of speaks to 643 00:31:54,400 --> 00:31:57,880 Speaker 1: the bigger picture. And the Inflation Reduction Act was extreme 644 00:31:57,920 --> 00:32:00,640 Speaker 1: in one direction, and you know that people within the 645 00:32:00,680 --> 00:32:03,360 Speaker 1: industries that we cover, I think we're very excited by it. 646 00:32:03,480 --> 00:32:06,480 Speaker 1: The OBBBA is very extreme in the other direction. Who 647 00:32:06,480 --> 00:32:09,160 Speaker 1: knows he'll win the next election. Who knows which extreme 648 00:32:09,200 --> 00:32:11,800 Speaker 1: we're going to flip flop to. Particularly, you know, with 649 00:32:11,960 --> 00:32:17,520 Speaker 1: this vehicle of budget reconciliation, is this harming the investability 650 00:32:17,800 --> 00:32:21,400 Speaker 1: of the US irrespective of which type of technology you're 651 00:32:21,480 --> 00:32:24,080 Speaker 1: interested in, whether it's a clean technology or another. This 652 00:32:24,200 --> 00:32:27,760 Speaker 1: is zigzagging in direction. Meanwhile, China is plowing ahead or 653 00:32:27,760 --> 00:32:30,760 Speaker 1: with a very stable and consistent line on which technologies 654 00:32:30,760 --> 00:32:33,240 Speaker 1: and industries it's supporting, and that is seen as the 655 00:32:33,520 --> 00:32:36,520 Speaker 1: competition here. So, aside from whether we agree with the 656 00:32:36,560 --> 00:32:39,920 Speaker 1: current policies, do you think that just generally, the US 657 00:32:40,040 --> 00:32:43,600 Speaker 1: has an issue with the stability of its energy policy. 658 00:32:43,880 --> 00:32:47,320 Speaker 2: Yes, we've heard similar complaints about the stability of oil 659 00:32:47,360 --> 00:32:49,960 Speaker 2: and gas policy. Under the Biden administration and the sudden 660 00:32:49,960 --> 00:32:54,240 Speaker 2: and dramatic pause on L and G export authorizations. I 661 00:32:54,240 --> 00:32:57,760 Speaker 2: think this is a consistent concern across energy categories, and 662 00:32:57,840 --> 00:33:00,000 Speaker 2: investors are going to look for stability they can find 663 00:33:00,280 --> 00:33:03,560 Speaker 2: from demand signals, from state level policy. It's a bit 664 00:33:03,600 --> 00:33:06,240 Speaker 2: more firm or consistent. I mean, even in Texas there's 665 00:33:06,240 --> 00:33:09,480 Speaker 2: a huge reliance on renewables to meet gaps in the grid. 666 00:33:09,520 --> 00:33:11,920 Speaker 2: In every two years when there's a legislative session, there's 667 00:33:11,960 --> 00:33:14,960 Speaker 2: threats to make it harder to build renewables. Those usually 668 00:33:15,000 --> 00:33:17,120 Speaker 2: are beaten back, but it's got to give people a 669 00:33:17,160 --> 00:33:19,680 Speaker 2: bit of pause, and to the degree that other factors 670 00:33:19,760 --> 00:33:21,920 Speaker 2: or sectors can create stability, that'll be all to the 671 00:33:21,960 --> 00:33:24,040 Speaker 2: good for the stability of the US energy system. 672 00:33:24,400 --> 00:33:27,000 Speaker 3: I would just add this isn't sort of theoretical. We're 673 00:33:27,040 --> 00:33:29,520 Speaker 3: certainly hearing from some clients that when they look at 674 00:33:29,520 --> 00:33:32,479 Speaker 3: the US, they have real concerns about whether or not 675 00:33:32,560 --> 00:33:36,480 Speaker 3: it is an entirely investible climate. And when you look 676 00:33:36,520 --> 00:33:39,640 Speaker 3: at two offshore wind projects that went through years of 677 00:33:39,720 --> 00:33:44,160 Speaker 3: review and permitting, and we're literally over a billion dollars 678 00:33:44,200 --> 00:33:47,280 Speaker 3: in both cases into installation and then in a very 679 00:33:47,400 --> 00:33:50,040 Speaker 3: arbitrary way receive a letter from the US Department of 680 00:33:50,040 --> 00:33:53,320 Speaker 3: Interior telling them to stop work without providing any compelling 681 00:33:53,560 --> 00:33:57,000 Speaker 3: and potentially even legal reason for it. This is something 682 00:33:57,000 --> 00:34:00,400 Speaker 3: that fundamentally undercuts confidence in the market. A big part 683 00:34:00,440 --> 00:34:02,280 Speaker 3: of what I do, Tom, as you know, is also 684 00:34:02,320 --> 00:34:04,720 Speaker 3: think about other markets around the world, and have been 685 00:34:05,480 --> 00:34:10,000 Speaker 3: basically looking after indirectly Latin America for almost fifteen years 686 00:34:10,040 --> 00:34:13,439 Speaker 3: at benef with our team down there. And listen, Latin 687 00:34:13,480 --> 00:34:16,359 Speaker 3: American governments swing let hard left and hard right all 688 00:34:16,360 --> 00:34:18,960 Speaker 3: the time, and it really is. It is a very 689 00:34:19,000 --> 00:34:22,160 Speaker 3: bad thing for attracting investment overall. I would just say 690 00:34:22,160 --> 00:34:24,720 Speaker 3: that the only thing worse than the environment that zigs 691 00:34:24,719 --> 00:34:27,800 Speaker 3: and zags is one that just zags in the direction 692 00:34:27,920 --> 00:34:29,680 Speaker 3: we're going in. And so I guess I would just 693 00:34:29,719 --> 00:34:32,200 Speaker 3: hope that we do see some return to some normalcy 694 00:34:32,520 --> 00:34:33,680 Speaker 3: at some point in the future. 695 00:34:33,960 --> 00:34:36,560 Speaker 1: Well, there we have it. Thank you both for a 696 00:34:36,600 --> 00:34:39,239 Speaker 1: fascinating conversation. We're out a time, but it's been great 697 00:34:39,280 --> 00:34:41,440 Speaker 1: having you Ethan, and great having you too, Derek. 698 00:34:41,640 --> 00:34:42,560 Speaker 2: Great to be here, Tom. 699 00:34:42,719 --> 00:34:51,880 Speaker 3: Thanks Tom. 700 00:34:52,120 --> 00:34:55,239 Speaker 2: Today's episode of Switched On was produced by cam Gray 701 00:34:55,440 --> 00:34:59,040 Speaker 2: with production assistants from Kamala shelling. 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