Energy and Climate Policy: A Discussion With Rep. Sean Casten
So it might not seem like it, but it's the middle of the day here in Beijing. The air is so polluted that it's darkened the sky most of the progress towards the environment, and saving it and getting rid of carbon, etc has been done on local level, somebody who's goal making energy both cheaper, but also completely clean, and so with right in Vientiane clean-energy is actually cheaper than Energy Agency for leave the oil market were balanced my second half this year, but there are still questions about price Brent crude down by. We will Lisa power of American energy toting shale oil, natural gas and legal, what we're going to do folks is going to be so special. Hello and welcome to off the charts. The podcast of the energy policy institute at the university of Chicago. Also known as Epoc. I'm your host, Jeff McMahon. This is the second of two episodes, featuring Eleanor Representative Sean Casten, a freshman member of congress with strong background in energy policy and clean energy. Entrepreneurship cast in staff is working on fifty climate related bills. He plans to introduce in congress in our previous episode axios energy reporter, Amy harder talked to cast in about the atmosphere surrounding climate and energy policy in the one hundred sixteenth congress in this episode harder and casting are joined by Michael greenstone, the Milton Friedman distinguished service, professor in economics and the director of the energy policy institute at the university of Chicago. The three get much deeper into the. The weeds of energy policy than in the prior conversation. Let's join them. Well, it's great to be here with the congressman and Michael, my name, of course, is Amy harder. And we're here to talk about the energy and environment landscape in congress and some of the underlying energy, there congressman cast in your rare-breed of lawmaker in that you have an energy background, and your scientist. And we don't have a lot of those in the US congress these days. So I want to get a little bit wonky on this podcast, which I think, is the point of podcasts Congress's suddenly talking about energy and climate change more than has in the last decade. So you're timing for your your first term is going pretty well. I would say. Which we were doing more. But yes, there seems to be a bipartisan commitment that climate change is real that it's manmade, and that's nothing that deserves praise given a hundred years of, of evidence but it's but it's a directional improvement. And Michael you spent a lot of time in the Obama administration when the dynamic, and congress was very different. What are some of your observations for how congress is addressing climate change? Now, compared to how it did actually when I was there, there was kind of the last vestiges of everyone agreeing that there was climate change. Maybe some differences in agreement on how to handle it. But then there was the dark winter for a long period of time and climate seems to be having a moment. It's a little bit hard to understand what happened, but it's having a moment and we talk about climate change. I really see climate change and energy as two sides of the same coin. You can't really talk about one without the other because greenhouse gas emissions from the energy sector are far and away the. The biggest driver of human driven climate change. And so, you know, sometimes people say, do you cover climate change, or do you cover energy, and I say, I cover both, and I would presume for for you too as well. With your research, Michael, and your legislative work. You would also be that you can't really separate them. In general agree. I think the most of the most of the easy carbon to reduce if you can say that way in the energy sector, the, the parts that I think are really hard are the ones that go beyond energy, because we still have to figure out, you know, how do you make fertilizer to feed the population? And so we still have a wouldn't limit energy. But I would say that the places where the economics, you can see a path, or in the energy sector dive a little bit into what has become a buzzword this congress and that's innovation. And something we've heard a lot from Republicans in particular, it seems to be a word that everybody can love in part because his definition is so Indiana that beholder. So how would you to define innovation when it comes to the energy space? We'll be honest. I, I don't I kind of instinctively reject the, the innovation conversation because I've, I've find that over the course of my career spent twenty years in the energy space, the, the two easiest ways to persuade people that we don't need to act is to either say, the science isn't real or the technology isn't ready. And there's a bipartisan consensus on innovation because everybody likes talking about sexy new technologies and everybody wants to have the ribbon cutting in their district for the Super Bowl new plant. But there's a danger in, I find in talking about that, because it causes us to take our I off off some some self evident truths. Like the fact that we're about half as efficient for dollar GDP as most of our trading partners like the fact that the Thomas edisons I powerplant was about twice as efficient as the electric grid is tha. Day. These, these are not challenges of innovation these challenges of wire. We not deploying technologies that could make us both wealthier and more fuel efficient and that's to take nothing away from the importance of innovation, but the find myself skeptical when the conversation starts there because it's often it's often a marker that we're going to get to a end there for it's too early to act, and we have to start acting. And so what do you think is holding back in vacation, can I jump in is, I think actually, I agree with the congressman about much of what he said about innovation. And I think often it's very strange approach innovation. It's kind of like an engineering approach innovation. I wanna build this particular solar panel of this particular battery, and what it misses is that we have a very long history that if you send market signal innovators will act and I suspect if we sent a market marketsignal, there would be all kinds of innovation. Areas that we can't predict Shirley cars internal combustion engine cars. Get more efficient with respect to carbon a whole series of things in I think, oftentimes when people talk about innovation. It is a little bit of a dodge away from leading the market determine where the best innovations are with respect to carbon as echo and just tell that specific story in back in about two thousand three New England created the forward capacity market for energy that said that load cited generation load cited demand response could participate in capacity markets. Can you said we could get won't get wonky? What that meant practically? Is that energy consumers could get paid for reducing their demand on the grid in the same way that energy generators get paid to provide capacity to the grid? And once that rule was in place. We built a small Jen plant that the NL in furniture plant up in northeast kingdom of Vermont, and we were able to remotely dispatch that plant, then it got paid to participate, and I got interviewed by someone who was saying, this is really the future of smart grids, because now we have all this great technology to go and do this in to your point. Michael, I said, this was a thousand dollars worth of equipment off the shelf at radio shack. It's not that I didn't have the ability to do this before it's that no one was paying me to do it before. And so now here we were providing good service instead of just providing benefit for our customer. Because people said this is a value that we want you to participate in. But if you don't put the prices there, people don't just, you know were greeted each other probably too much. But it is a little strange to talk about innovation when there isn't a market for the product. So when I hear from publicans, for example, I sat down recently with Republican Congressman Tom Reed of New York, who's been pretty forward on this issue knowledge in climate change is an issue in wanting to Ford policies but he's pretty much in this camp that innovation can do it without some sort of price mechanism. Of course, Michael has done a lot of work on carbon taxes. Wh-what congressman Reid said he cited this example, which I've heard from others, and that is well Ford. Didn't need a carbon tax innovated its way in front of the horse and buggy. So why do you think you know to, to Ford, his argument? Why can't we expect today? Transition too far cleaner. Sources of energy like what we saw with the horse and buggy. Why do you agree that those could be analogous? And if not, why not? Look, we don't need innovation in how quickly you can rolled on your windows and cars or power steering. We didn't invasion in reducing CO two promote driven. And right now, we don't have a price signal to cause people in the garage, people at conglomerates are international firms to devote are indeed to that. And so, that's you know, I think that's kind of slightly, confused example with respect to the congressman. Yeah. I guess at the risk of I don't mean to totally Pupo innovation. I just wouldn't limit it to technology, because their innovations. I mean, if we actually came up with a with a way to monetize value, all the extra analogies associated with environmental damage, and, and incentivize people to reduce them, that would be pretty innovative, right? It's on technology innovation, but it would drive a lot of other technologies forward the. All the time that I think any of any of our listeners here, who spent any time in the energy efficiency world can probably share these stories. There is not a business in the world that sells energy efficiency, that doesn't know in their gut that if you can't show industrials a two year payback. They won't buy it that means that basically, we have a ton of roughly forty percent compound annual return capital investments that are not being made because of some defect in the way that people are making capital investment decisions. We never rich conversation. There's good reasons for why that happens. But when you have to year payback's, that would save energy, save money, make people better returns on their capital than they can get anywhere else in the market and they're not being made the problem is a lack of technology. So let's go back to this, this idea of energy efficiency, because I know it's something that you guys have both spent good bit of your work on energy efficiency is a little bit like innovate. Version that everybody likes it, but not enough to really passing these sort of big bills on, I remember years ago, the Senate for years, it was debating this energy efficiency Bill and it's just kept getting watered down there was almost nothing in it. And then finally at past what is it about energy efficiency? We're going to start with you, congressman about why is it that more companies aren't doing it if it could save them money. So to go back to my example before and what I think most economists models get wrong. Is that every industrial has basically three buckets of how they how they spend their capital budgets every year? The first bucket is the stuff that they are required to do by law in, if they make a return, it's a happy benefit you've got, you know, OSHA compliance rules. You've got environmental permanent roles. You've gotta come into compliance with, you know, some series of mandated investment. And that's these are all good. We are happy to live in a society, where we mandate that, you know, handicap oaks have access to buildings. These are good things to do, but get return of that, if there is any money left, the next bucket of capital that industrials will spend every year is in is in corn vestments that will make their business more competitive in the space that they live in breath. So the, the paper mill will invest in a new paper, drying, machine the steel mill will invest in upgrade of their blast. Furnace, if there's. Any money after that you've got this whole list of non-core investments that you're, you're very plant, managers and engineers have come through forward through the air, and they're saying, hey, boss. I've got this thing, it's not an area of expertise. It's not really our mainland business. But it's got a forty percent return. The reason why those industrial say, unless you to your paycheck, I'm not coming through because they are well, managed companies who say, I do not want my employees focusing on non-core elements of our business. I used to tell all our salesman I said, if you think it's easy to sell this then convince me to buy a hot stock tip with our company dollars. But it's, it's the same basic question in so a well run business. That is. Mission driven is going to necessarily put a very high of implicit cost of capital on, on energy conservation. Except except in those businesses that have made a conscious decision to make energy conservation, part of their mission in and I'd give you some optimism on it. Because when we. When we passed the energy Policy Act of ninety two and told utilities where they're mainline businesses, make an energy that we're going to preferentially dispatch assets based on the cost their marginal cost of production. Instead of just you're obligated to serve rules into the old monopoly rolls, the nuclear plant capacity factor went from sixty percent to ninety percent. We built two hundred thousand megawatts of combined cycle gas turbines, and our CO two emissions per megawatt hour in the country are now down almost thirty percent from where they were then and the price of electricity is down by six percent. More energy. Yeah. So in an industry where where energy was their core business. Once we got the market signals right to Michael's point, they actually embraced energy efficiency, where this low hanging fruit is, is in the rest of the industrial sector, where that's not their core business, and we had a lot of updates that technology, but you've got to start by recognizing its, they're inherently going to be very risk averse. When it comes to conserve energy. Michael, you have a slightly different take, I think on energy efficiency. Can you talk about some of the research that you've done? Yeah. So I think probably a big difference between what we done with congressman. This done is almost all my work has been in the residential sector. And I suspect the so let me I just put a little bubble of skepticism about what the congressman said which is at its core. He's saying there's twenty dollar bills, laying around and someone's not picking him up. Now, here's a good story for why that might be true in the industrial sector, most of my own research has been in the residential sector where I think people actually thought there were more twenty dollar bills, laying around in the sense that people don't operate their household profit maximizing households, and what I found from a series of work on looking at residential energy efficiency, in primarily in Michigan, and Wisconsin. At some other places. Is that the returns energy efficiency investments in the residential sector are actually quite? Low. They're both low in absolute Centene. They're lower than the engineering models, predict. They are predictable and that came as quite a surprise. And it makes me think that if we're looking for inexpensive reductions CO two that's not the best place to look. And I guess, more broadly feeds into my general view that it's hard for government to know exactly where the best deals are, and that, you know, to not to be a broken record. But that if we send abroad price signal people will pick up on it and figure out what to do as opposed to targeted energy efficiency mandate, or targeted use a particular technologies or Indian particular technologies when we look at, you know, the global greenhouse gas reductions goals that are embedded in say the Paris climate agreement, you know, energy efficiency is something like forty two percent of the emissions reductions out there, so there appears to be a ton of gains in this space. How does one get to those actions? Is it efficiency mandates at the commercial level is a is it both also at the at the residential? I'm very concerned, I think it's from both places and I'm very concerned that a lot of what underlies that comes from these kind of engineering models of what would the optimal house? Look. And you know, the truth is a lot of that is like some model house in the Lawrence Berkeley campus. But it's not like a house that I live in or the my children live in, you know leave doors. Open windows, undone, and things like that. And the real alternately I think, what will what determines returns are the real real world returns, not the potential returns that engineering models produce. And I think too often those kind of projections you're talking about rely on kind of some optimal world that doesn't quite exist. Don't just come as Michelson think we made we may agree that there's differences between the residential sectors in the in the industrial into some degree. Some of the commercial institutional sectors. The energy consuming equipment is very high load factor. Your you gotta to three shifted manufacturer that, you know that motor that sitting there is going to run all the time. And so when you're looking at the life. Time cost of that motor, your dominated by the operating cost of the motor because that's where you spend most of your money, and so efficient see really matters. And there's big opportunities for saving when you get into the residential environment. Most of the energy consuming equipment in your home spends, most of its time, not running, whether it's a car parked in your driveway for, you know, for eighteen hours a day or a toaster. That's not running or a TV. That's not running me other than your refrigerator in your conditioner. Most of the stuff is not being used often. And so the life cycle cost of that thing is more function of your initial purchase price, not your operating costs. So it wouldn't it doesn't surprise me to hear you say that the actual return on those investments from a savings perspectives. And then I to me that doesn't say that there isn't a role for policy, but that in one environment, the policy role is let's figure out how to get people to understand the variable cost and control that and the other one, it's what can we do from policy side to lower the capital cost for sure there's always a role? For information and providing consumers get information. There's there's that's a classic role for government. You know, I could just since you open the door to walking. Run through that door. Let's totally Baylor cells turn on the water, the whole thing. I think a good way to think about this problem is like, where's the market failure? And so it's I think in the climate case are really to one is that when I pollute caused climate change, and that's gonna make everyone else's life more complicated. And so that should be penalized. The second is in our Indy failure our innovation failure, and that's that some firms if they're not going to get all the benefits of their innovation, then they're going to do less of it. And so we should subsidize that. And there's clearly example of that. Yeah. So like basic are at the beginning of the life cycle of new technology. I'm going to invent something but I can't appropriate all the ideas, you might steal some of the some of the ideas might flow over and you might start a firm based on those ideas Tesla's producing all kinds of benefits for the entire industry. And so there's not enough innovation going on because people aren't going to pay. There's not enough, tesla will there's they're not going to. Was not, you can take tests, not investing enough because they're not recouping all the benefits of their investments, some of that flowing over to GM and Ford and other companies, and so you would want to subsidize that kind of activity, the same has been subsidized, and they have been greatly subsidized for sure. Maybe enough but to case for being subsidized at all. And so that you definitely want to also like in the early stages of deployment of new technologies or a lot of learning that goes on. It's generic, it's not only captured by the firm that installing the solar panel, or whatever it is. And that's also something you would want to subsidize. But I think coming back to what the market failure was the problem you were trying to solve. It's always a good exercise thinking about what the role for government. Do you think a price on carbon emissions could do a better job at driving energy efficiency than anything else? I do. So I'm a little bit of a heretic on carbon pricing. I guess the we should absolutely put a price on the extra analogy in. We should make sure that, that flows to the people who are going to lower carbon. I think that we need to be very careful not to presume, that a price on one's competitor is an incentive for you. And there's a lot of economic models that assume that those things are, are, are quivalent and, you know. Well, meaning that let's say that I'm sitting before my board as I have been many times in my past life and trying to get approval for a project that's going to meaningfully reduce CO two emissions, and I told my board, the coal plant next door just got a carbon tax. The board says why do I care so well, because they're gonna have to pay this extra fine. Are they gonna pass it along to their customers their or their shareholders going to eat it in the margins? I don't know if they pass it along to customers has it. In fact, the power price that you're gonna get. Well, it kind of depends in the long term. It'll probably factor in the power place, which point my board says, fine put it in the upside case, but it's not a basis of our decision. On the other hand, if we say you're reducing ton of carbon. It is. It is a value in your work. There's a social value of reducing that ton of carbon, and we wanna make sure that we pay people who are reducing that ton of carbon amount. Equal to the social value, and I go to the same board and say, hey, I'm getting fifty dollars ton of carbon. I reduce great put it in. You have now differentially impacted my, my Bill to make that decision and so there to wholly separate questions, and I think we've, I think in the carbon regulatory space, we've made a lot of assumptions that those two are the same, and we would never make them in other industries. So when, when Wells Fargo got three billion dollars of fines last year, there was no economist, who said, Citibank's interest rates are gonna fall in yet, when we have conversations thing if we put a price on the dirty guys, the clean, guys will make more money and it's not my experience at such as direct link on economic models. Do you think about that? Michael. I'm trying to my mind around in. So what does it mean about covering pricing? It means that the carrot is important. The stick is not, not obviously important we should price, but the price should be applied on the carrot because the goal is to reduce carbon if, if reducing carbon comes about. With or without an increase in the price of energy. I don't I'm agnostic on that question. But we gotta get the carbon down. You know, I think the I think, in the my personal view is that the ideal structure is a, you know, the old early tradable permit models. Because if I'm polluter in your cleaner, and I'm paying you for the right to pollute, you have now received an incentive, I've received a penalty if we structure it right? You know. You know, maybe the actual price of energy on the side doesn't change because the, the transactions between you and I, but now I've trade basically. Kevin, Kevin traitors, it's a flavor of tradable permits and we got into a whole bunch of other complexities there. But, but my point is that in that case we've got whatever whatever social Justice reason we may have to penalize the bad actors, if you will, and the incentive to the good actors, but that's a very different calculus than attacks on, on the good actors. And my view is that the single worst thing, we could do is cap and dividend tax and dividend. Because if I do tax and dividend, I've raised the price of energy. I've taken the proceeds, and I've given it to a whole lot of people who are not people who are reducing energy. And so you've ended up with a situation where there is very little incentive to actually reduce the to in a in attacks in model and less. You assume that there is only one entity who is doing who's providing all of our energy because if I'm doing this for my own balance sheet, I can say, well, I'll stop building the Copland build a solar plant that's all left pocket. Right pocket. But as. Soon as those pockets are in different sets of pants. It's a very complicated economic argument that argues that makes and I say, this is someone who has deployed power projects in, in, in jurisdictions that had, you know, Reggie type cap and trade models. Canadian type tax models. And I can tell you that the tax model we all are boards always said at its doesn't matter. They cap the cap dividend. Plan is really gaining prominence in congress right now. So I wanna I wanna focus on that for for moment, and get your take Michael. But basically, there's growing Republican support for this idea that they think if the money can go back to consumers, it would blunt the political blowback that they might get for higher energy costs. But I see your point that in fact it could because if the goal is achieved that emissions, go down than the money going to these people will also down. I think we have to be, you know, to your point Michael, we have to start by asking what it is. We're trying to achieve the goal of carbon regulation, is to reduce the bloody carbon if we can pass a Bill that has a carbon regulation title. That's politically easy to pass. But it doesn't reduce carbon we have failed and, and there's a lot of pressure because I think there's a there's I get it right. If I could go back to Michael. Stitches and say you're gonna get an extra thousand bucks on your tax return this year. You know, they'll be pretty happy with me. But. That's not necessarily only reduction in carbon. Right. And if I don't make sure that these policies, incentivize people to build the assets of a low-carbon future because at the end of the day, once these assets are built, they run, nobody ever told her off a solar panel, because the price of power was too low. Right. So we gotta figure out how to get those boards of directors, who are sitting there saying, yes, this is now differentially increased my incentive to make the investment. And if the price of power goes up or down in the future, because the coal plant does or doesn't pass this along. It doesn't change whether or not that asset runs. So I think the slightly different places on this, I think, if we got the price. So let's just take the captive in one. That's I think very concrete way to think about it. The standard economic models of which I think are correct in the setting would be that if there was a tax on carbon, and we a took the money and put it in the ocean. Be took the money put in general revenues see give it back to all the people the effect on carbon exactly the same and mainly would have would have no effect and either of those case, no, the because the polluters would face higher price for emitting. So, so here's the, the big problem with that. Is that at the end of the day, we as a country want to have access to energy, right? And I have absolutely no question that putting tax on carbon will raise the price of energy. It's a completely energy only energy that has carbon Noah understand. But it is a separate question of Willett, incentivize, people to build the clean energy sources that are going to replace. It. And if you give me an incentive, I will build clean energy, if you give my competitor penalty. In the long run. Sure. And in the long run world dead to go with canes. But if you're telling me, we got we got we got a decade or less to make a difference. And we got to build assets, take two or three years to build, if you don't give those people, the differential incentive today, you're using two years that we don't have. I, I don't know when like let's go back in time to let's call two thousand seven or eight or nine when we had no idea what the fracking revolution was going to produce. Amy, we'll probably know this better than I do. But Cole was what fraction of the trajectory and now it's third that happened very quickly. And I think when these price differences emerge, you know, it's very in, in the deregulated states that can mean different things, but where there's bidding into a wholesale market. These guys got to produce low-cost energy and that penalty shows up on their, their cost of production. And so see. The low carb sneak in there, then, so I, I totally agree with one caveat. Once the assets are built, we will always preferentially dispatch, the lowest cost assets, and so what happened. We got when the fracking revolution came along. We had the we got lucky in the fact that we had built two hundred gigawatts of gas fired power assets that were largely idle because Dinan Jan reliant and a bunch of companies went bankrupt because they didn't. They weren't anticipating the price of gas was going to go to twelve dollars. Right. So they had built all those assets in the wake of deregulation, thinking is gonna make a ton of money then went bankrupt. And when when Frank gas came along, we had assets that we could use. What I would submit to you is that we have not seen a correspondingly rapid investment in new gas assets. In response to fracking, the commissioning of finance, a lot of them. Like negative investments. Coal plants there has there has been a lot of decommissioning of plants it hit the end of their life. Right. The coal plants were forty fifty years old, right? Not well, like the new coal plants are kind of rounding error in the fleet. Right. We really for all practical purposes. We haven't built new colon nuke and since there's power plants that have been shut down. No, no, no understand what I'm saying is, we had a we had an electric infrastructure that had way more capacity than we needed, which gave us a cushion that as those plants have retired. We had something we could replace it with the question that we have going forward is. How do we build the clean energy assets that are going to finish the job that, that gas, fleet started right? And the assets that we've built have been, you know, we built a lot of wind largely in response to production tax credits. Right. That was that's a carrot stick. Right. We've built a lot of solar on a megawatt basis. One hour basis, smaller also in response to tax credits which is a carrot the, the it's not clear at all that we have built a lot of gas generation in. Sponsor, too cheap cheaper gas. But we've, we've dispatched existing generation in response to cheaper gas. So that's an interesting question. If the substrate attacks matters more, I would tend to think, on average, they're going to be about equal value. And you have practical business experience. I think one when issues that we don't have a lot of real world examples to compare this against I think one of the issues if a lot of the carbon prices around the world is at the prices are often too low do either of, you know, of some successful examples of let me just before we do that, like we do have a lot of evidence and people responding to prices, so maybe not exactly the carbon price that you have in mind. But, like nobody's building nuclear plants in the US, there's a really good reason there would be money-losing activity, and there's nobody building lots of other things that would be money losing activties, and in general, people built things that are money making committees and the power of carbon. Ptacs is that it is pre specified. It's not gonna move around as we find new gas deposits, or, you know, cheaper coal or things like that. So it it sounds it's permanent signal. Unlike resource prices. So we know Michael's policy preferences, carbon-tax condescend, if you were president Casten. What would what would the respected? We haven't actually covered congressman cast in emails me, with great regularity. What about just asking for money? A lot of your time usually in the form of the carbon tax. What would be your policy that you would send to congress if you're president? So I'm actually working on one right now, funny, you should ask the balked a little bit when you said cap and trade. And this goes to you saying about the carbon prices, and high enough, I would submit to you that from Reggie AB thirty two Kyoto it has always proved to be easier to reduce carbon than politicians thought it would be in as a result, whether whether through a, you know, all the pressure in a cap, and trade is to lower the cap in a way that won't create economic pain, and all the pressure to carbon taxes to lower the price to appoint which one crave comic pain, which means the political pressure, given as it has always producer, reduce carbon than we think it would be has been that we never quite reduce as much carbon in the prices never high enough because of the political process and within the cap and trade, contra construct. We've also gotten so caught up in the transition that we've over allocated allowances, which then flooded the market. And so. Oh, I had some colleagues when Reggie was being negotiated regional greenhouse gas initiative that we were sort of too late to the taste on states. Yeah. We were too late to the table to impact. But my staff is working this up to see if we can do it. Federally to say. Let's, let's number one, build on some programs. Like Japan has the top runner program for vehicle officiency that automatically ratchets every year. So that you're always readjusting as markets responded, you're not tying the improvement of the political cycle, and, and then let's do the whole thing on an output basis. So if we said, we will give everybody allowance every generator, we'll give you an allowance to pollute the allowance will be tied to how many megawatt hours you make. So if right now the grid is, is little bit less than a thousand pounds, go our CO two. Let's give every generator five hundred and we'll stipulate that it will be the lesser of five hundred fifty percent of the current grid, great emissions, now every solar plant has five hundred megawatt. Five hundred pounds that they can sell every coal plant has about fifteen hundred. They need to buy gas plant maybe has five hundred six hundred they need to by the end. You could then basically simply say, you've got to report your megawatt hours to Furger DO, we every year anyway. So we'll figure out your allowance and you can buy and sell behind the meter. You've gotten allowances to ease the transition in, you have a self correcting system that keeps ratcheting down over time, and you would give everybody a way to participant move forward. I there's some tweaks that you'd want to do to two factor. Thermal, you so that you, you'll co gender participate in pick up industrial sector, personally, I don't think you worry much about transportation because I think to our earlier discussion you affect transportation with the price of the vehicle, much more than the price of, of the of the fuel us, the name of this type of policy Anita. I need a really cool acronym suggest here green new deal. Taking or rebranded. Yeah. Basically, it's the way tradable permits really started before we got into all these allocation grandfathering auction systems. And you could you could make this stuff work. It's like a which is like a independent of the economic state. So, in other words, it would loosen when time to really good, because it'd be more megawatt hours and it would contract a little bit. You probably need to have some way to make sure that, you know, we need to lower the total CO two emissions, but it allows away for fishing to participate. It's technology stick, and it ended allows people enter into bilateral contracts because what I want is people who are in situations like me to go to their board. And so what do you have a twenty year contract from polluter? What's their credit rating? Okay. That will inform how much factor this in. That's very different than there's a tax next government. Keep the tax I dunno. Okay. So let me just be inordinately picky, which is Lee very bad as a host, since we are at the university Gago, and you our guest here, and we liked it. That's. I'm going to call that Kevin trade per megawatt hour. Okay. That's not very it's very. But, but why permit on our the planet doesn't care about what our only cares about Tennessee to and in Finnish thought pure cap and trade does not divide by megawatt hours? No. And it's an it's algebraic issued a convert it back. But I think getting to an output based emission standard. We have we have hugely pernicious impacts, that we don't talk about enough, the Clean Air Act right now, as it sits discourages energy efficiency, because because so much of our environmental regulations are affectively on an input basis parts per million scales with fuel use. So the more fuel, you burn, the more you're allowed to omit, tying to the output ensures that you get you get the out with. It's tied to your performance. It make sure that we're not picking technologies because I would rather have clean technologies running twenty four seven and one. That's running two hours a day. The end and I take your points fair criticism that you have to make sure that the total cap is reducing but that's to some degree. That's break issue of saying, how will we adjust in my example of five hundred every yeah, you'll be getting some emails from Michael about that. Well, I think we are out of time with the podcast, but I want to say thank you, both very much for sitting down with me, and I look forward to seeing that Bill in congress. Michael. Thank you. Thank you for listening, please. Make sure to subscribe to off the charts wherever you get your podcasts including on epochs website at epic dot EU, Chicago, that EDU until next time I'm Jeff McMahon.