Making the Most of Investments in Clean Energy R&D
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 cetera has been done on a local level, some who's making energy both cheaper, but also completely clean, and so with right innovation clean energy is actually cheaper than Energy Agency for leave the oil market, where we balance second half this year. But there are still questions about price Brent crude down by we will unleash the power of American energy, including shell oil, natural gas and legal, what we're going to do folks is going to be so special. Hi, and welcome to this. Addition of off the charts the podcast of the energy policy institute at the university of Chicago. I'm your host, same Maury. Innovation. Clean energy is often said to be a critical element of any long-term strategy to reduce greenhouse gas, emissions history suggests however, that more are indeed. Spending doesn't always result in lower emissions, how compulsive makers make the most of every are indeed dollar. What's politically possible in Washington. And what technologies should we be watching for recently, axios energy reporter, and epic journalism? Fellow any harder discussed this topic at a dinner in downtown Washington DC, she was joined by epoch director Michael greenstone epic policy fella, MCI Campbell who's a managing partner. Bluewater strategies and former staff director for the Senate energy and natural resources committee, and rich, pal executive director of the clear path on days in which works to advance conservative policies that accelerate clean energy innovation. Here's their conversation. Thank you everybody, for being here. I'm also very happy to be here. So thank you to epic and. Everyone else that's helping to put this on. So we are here to do podcasts. Live, which is really exciting here in Washington DC, and I've three really smart people here next to me to talk about energy innovation, and are in D, And anything else we might want to talk about in Washington DC less than a month before the midterm elections. So I have rich Powell the executive director of the clear path foundation and then MCI Campbell, managing partner at bluewater strategies, and of course, Michael greenstone director of epic. So I wanna thank. Thank you guys again for this conversation. I wanna start with a pretty broad question. It is Ben one heck of a year in United States of America. And in particular Washington DC now energy innovation hasn't been exactly at the top of the headlines, but everybody listening to this podcast and who cares about energy. It certainly continues to be top of my mind and I hope others as well. So, I guess, rich start with you. Can you talk about what has happened in, in innovation space that you think is actually kind of some positive news? For for the record for the audience just in, you know, we're in an Indian restaurant right now where it's a little bit noisy. We've all had actually a lot of wine and heavy. Just for that. Yes. For the for the listening audience, just just. I'm glass right now, actually saving. So this is actually been again not, not something that's led the headlines. But from our perspective and incredibly productive year in clean energy innovation. So just amongst many interesting developments to targeted technology specific tax incentives were extended in significantly expanded for advanced nuclear energy for carbon capture technology that sort of level the playing field with intermittent, renewables to scale up existent, clean energy technologies. And we saw two spending bills that contain the largest ever increases to clean energy are in defending in both the F Y eighteen and the nineteenth spending bills and not only were they big increases in funding. They were also containing lot of really interesting important reforms to how that money was spent. Onto better target those resources toward really important. Disrupted programs. Like very large scale storage and events nuclear technology allow our innovators to better compete will be around the world, also been terrific new legislation, either for introduced on nuclear energy innovation that sort of setup testbed for those technologies here in the United States, that would allow us to compete more effectively around the world, with, for example, Russian so from that lens, this has been quite an interesting and productive year in clean energy nations. Great mci. Can you talk to us about setting your perspective, both as a former longtime staffer on Capitol Hill, and the now managing a lot of these issues from the private sector has house, an invasion are indeed changed since you were on the hell. Think we're seeing. Coming to fruition. A lot of things have been talked about for a long time, and you talked about this being under the headlines under the headline spent a really good place to be over this last year. I mean, plenty of controversy and plenty of headlines, but actually Congress's Fairmount stuff done and just quietly things chosen away. And with that it's nothing. There's no new sudden, hey, we have a wonderful idea. Let's do it this year. It's been this is things people talking about, but they finally put them together and making Africans. So of course you in the Obama administration and leading the all the smart work at the university of Chicago on these issues. What how are things as different in the innovation space between the two administrations as they are on almost every other policy issue? I think probably in the innovation space being below the radar has allowed for much more continuity than in many other areas. So in terms of price in carbon there was no real pulse and do that. But there was the use of the social cost of carbon to regulatory analysis served as kind of a price that's more or less gone. But as rich pointed out, there's really been a lot of new and even some expansions. And I think the targeted incentives for. CCS nuclear really tremendous policy. The best policy would be technology neutral one, but. This is a big accord. So of course innovation and research and development doesn't just fall from the sky, it often takes money of some type or another. So I want to quick lightning round question, which means that you answer with just one word. I know that's hard to do in Washington. So I continued to fail at this, but I will continue to try. So when it comes to supporting innovation and energy, do you think a carrot Halsey such as subsidies and things like that, or a stick policy, like some sort of price or tax on, on energy, for example, is better so carrot or stick, say one or the other each of you can can go down the line here? That's kind of cheating, but I'll I'll give it to you. Magai is true. I have no choice but to go with step, which is. Answer. But I like I like disagreement because it means that we're not just saying the same thing in, in a bubble with each other, which too often happens, I think, in any sort of policy discussion. So that's great. So let's build a little bit more on that. So this year, we've seen I think a lot of carrots given out and the energy secretary. Rick Perry has talked a lot about how well the energy sector is already winners is already picking winners and losers. So, and this is me continuing not him. He just wants to continue to pick more winners and losers. Washington does best. Talk about what, what this administration could do more of we've seen, for example, the administration has at out the funding for our e the super innovative agency with an energy department on this technology. Although the congress has then it despite that proposal talking about what the ministration could do more of. And if you know what administrations doing right in this area me, but it can jump in on that one. Super easy. There should be a price on carbon, and they misery has just waiting to unveil that policy and that will unleash innovation all over the place. In the absence of that, or maybe even as a complement to that, I think an enormous expansion in RV and other clean energy spending programs. That would be a great idea. You know there's the old line about. Speeches or in poetry. And the budget is in prose, and the pros is pretty bad with RV. Yes, it's funded at three hundred million dollars, but there's no plausible rate of return on a million dollars where that could have any meaningful impact Smith. So tiny. That would be a lot to me, and I would definitely support that. Thank you. But I think it should be three billion Barbie and three hundred million for you. Sounds great Mike. I do. Do you support a carbon dex? Taxi to happen for a long time, I think that it is going to be happening. Eventually, we've talked about this previously. We did during the Waxman Markey days. We did a lot of looking at a revenue neutral carbon tax. I think it had a real shot at that point, it lost hunters changed. I don't come back, quite a while. But I do think Exxon's announcement today while no surprise. They've been pretty open. While is a significant step Ford. For one million dollars over two years to urge congress to pass a carbon tax, which is a significant developments from one million dollars from years, a significant investment. What's been? What are we? Dividing. Zero. Hundred million in terms of lobbying fees. Significant Z Mei-chieh Greece. I also say go back to my both thing. I think. One to escape, they're probably carbon taxes, ultimately will be sin some former another. But I also think we're gonna see we've seen greater openness to enough quality of carrots if I quite a phrase, where for years, we would deal with RPM r f s people kept thinking we'd just change. Initials pass it. But the reality was that didn't want people didn't want nuclear in their one hydro in there. We'd have very vigorous discussions about look is your aim here to get a missions free energy, or is your aim simply to bolster the winning three or solar and Franklin. Some of the more special that was simply fun, those organization those I've of rituals fucking about. We sit much greater open. This now holiday nuclear hydros still solely of law. It's both a little bit about nuclear power. I think there's sort of a split screen going on, on this industry on the one hand one new store that did break through and get to the top of the headlines. These for a moment was the, the near collapse of southern companies Vogel project, which I think it's price tag. It's close to thirty billion dollars, and it's continuing to sort of limp ahead, but that can't I don't think described as a winner even if it does cross the finish line. And on the other hand, you have advanced nuclear technology, which continues to have some promise, and there was the, the piece of. Legislation in congress rich. Can you talk a little bit about what kind of what you see on the existing side the reactors that are already running now that are shutting down versus the advanced technologies pretty much totally different industries? You might as well divide them up in that respect. Is that correct spirit? I think unfortunately the United States could a lot of effort of particularly the second Bush administration into the nuclear renaissance which led to kind of Moore gigawatt scale reactor. So that was just anticipating a future, where demand growth was going to continue going like gangbusters, and the United States was going to be all this new opportunity to build new, gigantic power plants. And there would be no fracking. And so interestingly as, as all of that was happening the fracking revolution happened, and the vast efficiency mandates that that administration also put into place started heavily into demand growth, along with a recession. And so just a couple of things worked against that plane. And so, what was the plan to build twenty five at one point new gigawatt scale reactors suddenly became four suddenly became actually commenced, construction, and suddenly is now to that are sort of struggling along. And so we're just an utterly different environment than the policy regime was planned for right if you were building twenty five gigawatt scale reactors, this wolfing might have been approached very differently right? Supply chains might have developed in scaled up in a very different way. Each individual part might have been a lot cheaper. It cetera et cetera et cetera. And so instead, we're kind of left with these kind of one. Meaning project which we believe is a very important project to complete if nothing but to keep those supply chains alive for the next generation of technology come behind it. But the reality is the future is not gonna be gigawatt scale anything being built that is at least in the developed world that is misaligned with where electric markets are headed a combination of lack of demand growth, very inexpensive alternatives. Like shale gas fired combined cycle turbine match gas turbines, which can operate in any level. And a lot of demand for distributed generation a lot of Nimby ISM, which makes it very difficult to build big things that's all driving the power industry toward smaller manufactured things that are then put in place installed or not constructed on site. And so if nuclear is going to thrive in the future at simply asked to become a lot more like a winter by right? A winter buying somewhere between one and you know, ideally now big ones wealth megawatts, large manufacturer factory. It is brought somewhere in it is installed on site. Right. That's what we have to get to a nuclear and thankfully number of American innovators take on that challenge. And there's now increasing policy support to help that kind of new wave of reactors come along. And we hope that nobody end of the twenty twenties. There will be viable options that can supply. So one thing sort of one topic underlying all this topic of innovation. I often find that innovation is sort of politically, correct and nice to us, and we're talking about how do we address climate change because climate change wasn't initial, you do we really need energy innovation. I think I think that's a fair question to ask. And so, I think we have a great diverse set of political physicians here at this podcast. We have a former Obama administration official of former Republican staffer and a conservative clean energy leader. And so if you talk about, you know, whether or not you agree with what I just said that, you know, this, this energy innovation and our discussion. The over the overarching. Underlying issue is that he misses me to come down. I guess. Yes or no? If you agree with that statement. I think Michael's paulie gonna say, yes. In quick at the thing that Dan doing purpose of all this innovation is to address climate change. Oh, we always wanted a vision. Without a question. Knew you would say, yes, this one, I probably can't contain myself, a yes or no answer on. But the answers forget climate change. We do want the. Ovation. Pollution energy is such unlamented resource that affects everything to the extent. We can bring energy costs down in helps there's nothing more fundamental. You can do to help our. So. A whole host of various side effects of various forms of energy. Leaving climate change out of it was still need to look at. Rich. Yes. And even if we don't care about climate change or. For solutions right now. Maybe at a low the world is sort of, on this trajectory of this kind of spoken in, you know, greater and lesser volume in different places. And if we want our energy industry and technology manufacturers to be competitive with the Chinese, for example who are in most of these technologies far out had been there. Now, the undisputed leaders and the global solar manufacturing space, but some chance of catching back up with our advanced technology, but that will be hard. They're already well ahead of us on some events nuclear technologies if we want to have hope kind of owning any part of that future, global clean energy market, beyond natural gas, which is big and good and important, but won't be forever. You know, at least mitigate for we have to become more competitive on these technologies, regardless of what you think about the urgency of solving climate isn't domestic. So there's a couple of questions were wondering into picking winners here. Do we care for good at producing solar panels versus computer chips? I don't know. That was directed toward you. As well. Certainly American taxpayers who's, who's funding. The energy division complex. I care that it then results in, I don't know. I mean, I think one I don't want to overstate it, but let me get near over in it. Like did the Chinese enormous favor by driving down the cost of producing solar panels. Yes, early did. That should we send them a dollar and say, thank you. I actually think the German taxpayers. Did they? Collection of people. Germans refers Chinese the second money in the door. But I think you guys are getting at this important point of, you know, is energy innovation inherently global global issue. Or is it more of a competitive issue? I think under this administration, of course, was made trade a big component of its agenda. I think that's certainly a relevant question. What are some technologies that? So in the clean energy race. I remember a decade ago politicians in Washington, we're talking about how they didn't want China to win the clean energy race. And I think as rich and I've discussed before I think that the rates is, is being mostly one so far by China, what technologies that are still sort of very much. Up in the air in terms of who might reward is trying to win it. Don't we, we get to purchase cheap solar panels? We're the winners, we didn't have to spend all that money on what about, you know, Tara power to advance Nikola power company. They're building for stricter in China should we be concerned about that. Articulate what we're losing from that. And there might be knowledge, spillovers, and those will be super important. And then there would be a good case for it. Or maybe the case runs through it do carbon, but I do we're a little bit about innovation. It's like. I love I love my mom. I love apple pie. I must love innovation but. Your innovation could well be you reach into my pocket and trying to take a hundred dollars. And so we should or three hundred million. Yeah. So we should be clear on what like marking. What feeling factoring innovation and this sort of technical innovation? And so just like in silicon valley's where apple makes his comes up with phones. It goes to China made is that kinda what you're saying here in on energy? I think we should articulate what the problem is. We're trying to solve but, like there's so much under that umbrella of innovations that I think a lot of it or nothing would want to spend money on so that the United Nations recently issued this big seminal reports on the science of climate change, and we won't go into the details of that. But what I what I thought was interesting report is that they talked about the importance of basically technologies that remove carbon dioxide from the sky, and that's you know. Carbon capture project. Or something like what the Swiss company does what it just take carbon out of the sky, this sort of zany sounding technology. But it does exist. Can we talk a little bit about innovation in that respect? How important a quick additional lightning round question on a scale of one to ten how important, do you think this technology is to address climate change and innovating in the energy space, so ten being essential one being not essential? Number in. Yes. Okay. And colored adults. I would say ten mostly because that creates the backstop number above, which we should have no other policy. Right. So as soon as we get at this fear carbon dioxide removal, down to two hundred bucks a ton. We can end every solar net metering policy everywhere, in the United States because those are all significantly more expensive than the backstop technology in the lower. We can bring that the, the more stupid policies, we can cut off and focus. Only on the cheaper policies. I it doesn't actually work that way. But you could you could try MCI. Do you have a? Actually, interestingly enough. I think the biggest opposition to be able to do something like that is those who've you climate is a moral issue, and almost as quasi, religious issue, and they're very worried that of all sudden, we have that either fix that we don't need to do all this other stuff that feelers morally very important. I agree. I tend to think that people who think that we're going to continue our dependence on fossil fuels. If we have this technology, I'm like, well, we are ready continuing dependence on also fuel. So might as well find technology to address it. Michael, do you have a number between one and ten? Probably very rich. I'll probably go for ten. And let me emphasise coming back to what's the principled reason. Both the carbon side. But the second is it's incredibly immature area and very not a global price on carbon. It's very hard for private firms really enter that and devote, lots of resources. It's like almost tailor made for government support to try and might be some generic learning that would benefit lots of people, so talks about about what the government's role should be with this administration, not taking a significant leadership role in particularly talking about this these issues, raises the question, what company should be doing what kind of role do you think companies should play and innovating? And starting these sort of nascent technologies. Do think it's something that perhaps companies could do more or perhaps even hybrid citizens such as of course, Bill Gates has done a lot in this space and other philanthropists is that's something that you think needs to be stepped up in terms of the focus. I have the phone companies could be doing a lot newer on the procurement front. So at this point, you know, the next big solar purchasing commitment, so but wiser for example, one hundred percent solar, so they're gonna use the same virtual structure that the last people did. And they're going to incrementally deploy a couple more hundred megawatts solar, and this is very different in terms of level of emission from what Google WalMart initially did when it sort of kick this whole thing off and they said, we're gonna hundred percent. We will both they had no idea how to happen those all kinds of innovation that was required to actually make those goals real. And so, I think leadership, the bar now has been romatically raised for leadership in the corporate sector and kind of what that looks like. And so, I think companies should be much more focused on one hundred percent. Clean energy were actually powering data center, for example, with one hundred percent onsite clean electrons. That would be a technical challenge. A really big tech new challenge. That's the kind of. Thing that companies should be doing to retake ship in this. Defer to Michael on this companies. We're going to do where they think they can make money or whether it's thinking would influence consumers to like them better and help them make money. I wanna go back for one second though, to carbon removal, because while I think the technology is very, very important. I think it's almost more important is figuring out what we productively do with that, because that's all to me, the greater challenge. And we'd need to figure that one out. Beer. Did you know that mccown? About six months ago. There was an inter step in. Thing, which I think was totally waltz about China medium to make diamonds. They were doing carbon, remove carbon dioxide removed making, I'm all for it, but, but what to do with it. You know obviously do recovery. But that's a very limited amount of stuff you can do with it. I disagree. No, no. I'm fine with diamonds. Particularly if you can arrange for me. But no, I think I kind of guys you companies to first Brexit nation or there to make profits very difficult for them. Jews to do something more than that. So actually, I think we should be looking at people not companies and so that can both obviously influence the political process, but customers, if they expressed that they want their products made with clean energy. I think that's a much more reliable and effective way than people making pledges that are more likely than not on verifiable and uncertain impact. So I have one more question. I wanna ask for our listeners and everybody here and in the restaurants. So talking about people. So if each of you had since Michael said, three hundred million wasn't nearly enough. I'm going up the ante a little bit. I'm going to say ten billion dollars if each of you suddenly had ten billion dollars to innovates in any. He wanted and energy space. What would it be? No presser. And dead. Silence. On a podcast doesn't sound good says something somebody's gotta start talking. I would I would put in place, a ten billion dollar prize for any technology, which can with zero emissions fully dispatch, -able deployable, anywhere in the world produce power at the same cost combined cycle metro news. Impressively well thought out given I just told you that question twenty seconds ago all those like we do nothing but big about right. Crazy. Big winners, because while I have no because while I have no faith in the government's ability to pick winners have, total, faith liability victims, and that's. And as as part of that actually what I would try to do is equalize the level of subsidies that create various incentives for certain types of clean energy. I'd like to put a lot of it in this goes back to actually picking winners on nuclear and some of those other things, I think, where we can put money into working at the frontiers of science, it would lead to big breakthroughs not, not refining, the solar panel, but quantum differences in superconductivity fusion several. And. Only ten billion. I mean you can often if you want to game. So. I'm very tempted by Mkhize answer to level the playing field. I just worry that we burn through the ten billion very quickly. And I think riches ideas terrific, and I don't think anything in North America will ever be to combined cycle natural gas plants. Besides Bill Brown. So I will play out of character and say and pick a winner and say it's very, very hard for me to see the bright, cling future without improvement and batteries. And I just shove the whole thing about and find out what happens. I think that is good. Relatively positive note to end on. I want to say thank you to the panelists and until next time. Thanks for listening. If you wanna learn more epic in partnership with clear path the American Council for capital formation and Oxford University, hosted a conference at drill down further on this topic. The full video can be found on epic's website at epic dot EU Chicago dot EDU. Until next time I'm saying morning.