Energy Gang — Live from COP29: One Weird Trick to Solve Our Energy Problem
Podcast: Energy Gang
Host: Ed Crooks (Wood Mackenzie)
Guests:
- Zach Friedman (Senior Director of Federal Policy, Ceres)
- Vijay Vaitheeswaran (Global Energy and Climate Innovation Editor, The Economist)
- John Kreitz (Chief Executive, RMI)
Released: November 21, 2024
Setting: Recorded live at COP29, Baku, Azerbaijan
Overview
This special episode, recorded on site at COP29, examines pivotal developments in US energy policy in the shadow of the incoming Trump administration and the under-appreciated role of energy efficiency in the energy transition. The roundtable features top policy voices and energy thinkers discussing the continuity and risks in US climate and energy policy, realistic expectations for the coming years, and the structural necessity—and frustration—of energy efficiency in decarbonization.
Key Discussion Points & Insights
1. US Energy Policy Outlook Under a Likely Trump Administration
[Timestamps: 00:54–35:50]
Continuity vs. Change: The Political Reality
- Despite dramatic campaign rhetoric, expect broad continuity in US energy trends, with more focus on oil, gas, and incremental clean energy, rather than sweeping decarbonization reversals.
- Vijay: “If you say, what's the question for energy under Trump? And the answer is probably more of all of the above, which is kind of what we saw under Biden.” [03:46]
- Ironically, the Biden era saw record American oil, gas, and LNG production, despite Republican accusations of “shackling” the industry.
Limits of Presidential Power
- The power of the White House to directly transform US energy is “limited”; market factors, OPEC, Chinese demand, and shareholder pressures carry more weight.
- Ed: “You can't just wave a magic wand and transform the energy industry.” [04:21]
Methane Regulation and Industry Dynamics
- The Inflation Reduction Act’s (IRA) “methane fee” is the “first time the US introducing an externalities pricing scheme related to climate at the federal level” [06:03], but big oil is already investing in compliance, while independent shale producers (major Trump allies) fiercely oppose it.
Business Certainty, Economic Opportunity, and Policy Survival
- Business and investor certainty is paramount. Much clean tech investment—reshoring manufacturing, industrial decarbonization—is in red states; these investments now have Republican champions.
- Zach: “It’s not really about Paris, but it's about America. … Certainty for businesses and investors is what they need.” [07:49]
- Lobbying and “constituencies of self-interest” are expected to defend many IRA credits (hydrogen, carbon capture, etc.)—though EV credits are vulnerable.
- Vijay: “The power of self-interest and lobbying will ensure… there will be a lot of defenders looking out for their own self-interest, who will fight for big parts of them.” [11:04]
Risks: Fiscal Pressures and Legislative Cherry-Picking
- Looming expiration of Trump-era tax cuts ($4+ trillion over 10 years if renewed) creates intense pressure to find budget savings; IRA tax credits could be caught in the crossfire.
- Ed: “Does that not then make these Inflation Reduction Act tax credits… vulnerable… because there's gonna be so much desperation… to save money?” [13:19]
- Businesses need “certainty and not have a chilling effect,” especially since “we can't just overnight bring back supply chains” from China. [14:12]
Upside Potential in Clean Energy?
- National security, especially the AI-data center boom, could create unexpected political impetus for more generation of electricity—possibly benefiting clean energy, provided tax incentives survive.
- Growing bipartisan support for carbon tariffs (CBAM) as both nationalist/trade measures and effective climate policy.
- Zach: “We can integrate environmental performance into those with the carbon tariff. And Republicans have led on that in Congress.” [15:58]
- Vijay: “Within the next two years we'll get a CBAM in America, but it will not be a carbon border adjustment measure… It'll be the China Bashing Action measure.” [21:15]
Permitting Reform and the Politics of Building
- Bipartisan consensus that red tape is stalling decarbonization infrastructure, but legislative progress remains elusive.
- Vijay: “Building stuff. I think we'll get permitting reform done… If we can build, we can actually accelerate the clean energy revolution.” [19:41]
- Procedural innovations such as reconciliation are being explored as paths for reform, but uncertainty abounds.
- Zach: “There can be reasonable timelines for projects and that encourage incentivize early upfront engagement with communities…” [28:01]
Tactical Adaptation: How NGOs and Business Networks Will Respond
- Zach (Ceres): Continue using the economic case and wide business constituency to advocate at federal and state levels. “We bring the business case and the business voice to these discussions…” [31:09]
- Vijay: “Most of the business community… is going to try to stay on the right side of Donald Trump.” [32:05]
2. What to Watch For at COP29 and Beyond
[Timestamps: 33:13–36:15]
Hopes, Realities, and the Role of Finance
- COP29 seen as a “small COP” (limited expectations), but notable progress on Article 6.4 (carbon markets).
- Vijay: “Having a deal at all in this incredibly fraught area is a big step forward… If fleshed out, it will unleash enormous amounts of capital.” [34:58]
- Finance, particularly private capital, is central—public/governmental funding alone can’t shoulder the energy transition.
3. The Underrated Key: Energy Efficiency
[36:17–54:31]
Intro to RMI’s Mission
- John Kreitz (RMI): “We call ourselves a think do and scale tank… We try to bring forward… the solutions that we need to drive markets to scale here in clean energy.” [37:24]
Why Energy Efficiency Matters—Yet Lags
- COP28 set two big goals: tripling renewables and doubling energy efficiency by 2030 (to 4% annual improvement)—both equally necessary for net zero.
- John: “Energy efficiency itself, that doubling target, is actually required for us to reach the tripling [of renewables] at an economic way and an affordable way.” [39:37]
- Efficiency delivers extraordinary returns: “Three times the carbon kick for every kilowatt hour of energy efficiency you save versus the amount of renewables you put online… we lose about two thirds of the energy we put into the system today.” [40:39]
- Efficiency is “the first fuel”: most secure, cost-effective, and overlooked supply.
The Reality—Why Don’t We Do It More?
- Despite consensus on value, efficiency uptake is slow or even regressing—a “fundamental problem” with market/logical barriers ranging from split incentives to behavioral, legal, and cultural obstacles.
- Ed: “If businesses and individuals could save money by making these improvements, they would have made them anyway… There are some really pretty fundamental structural barriers… and all those things are really hard to shift.” [44:00]
- History shows global efficiency improves at a slow, steady pace (about 2%/yr); breaking beyond that isn’t easy.
Can Leadership and Innovation Help?
- Leadership, especially from energy-intensive industry, can shift the curve—examples from Dow and others.
- Electrification itself provides a 1% bump in efficiency due to inherent thermodynamic benefits (less waste from combustion).
- Digitization, advanced motors, balancing supply via the grid—all present real technical opportunities if prioritized.
Rebound Effects: The Jevons Paradox and Net Benefit
- Efficiency sometimes increases overall energy demand, but net benefit remains strong.
- John: “There is some rebound effect, but the net benefit is huge.” [49:30]
RMI's “Do” Role: Examples of Action
- Modular retrofits in Massachusetts’ public housing: External super-insulated panels, heat pumps, on-roof solar, all installed with minimal disruption—dropping energy burdens by 85%. [50:10]
- Off-site prefabrication and digital scanning shift from messy, home-by-home retrofits to scalable, industrial processes.
What Should COP29/30 Deliver?
- COP29 likely won’t result in major efficiency commitments, but should build towards 2030 goals at COP30.
- John: “Let’s make sure we’re ready to operationalize [efficiency] and commit to it next year as part of your nationally determined contributions… through policy development, education, capital, and corporate engagement.” [53:27]
Notable Quotes
-
“Trump coming into the White House almost certainly will lead to some negative consequences for the climate movement… but in terms of energy… I think there’ll be a slowdown in decarbonization, but the direction of travel won’t change very much.”
— Vijay Vaitheeswaran [02:56] -
“Certainty for businesses and investors is what they need. And the world is going to keep on moving without the US… we want to make the vehicles, the technology, the steel… in communities across America.”
— Zach Friedman [07:49] -
“70 to 80% of the money has been going to red districts, to Republican districts… more than 80 projects in Texas and Louisiana.”
— Vijay [10:41] -
“Increasing those tariffs even further, which Trump may well do, is going to slow down the fight [against climate change]. … In the meanwhile… there will be costs of larding all of these policies with local labor, local environmental justice.”
— Vijay [18:23] -
“Within the next two years we’ll get a CBAM in America, but it will not be a carbon border adjustment measure, as the Europeans call it. It’ll be the China Bashing Action measure…”
— Vijay [21:15] -
“We lose about two thirds of the energy that we put into the system today… that's like four and a half trillion dollars a year that we as a global economy waste.”
— John Kreitz [40:54] -
“There are many barriers to energy efficiency… split incentives, the size of the savings, opportunity cost… But we have seen that when leadership exists… there are ways to capture it at scale.”
— John Kreitz [45:38] -
“The modularization of retrofits: use panels to put super insulation on the outside, embed heat pumps… reduce the overall energy burden for the tenants by 85%... take what could be a complex and overwhelming process and make it a snap.”
— John Kreitz [50:10]
Timestamps for Important Segments
- 00:54–35:50 — US policy under Trump, IRA, tax credits, methane policy, business certainty, tariffs.
- 27:25–30:35 — Permitting reform, transmission challenges, prospects for bipartisan progress.
- 33:13–36:15 — COP29 expectations, Article 6.4 deal overview, climate finance focus.
- 36:17–54:31 — Energy efficiency deep dive, RMI’s work, obstacles, leadership needed, innovation case studies.
- 53:27–54:17 — What COP30 needs to do for efficiency.
Memorable Moments
- Ed cornering Vijay at the conference:
“You can run, but you can't hide. The Energy Gang will catch you in the end.” [02:12] - Vijay’s prediction:
“We’re going to get a CBAM in America… rebranded as anti-China, anti-carbon dumping.” [21:15] - John’s invisible windmills anecdote:
“I was talking with one of the Ghanaise ministers yesterday and he was talking about invisible windmills that they're trying to harvest in Ghana that was all about their energy efficiency program.” [41:15]
Conclusion
This episode captured the complex interplay between global climate ambition, gritty US political realignment, local economic interests, and persistent structural obstacles—especially regarding energy efficiency. Despite uncertain politics, the show finds reason for measured optimism in market forces, business lobbying, and technical innovation. Energy efficiency, although frustratingly under exploited, remains the “one weird trick” that could unlock the energy transition—if only we summon the leadership and creativity to prioritize it.
For further reflection: How much can market incentives, regulatory tweaks, and government leadership realistically shift the stubborn patterns of energy use and investment? And will the next COP succeed where so many before have only promised?
[End of summary]