← Shift Key with Robinson Meyer
Shift Key with Robinson Meyer
There’s a New Playbook for Cutting Power Prices
00:43:27
Rob talks with the Federation of American Scientists’ Arjun Krishnaswami on a new report with practical steps governments can take to make electricity more affordable.
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Robinson Meyer
This episode of Shift Key is brought
- [00:02]
Shift Key Sponsor Announcer
to you by the Yale center for Business and the Environment. Want to accelerate your career in energy? Explore online certificate programs from our sponsor, the Yale center for Business and the Environment. Whether you're designing, policy unlocking, financing or developing impactful projects, Yale's online clean energy programs equip you with tangible skills and powerful networks and you can continue working while learning in just five hours a week. Propel your career, expand your network and make a difference. Learn more about their 10 month financing and deploying clean energy program or their 5 month clean and Equitable Energy Development Program by checking out the Show Notes or heading to CBEY Yale. Edu to learn more. Listeners of Shift Key get an exclusive offer, use referral code HEATMAP26 and get your application in by the priority deadline for $500 off tuition to one of Yale's online certificate programs in clean energy. Transform your career, your and the energy landscape. Head to CBY yale.edu to learn more CBey yale edu that's CBey yale.edu.
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Robinson Meyer
Hi, I'm Robinson Meyer, the founding executive editor of Heatmap News. It is Tuesday, March 31, and I'm in a good mood. It's the first really nice set of days in New York all year, although I think it might be about to rain for a week. I'm not sure. Today we're talking about electricity. Since Democrats won statewide election in New Jersey and Georgia last year by campaigning on high power prices, this question of electricity affordability has been one of the biggest issues in energy politics. But even though Democrats are winning elections on these topics, it's not always clear what they should actually do about it after they win, and essentially what they should do about it at the state and local level. Well, a new report from the Federation of American Scientists tries to change that. It's called the Clean Electricity for Local and State Government Playbook, or the CELLS Playbook, and it's out this morning on the Federation's website. We'll link to it in the show Notes. Joining me today to talk about that report is one of its lead authors, Arjun Krishnaswamy. Arjun is one of my favorite people to talk about clean energy and climate policy with. He's now a senior advisor at the Federation of American Scientists, where he focuses on policy to deploy clean energy and accelerate innovation. Recently, he also served in the Biden Administration as the Senior Policy Advisor for Clean Energy Infrastructure in the White House, and before that he was Special Advisor to the Chief of staff at the U.S. department of Energy. We have a good conversation. We talk about a lot of the interesting, innovative work that states are doing right now to accelerate clean energy and bring down power prices. We talk about the role of regulation versus markets, kind of how to wrap your brain around the whole problem of electricity politics generally. I learned a lot, had a good time. It's a great conversation. And it's all coming up on Shift Key after this. Arjun Krishnaswamy, welcome to Shift Key.
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Arjun Krishnaswamy
Thank you, Robinson.
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Robinson Meyer
It's great to be here. So we talk all the time on this show. Also, I should say, you and I talk all the time about electricity prices, the kind of perils of electricity inflation. And it's reached the status of, boy, we talk about that all the time. Someone should really do something about it. And today, this morning, the Federation of American Scientists has released a new report about how states and local governments can advance the cause of clean electricity while also lowering electricity costs for ratepayers. Can you tell us, Arjun, what is in this report? What do you think we should do? Like, what's the playbook?
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Arjun Krishnaswamy
Absolutely. But before we even do that, I think we should take a step back to something that you and I have talked about a bunch, which is what is driving the fact that prices are going up, because that's really where we started to get to what we put in the playbook. And you and I know, I think the two things that are happening all across the country, we saw this in some of the papers that came out last year, including this great paper from the Lawrence Berkeley lab. The two things that are happening all across the country to increase bills for customers are increased utility spending on the distribution system, which is really the poles and wires, the substations, the stuff that gets the power to customers. And the second one that is also pretty ubiquitous is volatility in gas prices, which across the country is the marginal resource and sets the rate for energy costs. So those things are affecting bills all over the country. There's a couple of other factors that are really important right now are more state or region specific, but are probably going to come everywhere else in the country. And those are recovery and resilience to natural disasters, particularly right now in the west and in the Gulf coast states. But that's something we should expect to happen in more regions across the country. And then in some places, very likely in more places going forward, it's the increasing cost of supply of actually generating the power due to rising demand. And then there's other things here and there in some states, compliance with state policy that's passed on to bills and raises costs. So those are the big things that appear in the research as to what's driving electricity costs up and are going to run into other issues like electrification of homes and buildings and vehicles that exacerbate some of those issues. I start there because what we're seeing, I think, in the conversation about what we do about this issue is organizations and people and leaders taking one of those things and saying, let's go all in on a solution to that thing. Okay, supply costs, generation costs are going to rise. Let's make it easier to build power plants to reduce the cost of supply. Okay, utility spending on distribution is going up. Let's tackle the profit motive for the utility companies. Right. Those are good things. What we say in this new playbook is one, we have to address all those things, all of the factors, in order to really get our hands around affordability. And two, those factors actually have something in common. They're all caused or worsened by a weak administrative state that has failed to properly put the public interest in how we govern utilities. And so what we do with the playbook is we say we should focus on building out the government capacity, building out the administrative state that's equipped to handle all of these different factors and their solutions, and in fact is ready for additional issues that come up that are going to raise bills or make it harder to build clean energy. And so we can get into all the different pieces of that. But that's the thread across this new resource we put out.
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Robinson Meyer
So give us some examples here. I mean, first of all, administrative state, we're basically talking about the ability of the government to do things, the ability of the government to like, follow technical threads, that it kind of produce the physical outcome in the world that it wants, that it thinks is best for the public. Give us some examples of what are the concrete steps that at the state and local level, politicians should be taking to build out the administrative state. Because I think often when we think about administrative capacity, we're thinking at the federal level, which is where the New Deal state was built. Right. But like at the state and local level, what should be happening?
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Arjun Krishnaswamy
Yeah, sure. So I think my favorite example to start with is utility commissions. In every state you have a public utility commission that regulates the investor owned utilities, sometimes other types of utilities as well, but definitely the investor owned utilities in those states. So those are the privately owned utilities. That utility commission is responsible for reviewing the proposals that utilities put in front of them. Proposals for spending, how much is the company going to spend on the poles and Wires we just talked about. In states where the utilities own the generation, the commission reviews plans for new power plants or new power procurement and for rate increases. That commission is really the public entity in the process of determining what your bills are. Right. It intersects with the state legislature, who sets up policy and the governor who might impose their priorities. But really, the public entity that is directly involved in your utility bill is the Public Utility Commission. The way we've traditionally thought, and I think the way that a lot of commissioners have traditionally thought about their role in that job, is to respond to what the utilities put forward. The utilities are in the driver's seat. They know their system best. And in many places, what happens is the utility puts forward the plan. The commission gets some input from other, what we call interveners, say consumer advocates or environmental organizations that submit testimony, and then they make a decision that often looks pretty similar to what the utility has put forward, maybe with some tweaks. One of the core pillars of this playbook we put out is to say the commissions, as the only real public institution that's part of this process, should be main characters in that process in representing the public's interest, including the interest of regular people who pay bills or small businesses who pay bills, in the process of determining what our utility system looks like. Okay, so what does that look like? Some of that. When we talk about government capacity, obviously we're talking about people who are the people in those roles, and not just the commissioners themselves, but the people that are staffing the commissions, and how well can those institutions attract talent. We're also talking about process and mandate. And so one of the recommendations we have in the report is to say we should expand the mandate of those commissions and make clear that their mandate is to reduce bills or curb bill increases as well as some states have made clear that the mandate of the regulators is to deploy clean energy or meet climate targets as well. And that should trigger, with a governor's office working with the commission processes that go beyond the current flow. What might that look like? In Connecticut, there was this great process in which the commission solicited input on a couple of specific topic areas to say, hey, we're interested in how we use flexible electrification. We're interested in how we should better take advantage of distributed resources. We're interested in all these topics. And rather than saying, hey, utility companies, we just want your sort of proposal here, and then we'll get input on that proposal from other entities, we're actually going to set up a docket through which we. We want to Gather input from all sorts of entities that might have an opinion on how we do this, take those ideas in, and then move forward with the good ideas. And that might seem like, oh, that's just a little process tweak, but that represents a flipping of the script where you have an entity responsible for representing the public leading the generation of ideas of what we do with the utility system. So it's things like that, changing the mandate and the processes to allow for generation of additional ideas and programs. And then on the actual sort of the people capacity, it's making sure that you're devoting resources and staff to really fulfill the rigorous interrogation of everything that utility puts in front of a regulator. And that I think, looks different in different places depending on how many resources a commission might have. And I think one of the things we talk about in the report is we need governors and state legislatures to look at creative tools to better resource commissions with maybe it's using a state Department of Energy analytical capacity to provide some independent analysis to a commission, figuring out how to do that, rather than solely relying on utility analysis or other intervener analysis. And there's many ways we could think about doing that, but the idea is we should be pursuing those sorts of creative approaches.
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Robinson Meyer
So it's a very cool playbook. And I'm just going to run through a number of the other kind of proposals in it. But other ideas in the playbook are kind of increasing permitting certainty, increasing siting certainty, including advanced transmission technologies in planning documents, whether that's happening at the state legislative level or the public utility commission level. This is basically having state regulators say to utilities, if I'm understanding it correctly, you have to consider these new advanced transmission and distribution technologies. When you're making your plans, you have to say, what if we were able to send more power over a certain line or something? Then we're planning, building state transmission planning authorities. We're going to get to that, creating maybe creative developmental entities or public enterprises with the legal authority and the staff to pursue new big clean energy projects. There's a lot of ideas in there. I want to get to many of them. Like, let's talk more about this regulatory question, because I think it's so key to so many of the conversations we have in electricity where you have these state public utility commissions. If we're being honest, they are, first of all, to all the state public utility commissioners listening to this podcast, hello, we hear you, we love you, we salute your hard work. However, as they themselves know, this is often very difficult work. It's quite anonymous. You know, one of the headings in the report is making state public utility commissioners giving the main character energy. But in fact, giving them main character energy is like, very challenging because these are often quite forbidding and technical aspects of the law. It's not totally clear to consumers and to residents how even a rate case, which is the bluntest kind of public utility proceeding, where utility brings a case to the PUC and says, hey, we want to increase rates for this reason and this reason and this reason, and these are the things it's going to pay for. Like, even when looking at a rate case, it can be very hard for people to understand, like, how that's going to affect them and even where the money from those higher rates will go to. Can I just ask, like, how on earth will public utility commissions be? How can they be made a more visible part of this process? Because this, to me seems like one of the key disconnects to any plans to increase the salience or the attention to these fights over different utility plans or lower costs is that it's just very hard for the public to follow these fights. The public has a lot going on. Most people don't spend that much time a month thinking about their utility bills. How can this actually be practically done?
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Arjun Krishnaswamy
A couple things. First, I think we're in a moment where because bills are rising so fast and there's so much attention about really rapid spikes in bills, I think people are paying a lot more attention and asking a lot more questions about their utility bills than perhaps ever before, at least in my lifetime. That opens an opportunity to take advantage of that interest. Right. People are seeing their bills go up. They're asking, why am I paying maybe 30, 40% more than I was in the last couple years? And for our state leaders, they have to have an answer to that question. And the answer to that question is obviously it's differing across different states. But what we're arguing here is you should use that question as an opportunity to talk about the ways that your representatives, either people you appointed as a governor or that the state elected in some states is or isn't showing up to protect you from those bill increases. So that's one. I think this is a chance, a sort of communications chance because of the fact that bills are rising so high to open up that system that for so long has been really not transparent.
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Robinson Meyer
It's interesting to bring up Connecticut because I think Connecticut has been a laboratory for a lot of these ideas. And there was a really innovative head of their public utilities regulatory Authority, which is the same as their Public Utilities Commission there, named Marisa Gillet, who tried a lot of experiments, turned herself into a big, a big name in state politics and ultimately did resign because there was just so much controversy attached to her and to some of these plans that it was just, I think she was tired of dealing with it, maybe the governor was tired of dealing with it too. And now what we're seeing, Connecticut frankly is there's going to be a state election this year and there, there are fights about the legacy of this puc and electricity prices have remained a little in Connecticut. Now she was working at a moment when I think the focus was on the cleanliness of the system, not necessarily the affordability. But what do you make of the Connecticut example? Because that is the most recent example, I think, where a state public, due to commission did turn themselves into a main character and there was a lot of excitement about it. But I also think the legacy is maybe slightly mixed.
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Arjun Krishnaswamy
Absolutely. I think this is a great example to have a conversation about the trade offs and strategy. So what she did, I think you can put in, it's more than this, but two big categories. The first is to say, as we just talked about, hey, what's our traditional role as regulators? Our traditional role is to really look at what a utility puts forward and ask the questions we're supposed to ask about what they're putting forward. Are these prudent investments? Are they reasonable? Should we pass them on to customers? Are there places where maybe you should be spending less on this thing or more on that thing? Like those sorts of questions calling balls and strikes. Perhaps that's category one. And then category two is some of this longer term, more innovative thinking around how do we solicit different ideas for what we should do with the system in more creative, expansive ways, change the incentives for the companies in a more wholesale way. On that first category of calling balls and strikes, I think what she did was go further than the utilities were used to on interrogation of their proposals. Right. She said, you didn't properly justify these investments, so therefore we can't include them in your cost recovery. And that pissed the utilities off because they were expecting to be able to recover all those costs. I think the problem there or what we should learn from that is two things. One is that the status quo of not interrogating those programs is not working for customers. Right. Because what she identified was, hey, there are places where you're either just not providing enough justification or, or in fact you're spending money on the wrong Things when you could be spending money on some other things that have more benefits for the system and for customers. That's one thing I think we learned. The other thing we learned is that the utilities really don't like that. And so you have this political. Political pushback that results. One interesting thing about that actually is before she resigned, she had written proposed decisions with other commissioners on a couple of cases. One for the gas subsidiary of eversource and another for an electric subsidiary of Avant Grid.
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Robinson Meyer
And these are two big Connecticut utilities,
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Arjun Krishnaswamy
two big utilities in Connecticut. And after she resigned, those decisions got finalized. And it's interesting to go and look at what happened before with the proposed decision when she was chair, and then afterwards after she left and the decisions were finalized, the amount in each case, in the electric case, the amount that the utility was approved to recover went up by almost $40 million. And the amount that the gas utility was approved for, I think it was similarly about a $40 million increase in. In what they were allowed to recover. And I think that's a reflection of how much are you.
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Robinson Meyer
What.
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Arjun Krishnaswamy
What is your vision of calling balls and strikes? Right. And I say that because I think it's actually meaningful for bills.
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Robinson Meyer
Right.
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Arjun Krishnaswamy
Like in the gas.
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Robinson Meyer
Yeah. We're talking about $80 million across the state. That's a sizable economic.
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Arjun Krishnaswamy
Yeah. And between those two, the overall rate increases that result from those two decisions, I think it's like for the gas, it was estimated to be 17 to $20 a month for an average customer, and for the electric, it was a little less, but similar. And so that's like. That's a meaningful amount of money. Right. Not from the 40, 80 million dollars itself, but from the overall increase. I think what her experience shows us is one, there's a way of doing this that actually results in benefits for customers and a bunch of new innovative ideas. And we should learn from that and think about how do we pull those things into other states. And two, I don't think we're ready, I mean, broadly, state leaders and the advocacy community to address the backlash to those measures. Part of it is a public communications challenge. Right. Like, how are we better selling? The benefits of having a commission that's ready to ask hard questions about the system is part of it. But yeah, I think you're right to ask, what should we learn from this backlash that ended up causing a resignation.
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Robinson Meyer
It kind of illustrates both sides. First, that more aggressive regulation can theoretically lower costs. And she was able to get policies through that I think were not otherwise have been countenanced on the other hand, she resigned and the backlash was significant. And to me, I will say that this illustrates the perils of this approach. I mean, look, we're talking a lot about electricity affordability, but in the next few days, if not the next few weeks, electricity affordability, if we're being honest, is about to drop right off the map of energy affordability issues. And it's going to be all gas prices all the time. And we're going to be back in the world of gasoline being the primo energy affordability issue, which I think will have some positive byproducts for electrification of the transport sector in the United States and other countries. However, it does illustrate, like to some degree, the utilities. When you're regulating them, they can always wait you out, they can always pile you with more documents, they can always take a long time to respond to your requests, they can always overwhelm you with spending. Because for the utilities, these are life or death issues. While for the governor, utility affordability might be a very important issue, but it will never be the primary issue that a governor is trying to manage. They'll always have lots of different equities that they're trying to juggle across the state. And it breaks my own heart that I'm saying this, but like, I understand better why liberals looked at the 1970s and saw the value of markets, like looking at this case, for instance, and maybe lost a little faith in the value of regulation. Because at least in a market you can introduce some degree of competition between different entities and they can manage theoretically, do a little bit more cost management that way as opposed to regulation, which, like, I think a perfect regulatory scheme will always exceed an average market. The question is, how many states can we achieve that perfect regulatory scheme?
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Arjun Krishnaswamy
Yeah, super interesting. I think when we talk about markets versus regulation, like the way that our utilities operate, even in the places where we have competitive markets, like in Connecticut,
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Robinson Meyer
we still have distributions.
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Arjun Krishnaswamy
You still have, you still have this model that is so non competitive. Right. They're not. The only thing they're competing against is whether they can get something approved by, by their regulator, which is, I think, a bad. Whether or not the system is bad. I think what it requires is to have a regulator who's going to work in push and pull to make sure that the customers are not losing out. Right. And like, I think we're now reopening a conversation about whether generation should be competitive or vertically integrated. And that's playing it out in all sorts of interesting ways. But even where it's just the distribution system. I think we're actually in a less competitive place with the way things are now than if we had regulators who were pushing on, say, opening up tools like distributed resources, because those are the things that are in competition with our utility companies in those places. One interesting dynamic that I think is coming up here in the distributed resource arena. And when we say distributed resources, small scale rooftop solar, small scale storage, community solar, things like that, there's another debate growing here about how exactly we take full advantage of those resources. The promise of those resources is a couple things, but one of the things that's most, I think most exciting is maybe you can avoid some bulk investment and therefore reduce bills for all customers if you better strategically use these attributed resources. There's a fight playing out about who owns and benefits from those resources. And we see that playing out between mandated virtual power plant programs where you mandate the utility or some other entity to pay customers for the benefits of the resources they own, which is great and is bubbling up all over the place and proving effective. There's another model where the utility itself procures the resources and owns them and gets more benefit by owning them via return on those investments. And in Minnesota, Xcel is launching the first of a kind distributed capacity procurement to that effect, which I think is going to expand distributed resources in the state, but is also creating some enemies who say the utilities shouldn't own those things and profit off of them. And I think where we land and where this playbook lands is a state should take a look at what's feasible. Right. If you're not going to get distributed resources by trying to fight the utility and that the result there is minimal deployment of rooftop solar and small scale storage, then maybe looking at something like a distributed capacity procurement that brings the utility in on the solution and changes their incentive structure to make sure they're using this full set of tools, maybe that's a good approach. Right. And I think you have to look at that on a state by state basis.
- [25:41]
Robinson Meyer
This week's episode of Shift Key is
- [25:42]
Shift Key Sponsor Announcer
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- [26:58]
Robinson Meyer
That's awesome.
- [26:59]
Shift Key Sponsor Announcer
Head to cbey yale.edu to learn more. Check out the show notes cbey.com yale edu that's cbey yale.
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Robinson Meyer
Edu it doesn't matter if a cat is black or white or I suppose it doesn't matter if a cat is venture backed or a fully regulated public utility, as long as it catches mice or builds rooftop solar and residential batteries, as the case may be.
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Arjun Krishnaswamy
Exactly.
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Robinson Meyer
We've been talking about PUCs. Can you give us a few other examples, things that state governments, governors, legislatures could be doing to bring down costs for consumers and also to deploy more clean energy? Like at the particular moment that we're in?
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Arjun Krishnaswamy
Absolutely. So one, one that's fairly simple is we have a whole section on making government responsive, which is kind of a core pillar of good government capacity, making sure that your government can actually be dynamic and respond to challenges as they come up. One very simple executive action thing that governors can do is improve the ways that agencies and the governor's office itself collects information from developers of clean projects to figure out where the bottlenecks are. I think you'd be surprised at how little transparency, little communication there is across the state government on and between the private sector developers and the state government on where the actual issues are. We can talk about permitting writ large, but getting down to, hey, this specific mitigation requirement for a solar farm for water impacts is taking a really long time. And so that very simple I think every state should be doing is collecting that information on where are the actual hang ups and then saying, okay, can we move resources around or change our standard operating procedures or create requirements for regional offices that actually addresses those very specific bottlenecks, rather than tackling permitting as this whole big Thing that we have to solve all the pieces instead just trying to improve how dynamic the government can be. And Pennsylvania is doing this. The governor's office has brought together a bunch of solar developers in the state and identified places, including with the clean water permitting in the state, where you don't have to sacrifice good permitting outcomes. You just need to make more consistent the modeling and analysis requirements and environmental requirements. So that's one example. Another example is in that same realm on responsive government is addressing citing rules that are often super inconsistent across different municipalities within a state that's often is going to require legislative change. Michigan and Illinois both have done really cool things here where they've either set statewide standards that all municipalities have to adopt for their siting rules, municipalities and counties, or banned ordinances that are too restrictive. So that's really great, like just increasing consistency for how to cite clean energy projects.
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Robinson Meyer
And I should say there we see in the Heat Map Pro data which we, you know, we track political risk and, and the kind of clean energy build out across the country with the Heat Map Pro product. And what we see is that states that do pass those kinds of siting certainty laws, like Michigan, like Illinois, see an explosion of clean energy in a way. I mean in a positive sense. See clean energy get built so many more places than it would otherwise not built. And you can look at neighboring states and look at similar sites in neighboring states and it is like Michigan is building on those sites and Indiana for instance is not.
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Arjun Krishnaswamy
Yeah, it actually matters. It matters in terms of our ability to build. If your state wants to be a power generator and have lower costs, like that matters. Right. Being able to site projects matters as well as being able to reap the rewards of those projects in terms of local economic development. Another pillar of the playbook is on creative and public finance. And this is something we're increasingly focused on. With the rollback of the inflation reduction act and losing those federal financial incentives for wind and solar and not having a federal government that's investing and putting financial support behind clean energy generally. Now there's this question of, okay, where are the places where we need public finance or creative finance tools to get projects built? And there's a bunch of good stuff in there. I think one of the things that I'm really excited about is how can we use public debt to help finance either transmission or clean energy projects? Which has a couple of advantages. One is making sure we're investing in the right things. We want to build a bunch of stuff. We want to make sure we're building the right the most strategic things, the clean energy projects and the transmission lines that are best fit to bring that power to sources of demand. That's one big advantage. The other big advantage is if you use public finance, then you take some amount of capital off of utility equity finance, which then means this whole conversation about reducing the guaranteed return on equity, which we can also have that discussion. But another way of reducing the costs associated with that is by using public finance to say actually less of the capital stack is coming from equity and instead we're using some public finance. California passed a bill last year to do that for some transmission lines. I think that's going to get a lot more attention. Local governments can play in that arena too, especially if you, if a state can set up a pooled bond bank that can then say, okay, we've got all these local bonds, like how do we use those for the best sorts of projects? So a lot of really exciting stuff happening in that finance realm as well.
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Robinson Meyer
One of the great things about this report, which we'll link to, of course, in the show notes, is that you've linked to for each of these policies, you have a number of examples of states that have implemented that policy. And then at the end of the report, you have a list of all the states and everything they've done. It's a really great resource to go see what your state is doing, maybe even policies folks didn't know about, such as Colorado has used public debt to set up a public financing authority for transmission within the state. And it has a special ability to, you know, set corridors and to resolve some land use fights that otherwise the state wouldn't have been able to do or a private developer wouldn't have been able to do. These are authorities that states once used a lot more, sometimes still use in quite muscular ways, but are beginning to be applied to this topic. And as you were saying, it gets cost off the rate base, off of the electricity base that then has to be assigned to ratepayers, and onto the tax base, which is more progressive, maybe a little more longer lived.
- [33:27]
Arjun Krishnaswamy
Can I say one thing about that, Rob? Is the other benefit of giving expansive authority to these sorts of state entities, whether it's a state transmission planning authority like this Colorado example, or even a public utility commission, is you are able to attract talent to those government entities not just by salary, which you know, is another thing we have to think about of how do we hire good talent with constraint salaries, but by an offer that you can actually change something in that role and I think that's something really exciting about providing more expensive authorities is the promise is, hey, this is, you've got the tools you can run, build good stuff, lower costs, provide benefits, do cool things, solve hard problems. And that's something that I think a lot of people are frustrated about when they go and work for a government agency, is when they feel like they're, they're taking the sacrifice, but they can't make things work the way they want, that they want to and see is needed. So that's another excitement that intersects exciting thing that intersects back to the government capacity space.
- [34:29]
Robinson Meyer
This is actually something I've kind of changed my mind about in some ways compared to the Biden administration in the other direction. I think back during the Biden administration, early in the Biden administration, my feeling about, say, interstate transmission was like, look, yes, we should be planning some kind of national grid, but let's just do the work to let private developers kind of knock it out first, because then they can build what finances itself, and then we can go in and kind of clean up the rest. And I have to say now five years have passed, so in some ways, Congress wasn't able to put together a legislative package that time. And so to some degree, time has just passed. I feel like the problem's more urgent. But I also feel like if there were to be some kind of national grid authority, of course existing private transmission projects should be allowed to proceed. And there's, you know, proceed under the corridors that were established under the Department of Energy. And we should be looking at ways to get costs from a transmission backbone off the tax base, off the rate base and onto private sector books. However, one of the benefits of having a national Transmission Planning authority would be, first of all, you train transmission planning talent and you'd be able to teach people how they should be thinking here. And second of all, you'd be able to make a promise to people who do want to go out and build these lines that they would be able to do so because they'd have the full faith and support of the federal government behind them. I think we're kind of dancing around at least one question I want to confront directly, which is you were involved in implementing a lot of different parts of the Inflation Reduction act in the Energy Department and then in the White House. And I think since its partial repeal last year, there's been the beginnings of a discussion around what went right with it, what went wrong, kind of what were the lessons learned, what would, if there were a next time, and I have to Say, I'm very doubtful that there will be a next time in quite the same way. But if there were to be future federal climate policy or future federal energy planning policy, what it should do differently? We recently had Alex Gasmorri on the show and the great recent paper finding that even when the Biden policies were successful at building local manufacturing capacity or local clean energy capacity in a region, basically no one living in that area, even though they were benefiting from the growth and benefiting from the economic activity, associated that particular facility with the Biden administration or with the Inflation Reduction act or with the bipartisan infrastructure law. How do you reflect on, on the ira? Because you saw it up close, you were trying to get it done. What do you think should be different next time?
- [36:53]
Arjun Krishnaswamy
One thing that I've been thinking about, you know, you and I were there early on as what was in the various campaign plans turned into the Biden campaign plan turned into Build Back Better, turned into what became the Inflation Reduction Act. And throughout that process, and especially I think in the, when we were in the real legislative process, the metrics that we were organizing around, I think broadly between the administration and the advocacy community were medium to long term around what is the emissions impact of different programs on a 2030 and 2035 timescale? And jobs, what is the economic benefit? But in particular, how many jobs do different programs create? And I do think there were really good reasons for those to be the metrics. I mean, obviously we know we have to solve the climate crisis to avoid all sorts of cascading impacts. And organizing around and prioritizing around emissions makes a lot of sense. That's a long term problem. Jobs are super important and were even more important at that time. But both of those metrics I think pushed us towards programs whose real benefit was on the long term. 1 and 2 avoided asking any big questions about how the programs are traceable in terms of people's lives. I think we see the result of that in terms of the public knowledge and reception to the Inflation Reduction act. You know, hindsight's 20 20, but I think, I think one thing that I would love to see next time we go, if we have a chance to do some sort of big federal climate policy, is how are we also solving for, in addition to those things, especially long term emissions, how are we also solving for traceability and near term benefits? By traceability I mean near term benefits that are clearly tied to federal policy change. And okay, what does that mean? I think one thing that that leads me to, and this came up in your, your conversation with Alex is the role of the federal government, at least for some of the programs, has to be very clear and easily communicable and at the center of the program. That really wasn't true for the vast majority of the money that flowed through the Inflation Reduction Act. As we know, most of the money flew through the tax credits, but even the money that didn't go through the tax credits, which largely went to companies building projects, the rest of the money went through, a lot of it went to grant programs that went to private companies or went to states for implementation. And with all those things, I think it's really hard to tell a story about how a federal policy change made your life better. One thing I think we, and this shows up in our playbook, one thing I think we have to do is figure out what are the charismatic programs that can make people's lives better, that have a clear government role in them. And that's important not just, I think, for the politics of climate and energy, but it's also important because faith in our public institutions is at a historic low. And that's something that at fas, at the Federation of American Scientists, we're also trying to solve is how do we increase faith in these institutions and get the cascading effects of that that allow us to do more good things and solve our problems.
- [40:07]
Robinson Meyer
Some of the problems that you're discussing here, some of the kind of outcomes were related to each other in that I think the laudable fixation on long term emissions decreases and focusing on the tons and the desire to make some of that focus and some of those projects less politically salient were actually twinned in that people were like, okay, we want to eliminate tons. But also climate change is quite a polarizing issue. So we don't want to make people feel like this is an eat your veggies moment. And so the more we can do this through existing systems, through the tax code, through ways that people might not notice but then might protect later, the better. I'll never get over the, how bizarre it was to be reporting on the ira, to see the entire Democratic administration and Congress kind of throw its weight behind a pretty aggressive climate bill, especially I think in context, and basically receive no public recognition for that. Not even for the public, not even to fully understand what was happening. Even people who claim to care about climate change not fully understand what was happening. I think there's a number of conclusions one can draw from that. One of them is that a lot of people who say they care about climate change might actually care about it in a kind of broader aesthetic sense and less in a long term technocratic focus on the ton sense, which is a politically meaningful takeaway if that's true. But also, I think the IRA never found its, you know, build the wall and or freeze the rent moment. And it was not designed to have one. It was not designed to have something that the president could take to the public and be like, look, we're doing this thing and this thing is small but meaningful, but it actually represents a far larger regulatory push or a far larger governing focus that we're not going to describe all the parts of, but that by the ardency of this one project, we're communicating the broader governing philosophy.
- [42:00]
Arjun Krishnaswamy
Yeah, exactly. And those two slogans you just mentioned, build the wall and freeze the rent. The thing that is interesting about those things to me is they're both the government is doing those things, the government is building the wall and the government is freezing the rent. And you know, in New York, the promise was the government is making your transit free and your groceries cheap. I don't think the best policy solution is necessarily only public investments or only public finance or only have government at the center. But I think we overindexed a little bit on the opposite because of all these factors that you just mentioned around what was actually feasible. What could we do in reconciliation? What are how do we get money out through these pathways? But we need to create some space, I think, at the state, local and federal level for some charismatic policies that are sloganable, that clearly showcase and then execute the ways that government can make your life better.
- [42:54]
Robinson Meyer
Arjun, thank you so much for joining us here on Shift Key.
- [42:56]
Arjun Krishnaswamy
Thank you, Robinson, for having me. This was great.
- [43:02]
Robinson Meyer
And that will do it for us today. We'll be back later this week with another episode of Shift Key, so you'll hear from us at least one more time this week. Until then, Shift Key is a production of Heat Map News. Our editors are Julene Goodman and Nico Lauricella. Multimedia editing and audio engineering is by Jacob Lambert and by Nick Woodbury. Our music is by Adam Komalau. Thanks so much for listening and see you next.