Summary of "Yes, Biden’s Green Future Can Still Happen Under Trump" – The Ezra Klein Show

Episode Title: Yes, Biden’s Green Future Can Still Happen Under Trump
Host: Robinson Meyer (Guest Host)
Guest: Jigar Shah, Director of the Loan Programs Office (LPO) at the Department of Energy
Release Date: December 20, 2024

Introduction

In this episode of The Ezra Klein Show, guest host Robinson Meyer engages in an insightful conversation with Jigar Shah, the Director of the Loan Programs Office (LPO) at the Department of Energy. The discussion centers around the impact of the Inflation Reduction Act (IRA) on clean energy initiatives, the resilience of the green economy under changing political landscapes, and the future of decarbonization efforts in the United States.

Biden's Inflation Reduction Act and the Role of the LPO

Robinson Meyer introduces Jigar Shah by highlighting the significance of the Inflation Reduction Act, which President Joe Biden signed two years prior as the largest climate law in U.S. history. The IRA aimed to revitalize manufacturing jobs and enhance the competitiveness of U.S. industry against China, resulting in nearly half a trillion dollars in investments in green energy and manufacturing.

Jigar Shah elaborates on the mission of the LPO:

“We're basically a bank within the U.S. Department of Energy. It is supposed to take that risk of building that first project when commercial banks are not comfortable with putting the loan out the door for that first project.”
(03:55)

Shah explains that the IRA expanded the LPO's lending authority from $40 billion to over $400 billion, significantly bolstering its capacity to fund renewable energy projects deemed too risky by private lenders.

Clean Energy Under the Trump Administration

A pivotal question arises about the sustainability of clean energy advancements under a Trump administration, given his administration's previous stance on environmental policies.

Jigar Shah responds optimistically:

“The deployment of clean technology is going to keep going. I think the real question is around what our leadership looks like around the world.”
(03:55)

He emphasizes that the clean energy sector has developed its momentum and that American technology in fields like geothermal and nuclear continues to attract global interest despite political shifts.

LPO's Operations and Successes

Shah details the operations of the LPO, emphasizing its role in commercializing innovative clean technologies:

“The loan programs office operates like a commercial bank, but has this mandate to lose money to make sure that we are commercializing technologies here in the United States.”
(07:21)

He highlights the LPO's success in identifying and funding next-generation technologies, ensuring that the U.S. remains at the forefront of clean tech innovation without losing money on investments.

Impact of the Inflation Reduction Act on LPO

Robinson Meyer probes into how the IRA's expansion of the LPO's authority has influenced its operations and integration into Biden's broader decarbonization policies.

Jigar Shah notes:

“We have been working to get everyone to meet that threshold... we're being tough on these companies.”
(11:25)

He underscores that the IRA not only increased funding but also reinforced stringent evaluation processes, ensuring that only well-prepared and viable projects receive support.

Loan Program Office's Approach to Risk and Success

Addressing past criticisms, Shah contrasts the current operations of the LPO with earlier controversies, such as the Solyndra case.

“There were two big challenges with Solyndra and both things we don't do anymore.”
(19:25)

He explains that the LPO now ensures private sector investment precedes federal loans and avoids technology risks by leveraging grants for preliminary demonstrations. This disciplined approach has led to a robust track record of loan repayments and project successes.

Sector-Specific Investments: Batteries and Electric Vehicles (EVs)

A significant portion of the discussion delves into the LPO's investments in battery manufacturing and the burgeoning EV market in the U.S.

Jigar Shah states:

“Battery manufacturing has been a huge highlight of our four years in office.”
(11:29)

He details investments in lithium and graphite processing facilities, aiming to secure domestic supply chains and reduce reliance on China. The LPO is actively funding projects like Rivian's mega factory in Georgia, highlighting the sector's rapid growth.

Challenges in Loan Disbursement and Process Efficiency

Despite substantial funding authority, Shah acknowledges that the LPO has substantial "dry powder"—funds awaiting disbursement. He attributes this to the rigorous preparation and high standards set for applicants.

“Today people are more prepared and things are moving much faster than the loan programs office.”
(31:02)

Shah credits the increased preparedness of companies, following LPO guidance, for the accelerated processing times and higher project success rates.

Decarbonization and Rising Electricity Demand in the U.S.

Shah addresses the surge in electricity demand, initially attributed to AI but primarily driven by broader industrial growth, including EVs and heat pumps.

“Most of the load growth on the data center side is still cloud. AI is coming, but it's not yet.”
(50:04)

He emphasizes the Department of Energy's role in promoting energy efficiency and the diversification of energy sources to meet rising demands sustainably.

Nuclear Energy and Grid Modernization

The conversation shifts to the role of nuclear energy amidst rising electricity demands and the integration of AI technologies.

Jigar Shah explains:

“If you can maintain that 20% nuclear that we've had for many years, it is so much cheaper to run a decarbonized grid.”
(53:15)

He advocates for a balanced energy mix, including nuclear and enhanced geothermal energy, alongside renewable sources to ensure grid stability and cost-effectiveness.

Future of LPO and Clean Energy Policies Under a Trump Administration

Looking ahead to potential policy shifts under a Trump administration, Shah remains confident in the resilience of the LPO and the U.S. clean energy sector.

“American innovators and entrepreneurs are an unstoppable force. They walk through walls.”
(56:37)

He contends that regardless of political changes, the drive and ingenuity of American entrepreneurs will sustain and advance clean energy initiatives, preventing a rollback of progress.

Conclusion and Recommendations

As the episode wraps up, Shah offers advice for future LPO leaders and shares his book recommendations, underscoring the importance of resilience and strategic thinking in advancing clean energy.

Notable Quotes

• Jigar Shah (07:21): “The loan programs office operates like a commercial bank, but has this mandate to lose money to make sure that we are commercializing technologies here in the United States.”

• Jigar Shah (19:25): “There were two big challenges with Solyndra and both things we don't do anymore.”

• Jigar Shah (53:15): “If you can maintain that 20% nuclear that we've had for many years, it is so much cheaper to run a decarbonized grid.”

• Jigar Shah (56:37): “American innovators and entrepreneurs are an unstoppable force. They walk through walls.”

Key Takeaways

• Resilience of Clean Energy: Despite political uncertainties, the clean energy sector in the U.S. remains robust, driven by innovative technologies and strategic federal support through the LPO.

• Strategic Federal Support: The Inflation Reduction Act significantly empowered the LPO, enabling substantial investments in green technologies and manufacturing, fostering domestic industry growth.

• Rigorous Evaluation Processes: Learning from past mistakes, the LPO now employs stringent evaluation criteria, ensuring high project success rates and financial prudence.

• Sector Growth: Battery manufacturing and the EV market are experiencing rapid expansion, positioning the U.S. as a competitive player against China in clean energy technologies.

• Future Outlook: The commitment of American entrepreneurs and ongoing federal support suggests a sustainable trajectory for clean energy advancements, regardless of administrative changes.

This episode underscores the intertwined relationship between federal policy, private sector innovation, and the persistent drive towards a sustainable and competitive green economy in the United States.