Volts

In this episode, Project InnerSpace founder and executive director Jamie Beard, who has been instrumental in influencing oil and gas personnel to move into the geothermal industry, discusses exciting recent developments in geothermal and the opportunities ahead.(PDF transcript)(Active transcript)Text transcript:David RobertsThings are starting to come together for geothermal. Political awareness has seen an uptick. Investment is flowing in. Startups, many staffed by veterans of the oil and gas industry, are swarming to take advantage of existing geothermal opportunities and expand those opportunities. New technologies and techniques are reaching the demonstration phase.It’s an exciting time. At the center of it all is Jamie Beard, who for more than a decade now has served as a kind of pied piper luring people out of oil and gas and into geothermal. (Here’s her 2021 TED Talk.) A one-time energy and regulatory lawyer, Beard founded the Geothermal Entrepreneurship Organization, dedicated to educating and training oil and gas personnel to move into geothermal. (GEO recently helped launch the Texas Geothermal Institute to expand that work.) She is also the founder and executive director of Project InnerSpace, a nonprofit dedicated to advancing the geothermal industry. It recently launched an initiative to build a Global Heat Flow Database, which would help map subsurface resources across the globe. It also plans to invest in new geothermal technology companies that are ready to launch first-of-a-kind demonstration projects.Beard has been my go-to resource on geothermal for years, so I was thrilled to bring her on the pod to discuss the current state of the industry, the migration of personnel and expertise from oil and gas to geothermal, and the path to global scale for the industry.All right then. Jamie Beard of Project InnerSpace. Welcome to Volts. Thank you so much for coming.Jamie BeardOh, my gosh. David Roberts. Hello. It's nice to see you again.David RobertsYeah, it's been a while since we talked. You know, when I was working on a piece on geothermal for Vox a few years ago, I don't know how many years ago, my family makes fun of me because everything pre pandemic is about five years ago. Yeah, I guess it was 2020. And my sense then around geothermal was that there was this sort of kind of a surge of interest, call it ten to 15 years ago, and a surge of investment. And then that kind of tailed off, kind of the air went out of that balloon a little bit lost steam.There you go. That's the pun I was looking for. And then my sense was that as we were talking back in 2020, a bunch of strands trends were just starting to come together for a new big resurgence, a renaissance of geothermal. I want to talk about the future of geothermal, the immediate future, the near term future, the midterm future. But first, I would like to just start with a snapshot of, like, what is happening in the industry now? Is it still the case that only conventional geothermal wells are actually being dug and operating? What's the kind of snapshot of the industry?Jamie BeardWell, no, it's no longer just the case that conventional is being dug, which is really cool. And that's actually a difference between now and 2020. So when we talked back in the day, you're right to use renaissance, we were just about at the beginning of one, right? So it was like there's all this stuff that was very buzzy, but there wasn't really a whole lot in the ground. There were some teams that were kind of thinking about it, but nobody was really doing it yet. So there are some teams that have gotten out and done stuff in the last couple of years, and that means demonstrations, and that means that wells have been drilled, and that means that demonstrations and pilots have been done.And that's also meant that the oil and gas industry has gotten increasingly excited and started investing. So the landscape has changed quite a bit in the last three years in terms of momentum and also investment dollars, which is really cool, I guess, to start with.David RobertsI should have done this at the very beginning, but I shouldn't assume that listeners read that piece on geothermal.Jamie BeardWell, everybody in the world has.David RobertsI would like to think so, but just in case there's a few out there who have it, I just want to make a very basic distinction. Geothermal to date, mostly, almost exclusively has been what's called hydrothermal, which is you go find places where there are natural riffs and reservoirs of thermal activity, and then you go down there and exploit that heat. So that's what geothermal has been from like the dawn of time up until about five minutes ago. You go find these areas where the heat already exists, that's conventional geothermal, and you stick a straw down and get the steam up and make electricity.Then there is coming what's called advanced geothermal, whereas you go make your own reservoir, you dig down and you crack the rock to create basically an artificial or a human made fracture, which then the hot water comes, fills the cracks, then you stick a straw down, et cetera. You make your own reservoir. And then there are sort of beyond that, kind of like what you might call cutting edge. I don't know what the exact term is. Cutting edge technology research where people are trying to do things like closed loop geothermal, where instead of just having the heat be dispersed in this natural reservoir, you're just tubing water down, letting it heat up and tubing it back up.Jamie BeardThese are very accurate terms.David RobertsI hope everybody's keeping up. And then there's wacky cutting edge drilling technology, like using lasers and plasma sound waves, plasma millimeter waves, god knows what else. That's the cutting edge. That's just like the landscape, just in case people don't know. So most of what's happened to date in the history of geothermal has been conventional geothermal. And as far as I know, in terms of commercial operating geothermal plants, they're still almost all conventional hydrothermal, are they not?Jamie BeardYeah, that's right. There are a few commercial egs plants in the world, but they are very few. And the rest is the Iceland kind of geothermal, the geothermal that we see on the surface. So it's the traditional stuff, but even that there's not much of it in the world. Right?David RobertsRight.Jamie BeardIt's still quite small, but anyway, yeah, so you caught everybody up to 2020 with your article. So everybody that's listening, go read David's article from 2020. It'll catch you up to then, and then we'll cover the last three years.David RobertsNow, right now what I want to know is, is there still interest in conventional hydrothermal? Are people still trying to dig those wells? Is that still like a going concern? Or is everyone turning their attention now to egs, which is enhanced geothermal systems, which is this make your own reservoir thing, scalable geothermal? Is everybody going in that direction now?Jamie BeardNo, not everybody, and I don't think everybody should. When it comes down to it, there's a whole lot of conventional geothermal in the world that has not been developed. There a lot. Even though conventional geothermal, or hydrothermal as it's called, is geographically limited, there's still a whole lot of it out there that we could be leveraging. Right.So if you look at the oil and gas industry and how they're engaging in geothermal, about half of the entities are going to dip their toe in to geothermal by pursuing conventional hydrothermal projects first and then the other. Half is looking and thinking, well, we'll just skip over that and go for the gold. Go for the stuff that we can scale and do anywhere. Right. And so there definitely a split in the community on that. But I think when it comes down to it, we're going to, over the next ten years or so, develop a whole lot of hydrothermal before we end up in scalable stuff.David RobertsMy impression of hydrothermal was always that there are a couple of places where the sort of activity is intense enough to give you the heat you need to really make electricity efficiently, but there wasn't a ton of it because it couldn't compete kind of with wind and solar. Have there been developments in conventional hydrothermal geothermal that make it more attractive for investment? Like have costs come down, has permitting or siting gotten easier? What's the kind of state of play?Jamie BeardSadly, that's not the case with we're going to get into that. Yeah. No, there's not been much by the way, of regulatory, unfortunately. But I think your question about costs coming down yes, a lot of that has happened because of technology transfer from the oil and gas industry over the past years that have helped revitalize, for instance, underperforming wells for hydrothermal. The heat is not usually the problem. The problem is having sufficient water naturally occurring underground in your reservoir to sustain your output. So you need to have enough water coming up out of the ground to run your power plant.And if you don't have enough, or if your well declines, over time, which does happen with hydrothermal. Eventually you start running out of water and wells decline. There are ways to revitalize old wells, and that's being tried. There are ways to enhance the fracture network in hydrothermal systems and that's being tried, right? Yes. And quite frankly, hydrothermal is a really nice 24/7 baseload source of clean energy. And so what we're finding in terms of cost is that there are markets that will sustain a premium for baseload simply because there's so much solar and wind. Right?David RobertsYeah, that's what I've been thinking about, is just that the value of dispatchability in and of itself is rising. So I thought that might be sort of affecting the economics of geothermal.Jamie BeardThat's right.David RobertsActually, let's pause here to talk about permitting and siting. You hear a lot of complaints, really from everyone about this subject, from every industry. But the geothermal people complain that it's very difficult to get a well started, even relative to oil and gas wells.Jamie BeardYes.David RobertsSo maybe just tell us quickly. These permitting and siting problems, I assume, face all kinds of geothermal, the hydrothermal and the advanced stuff. So what's the problem now? And is there any solution on the horizon?Jamie BeardAll right, so in a nutshell, so we don't put everybody to sleep. In the United States, most of the really low hanging fruit for geothermal development exists on Bureau of Land Management land, federal land that is subject to the National Environmental Policy Act, or NEPA. And it's an extensive set of environmental regulations that require a lot of review before doing a project on federal land. And geothermal projects are subject to NEPA. What that means, essentially, is that for the multiple phases of a project, in order to get a project developed on federal land, you're looking at a permitting timeline of six or eight or even ten years to get a project off the ground, which is completely ridiculous.You can't get projects funded under that scenario.David RobertsIs that also true for oil and gas well? Is that true for everything, or is there unique barriers?Jamie BeardSo here's the thing. This is what I was just about to point that out, which is oil and gas drilling on federal land has been excluded from this process through a categorical exemption.David RobertsWhat? Isn't that nice for them?Jamie BeardWell, that's whether they lobbied for it. And here's the problem. Geothermal doesn't have a lobby. And so what we end up with here is a scenario where you can get an oil and gas well drilled on federal land in no time, very quick, in a geothermal well, which is clean energy. And the same process as drilling the oil and gas well is going to take you a decade. It kills projects. This kills projects, right? When you ask what's the solution, I am loathed to say politics, because who knows, right? And are we going to wait around for that?My personal opinion is no. Let's go around it so that's why I've been focusing all my efforts on state and private land, because we're just not going to do the federal you're.David RobertsJust going to throw your hands up about federal land and go to other.Jamie BeardAnd that's how we go fast. And that's why most of these demonstrations are in Texas.David RobertsInteresting. That's hilarious. And are there state permitting and siting issues or are things generally better at the state level?Jamie BeardWell, look, if you focus on oil and gas states that have streamlined permitting for oil and gas and that have friendly regulatory environments to oil and gas, no, you got no problems. Right. I think the trend is going to be and quite frankly, this is the way it should happen if we're not going to sit around and wait for politics, we need to be focused on deploying pilot geothermal projects in states that are used to oil and gas permitting. Right. Those are going to be the oil and gas states. And they just so happen, many of them, to have excellent geothermal resources so we can get projects permitted in twelve months or less instead of a decade.And we've seen that happen with one of the projects in Texas. They were off to the races in a matter of months to do their pilot. Yeah,David RobertsTexas.Jamie BeardGo go drill, baby drill.David RobertsDoes have its merits.Jamie BeardRight.David RobertsSince you sort of brought up oil and gas, let's talk about a little bit about how in the last ten years, techniques developed and perfected by the oil and gas industry are coming to geothermal. I think people know, once again, assuming they read my article.Jamie BeardRead the article.David RobertsThey know that fracking is part of that, but it's bigger than just that. So what is the sort of knowledge transfer that's been happening?Jamie BeardYeah. So it's all of the learnings of the shale boom. Let's back up on the shale boom. So all of a sudden, 20 or so years ago, global geopolitics got rearranged by natural gas. And I think a lot of folks kind of skip over why that happened. Right, it happened, and we all realize it happened. But why? Why is the reason geothermal is now a thing? Because it was this gigantic flourish of technological development that came out of the oil and gas industry and 10 or 15 years of massive leapfrogs in what we can do when we're drilling and engineering the subsurface.And that includes fracking, but it also includes a lot of other cool things.David RobertsWhen we say fracking, we mean fracturing rock to create natural gaps that are then filled, in natural gas's case by natural gas, in this case by ...Fluid.Hot water. But that's what we are referring to, by fracking. I just didn't want to assume people knew.Jamie BeardYeah, right. So hydraulic fracturing, so the process of applying pressure to a well bore in order to enhance or create new fractures or pore space in rock. And that process can be used for more than one thing. Like right now, we use it to produce more gas than we normally could from a reservoir. But it just so happens that that technique in creating or enhancing fractures and rock is really helpful if we want to engineer the subsurface to create a geothermal reservoir. Right. So it's a really good example of kind of a bad word that comes out of the oil and gas. Really polarizing word, right?David RobertsYeah.Jamie BeardThat can kind of be repurposed into a really interesting and big opportunity for the future of clean energy.David RobertsKind of a side thing. But I wanted to ask in the industry, what is the sort of state of thinking on how to tiptoe around that?Jamie BeardOh my gosh.David RobertsDo they want to just address it full on and say it's fracking but it's different? Or do they want to just come up with a different word for it? What's the kind of state of play?Jamie BeardWhat a good question. David, I love talking to you. This is an excellent question. So it's super controversial what you just asked and nobody really wants to talk about it. Right?So this is the way I see it going. You've got geothermal entities and the government tiptoeing around it, so they're trying to call it something else because they don't want to get mixed up with oil and gas and all that. Right.So let's keep it nice and simple and let's call it other stuff. So they've called it things like hydro-shearing and hydro-fracking just to try to avoid the word fracking.David RobertsCome up with a boring enough term and everybody will just slide right past it.Jamie BeardRight, right. Like nobody's going to notice kind of thing. Right. The oil and gas industry, by and large, adopts the opinion, "well, that hell, we just spent the last 20 years perfecting this amazing technique that rearranged geopolitics and can revolutionize the future of geothermal. We're going to call it what it's called, damn it." Right. Then you have some entities saying, yeah, but it might be easier from a community relations standpoint to not dive right in there. So you do have some controversy in oil and gas. My personal opinion is we need to call a spade a spade. Right.And I think there's going to be some intellectual work that we need to do as human beings to get over polarized and loaded terms. But we need to be honest with one another about what we're doing. And if we rename something that is what we are doing a technique for geothermal. It's not producing oil and gas, it's producing clean energy. That's awesome. But we are doing a technique that's called a thing.David RobertsYeah, it looks a little shady when you ...Jamie BeardWell, it doesn't build trust. Right. If we start trying to call it something else, that's not a trust building exercise. And I think that's a lot of what we need to be doing for geothermal is trust building.David RobertsWell, let's briefly address here then, the kinds of concerns people might have when they hear the word "fracking". So I think people have a lot of muddled ideas in their head about what the dangers of natural gas fracking are. But tell us why this is different and why people shouldn't worry, or if they should worry a little bit, how much should they worry?Jamie BeardWell, okay, you're going to get the direct story from me, David. This is the no b******t answer here, which is the way hydraulic fracturing has been utilized by the geothermal industry so far has been a very simple version. It's been very low tech. So they're just trying to apply pressure and enhance existing fractures. But it's a very basic method of hydraulic fracturing that's been used. And I think when it comes down to it, when you're fracturing to enhance a reservoir to circulate water or another fluid, like, we can get to this later, but like, supercritical CO2 is the new cool trend to use as your working fluid for geothermal systems.And it's a really cool idea, but if you are enhancing the subsurface to make that clean energy system work better, why not? As long as you're doing it safely and responsibly and leveraging the learnings of the last 20 years about how we do that safely and responsibly. I think when you start thinking about hydraulic fracturing in the oil and gas context, the types of images that come to mind are lighting your faucet on fire kind of these very polarizing and upsetting images. Right?And I do think that that is a result of ten or 15 years of bad blood. Mistrust and bad blood between oil and gas and environmental and climate activists. And I'll just go ahead and say, just for full disclosure, I am an environmentalist and a climate activist. I am not in or from the oil and gas industry. In fact, quite the opposite. So I understand all of those sentiments. I grew up wanting to oil and gas be damned. I mean, I was going to bring them down kind of thing. So I get all that. The differences, though, between the way geothermal wells are fractured and oil and gas wells are fractured.There are some in oil and gas. They're using a variety of chemicals to enable that process.David RobertsYeah, this is what I emphasize to people, is most of what you associate with the damages of natural gas fracking have to do with the fluids being injected and leaking into the groundwater and etcetera. And geothermal just doesn't use those same fluids.Jamie BeardThat's right. Well, right now, let's pause for a second and say, yes, there are a lot of differences in techniques and fluids used and also where natural gas is located, you oftentimes have to drill through water tables to produce and get to natural gas reservoirs. And when you have those sorts of close in geographical distance between water tables and oil and gas resources, you have the potential to have problems, particularly if you're fracturing the subsurface. Geothermal is different. Right. So because in the case of hydrothermal, you're in a hydrothermal reservoir, you're in the water table, it's a reservoir that's full of water, and your intent is producing that water to the surface.Right. So it's a different kind of game in geothermal. Just off the bat, but I'll say part of the excitement, this is where we need to do some intellectual work, in bringing people together and not fighting about this. But but we're going to have to think about this. A lot of the benefit that we will see over the coming years, coming out of the oil and gas industry into geothermal, is actually adapting some of those more complex techniques that they use in hydraulic fracturing and oil and gas and adopting them into geothermal, applying them to make the geothermal reservoirs function properly.Does that mean we need to transfer the chemicals and these ... no, not necessarily. But what we do want to do is transfer the really cool, cutting edge stuff like multistage fracturing, where you're actually engineering the reservoir in really specific ways to where they're parallel structures that you're fracking to connect with one another, and therefore you can predict how the fluids will flow amongst them. They're more complicated engineered subsurface reservoirs. And if we can do that like we're doing it for natural gas. Now in the geothermal context, EGS in particular, what we're saying is engineered or enhanced geothermal systems, they will work better.And what that means is they will have better output. What that means is they will be cheaper to build. Right. So some of that transfer we do want and we should support, but I think we need to figure out how to separate the good from the bad when we think about fracking or the "f" word. So we call it.David RobertsAnd also the other question that I get constantly, I'm sure you get it several times a day, is about earthquakes. People have this real fixation on the idea that geothermal digging is going to cause earthquakes. Was there ever anything to that? Is there currently anything to that? Is that a real worry or is that kind of a myth?Jamie BeardNo, it's a real worry. Absolutely. It's something that we should absolutely be focused on and considering. Here's the thing. The cases in the world where seismicity, or I'll back up induced seismicity, so geothermal systems have natural seismicity associated with them all the time. It just happens. What we don't want is to be causing that seismicity by our actions. So we are interfering with the subsurface in a way that causes seismicity, particularly seismicity that is detectable by humans. Right. So seismicity that is above a level that becomes noticeable. And there have been cases where geothermal systems, particularly EGS projects, where they're going in and fracking these reservoirs, have caused induced seismicity and some of them have been significant.They not only detectable, but damage causing induced seismicity. And I will say there is kind of an obsession in media, right, about geothermal. It's like, oh, there's all this awesome stuff happening, but earthquakes, it's always this thing. It's kind of the boogeyman. And I would say in those situations where there has been induced seismicity related to an EGS project, in 100% of the cases, that was because the system lubricated an existing fault that was underneath the system. Therefore, that system should have never been located or sited where it was being developed. And there's a reason this is happening, which is the geothermal industry is so fractured and regional.It's kind of a mom and pop shop kind of industry. You've got entities out there just kind of developing projects, but not really sharing best practices and standardization, developing protocols that everyone is following, et cetera. And in those types of situations, you'll have mistakes and some of the mistakes end up on international news, right? And that's what you have for geothermal. And that's also David, kind of, and I think this is going to be ironic to probably some of your listeners that I'll say this, but standardization and establishment of protocols and data sharing and getting things like this under control at scale, the oil and gas industry is really great at that.David RobertsWell, we're going to get back to that, but that's a great segue to my next question, which is tell us about what Project InnerSpace is. Project InnerSpace is nonprofit. You have to advance geothermal. The plans have two phases, which I would like to talk about in turn. The first phase, what you're trying to do now, what just got launched and is underway, is basically, as far as I can tell, an attempt to map and better understand what's beneath the surface. So just tell us a little bit about InnerSpace and what this phase one looks like.Jamie BeardAwesome. Thank you for asking this. We kind of forgot about that part right at the beginning. Hello, I'm Jamie Beard. I run Project InnerSpace. Project InnerSpace is a nonprofit that I founded this last May. So it's a newly launched entity. The purpose of InnerSpace is to address two major barriers that are standing in the way currently of geothermal reaching exponential scale in growth. And essentially what we're trying to do at InnerSpace is put ourselves out of business by 2030. So we're trying to run a sprint and make ourselves completely irrelevant by the end of this decade.First is phase one, which you mentioned, which is building a global, high resolution, global map of where the geothermal resources are and how deep they are so we can understand the low hanging fruit.David RobertsAnd this doesn't exist. Imagination, like in some library somewhere that seems like that should be happening already.Jamie BeardYou'd think, amazingly, it doesn't exist. Some places in the world have done a better job than others at estimating we have some maps of the United States that were done by Southern Methodist University in the early 2000s. We did a little poking around on that, actually, with SMU a couple of years ago to see how accurate those maps were. And it turned out the maps are a little bit inaccurate on the wrong side for geothermal. So it's actually a rosier picture for geothermal than those maps show, which could interfere. And frankly, since so many projects are on the margin economically, having maps that are even 10% off matters.It matters, right. So we need to get this stuff right. We need to know where the resources are, how deep the resources are, and what temperature they are before we start siting projects.David RobertsSo right now a geothermal company just wanders out into the landscape and starts digging.Jamie BeardThat's exactly right. Yeah. I mean, they do the best they can, but there's a lot of money that goes into subsurface exploration. Oil and gas spends billions of dollars doing subsurface exploration for oil and gas.David RobertsI'm surprised some of that isn't transferable, they would know enough.Jamie BeardThat's what InnerSpace phase one is. Right?So it's like, all right, oil and gas industry, y'all have a lot of data and we would like to use that to build a really high resolution, detailed global map that's interactive and free for the world so that everybody can use it, including governments, but also startups and everybody in between.David RobertsSo this will just save a lot of exploration costs. It will help startups skip some of that exploration stage and just know where to go.Jamie BeardThat pre-project risk. Yeah.David RobertsAnd it will give us a better global sense of what the resource is.Jamie BeardThat's right. So it's not going to be high resolution enough to say this is the exact spot we want to put our plant. We can't do all that. That's a little bit too much for a map of this size. But what we can say is these are the regions in the developing world where there's a lot of low hanging fruit for geothermal and there are huge population centers here and wow, this country is poised to be adding a lot of coal capacity over the coming decades. So, wow, let's just slip geothermal in here instead.David RobertsIs this about sort of like rationalizing and checking and ordering existing data? Or does this involve people going out into the field and I don't know what it would look like digging holes ...Jamie BeardDrilling a hole.David RobertsDrilling holes and testing.Jamie BeardWe will not be drilling any holes in phase one. Thankfully. Phase one is a fast sprint too. So we're going to publish in 24 months. What we're doing is we're grabbing all the data that's out there that's imperfect. And most heat flow data in the world that's out there is imperfect, meaning it's not cleaned, it's not organized. It needs to be QC'd before it can be utilized and relied on. So. We're going to take all the data that's out there, clean it and get it in really good shape. Then we're going to collect as much oil and gas data as we can.So this is data that the oil and gas industry has from the millions and millions of wells they've drilled globally. So they know ...David RobertsIt's not proprietary, they're willing to share it?Jamie BeardSome of it is, but they're willing to share the pieces that we are able to clean to keep proprietary. So we can do that. So we'll have a subset of data that's never been used for the purpose of geothermal exploration before, which is going to be really helpful because it turns out when they drill for oil and gas wells, they take the temperature of the well as they drill all the way down to the bottom. And that's really helpful in predicting how hot it will be deeper and also in like formations in other places in the world. So what we'll do after we get all this data is add in some AI.So we're going to do some predictive analytics on it, right? So we'll be able to predict more accurately than we do currently places in the world where we don't have a lot of existing data, what to expect in those formations in terms of depth and quality of the geothermal resources.David RobertsInteresting. And then phase two will be investing in sort of demonstration projects, first of a kind projects helping a lot of these new technologies, these new startups, establish the fact that they are possible ...Jamie BeardGame changers.David RobertsThis is what I want to talk about is we discussed earlier there's Egs, which is just sort of fracking making your own reservoir, but then there's deeper and deeper and deeper stuff people are pushing towards. And that super deep stuff is where you get into really mind blowing, game changing type of stuff. We're basically like super-efficient, super-hot, always on available anywhere, this kind of stuff.So the second phase for Project InnerSpace is investing in some of these first of a kinds. And what I am curious about is sort of of all those technologies that I wrote about and that people are passing back and forth and some of them sound quite Sci-Fi. Who is ready to go start digging. Like what are the advanced geothermal technologies that are to the point that they're ready to start producing. When you start investing in these first of a kinds, what are they going to look like? Like first of a kind, what?Jamie BeardSo phase two is a fund. It's a billion dollar fund and it will invest in up to 20 1st-of-a-kind pilot projects in different places in the world. And phase one will help inform where we put them right. So we're going to use that data to help inform that process. But the portfolio will be broad. So geothermal is vastly underfunded in every possible way across every single concept to be honest. And so we're going to cast as broad a net as we can to have as high an impact as we can in terms of proving out scalable geothermal concepts.And so geothermal, I don't think that we should look at geothermal as a one size fits all type of thing, where if we can just make this one kind of system work, it could be applicable anywhere in the world. That's probably not going to be the case because the subsurface in different places in the world looks really different. There's different types of rock, there's different types of heat flow, right? So different types of geothermal systems will excel in different types of subsurface reservoirs. And so I think we need to cast a really wide net on the types of concepts that we'll fund with phase two.And so that will include EGS, but it will also include closed-loop. It will include EGS and closed-loop hybrids. So systems that mix both so they'll go down and they will directionally drill this radiator style, radiator style system into the rock, but they will also fracture around that to enhance heat flow going to that well bore, right? So that's pretty cool because what you do in a hybrid kind of system is you eliminate the risk of fracture evolution over time. You're not pressurizing the fractures and trying to circulate fluid through them and then making them change over time.They're static, right? They're just sitting there.David RobertsYou fracture the one time and then it does the rest of the work for you. And closed-loop is so, I mean, I'm the farthest thing from a technical person in the world, but it's intuitively appealing because it's just so much more contained. Like your fluid is exactly you know, exactly what the fluid is, exactly how much it is, how fast it's moving.Jamie BeardAnd you get out what you put in. Right? And also closed loops are really cool because you can use non-water working fluids that work better than water in closed loop. And that's where supercritical CO2 comes in. It heats up faster than water. We have a lot of CO2 laying around. Let's use it, right? It's cool. And the turbines on the surface can be redesigned to actually run directly off of supercritical CO2. So direct drive by CO2, which is very promising and very cool. So the fund is going to cast a wide net on these things, right?We're looking at power production projects with Cogeneration of industrial heat. So looking at industrial heat decarbonization with some of the concepts, a coal plant conversion might be possible.David RobertsWhat about the lasers? What are ...Jamie BeardThe drilling concepts? Yeah.David RobertsAre those real enough that they're ready to start digging?Jamie BeardWell, I don't imagine that we will be deploying one of these next gen drilling concepts in phase two, because we are deploying phase two starting in a year and a half or two years. So those concepts are not quite ready for commercial deployment, and these are commercial pilots. So we're going out and building power plants with this money. And we'll have 20 power plants when we're done. They're not quite ready, but that's not to say they won't be. Right.So these cool, we're going to vaporize rock kind of concepts, they're sexy enough for venture capital and they're well funded. Right. So they're running a sprint. And we may see some of these concepts deployed in the near term, but probably not near enough term for phase two. Let's see, definitely by the end of the decade, we'll see one in the field, my guess.David RobertsAnd this is all basically different ways of bringing up heat that you use to boil water and create steam and run a turbine. Right. I mean, this is all ...Jamie BeardVery simply yes.David RobertsJust about getting heat.Jamie BeardThat's right. We're just trying to harvest heat so we can harvest heat for heat, so we can harvest it to use in an industrial process so we don't have to burn fossil fuels to produce that heat, which I think is a no brainer for geothermal, but we can also use the heat to produce electricity. And we're focused on that as well.David RobertsSince you mentioned it. I wanted to ask about this, too. A lot of this is another thing that I feel like has sort of captured public interest, maybe slightly out of scale with its reality. But how big of a piece of the geothermal pie is going to be repowering fossil fuel facilities? Because people really love that idea.Jamie BeardYou mean converting existing plants to geothermal?David RobertsYes, like a coal plant. Instead of getting the heat to run the turbine from coal, you just get it from underground. But the turbine already exists. The power plant already exists. The ...Jamie BeardTransmission structure.David RobertsTransmission to and from already exists. So it's a great idea. I just wonder great idea. How big of a deal is that going to be?Jamie BeardWell, so there are a couple of things about geothermal right now that are really good at catching headlines because they sound so cute. Right? And that's one of them. And another one is oil and gas well reuse. You hear that one all the time, right? Yeah. Oh, let's just reuse. All right. Okay.David RobertsBoth those I wanted to ask about. The second one I'm super skeptical about, just for obvious ...Jamie BeardWhich one the coal plant?David RobertsReusing wells.Jamie BeardYeah.David RobertsYou're drilling in different places, looking for different.Jamie BeardYes, Right. And you're not looking for heat when you're drilling for oil and gas. You're looking for oil and gas. You're avoiding oftentimes. Yes, that's true. All right, so let's look at coal first. I really like the idea. In fact, InnerSpace has just funded a coal plant conversion study. Right.So we are studying the top 20 candidates for coal plant conversion in the United States to geothermal. We're going to prioritize them by economics and subsurface characterization and we'll get a good picture of that. I like the idea. Could we go and do a megawatt to megawatt coal plant conversion today on the existing footprint of the plant with geothermal? Maybe ... Maybe in a really hot place, a hot subsurface. Hot in the subsurface, right. So say we go to Nevada, where you've got really attractive geothermal gradients and you try your very best. So we get the best in oil and gas to drill this well as cheaply as they can.And by the way, it's not one well, it's many wells to do it. Megawatt for megawatt. We could probably technologically do it. It's feasible to do it. The problem becomes this, though. It's not economically feasible to do it. Not right now.David RobertsIt all just comes down to how deep you can get. Right? I mean, ultimately it all just comes down to getting deeper. Getting deeper, cheaper.Jamie BeardWell, yes. So it depends. This is all about energy density, essentially. So if you want to look at it like energy density, the deeper you go, the more energy dense your output for geothermal. Right?So if you're drilling to 600 degrees Celsius and you're producing at the surface 600 degrees Celsius fluids, that's awesome. I mean, that is natural gas power plant style enthalpy. And that's pretty awesome. And then you can start talking about plants that are gigawatts, right? Big plants, like coal plants. But right now, what we're calling that in geothermal land is super-hot. So super-hot rock or SHR, my favorite.David RobertsFinally the energy world comes up with a cool term, finally, right?Jamie BeardExactly. Just add super to it and that makes it cool. Right. So those systems are theoretical right now, not super well understood. How we would fracture in, for instance, you've gone so hot that the rock is now plastic. It's not hard anymore. It's soft. So how do you fracture that and have the fractures not closeDavid RobertsAnd have your drilling equipment not melt?Jamie BeardIt'll melt. But that's the thing. That's why all these kind of cool new drilling methods are being researched and produced, because they are relying on materials that actually just melt and vaporize the rock instead of drilling them. There may be a situation where we can actually drill into 600 degrees Celsius semiplastic rock in the future. I think what this comes down to, though, is economic feasibility. We can probably do it now, like I was mentioning with the coal plant conversion, right? We could get the best in class to go drill those wells, and they've done it.Like oil and gas has drilled 300 Celsius offshore, no problem. We could do it. But do we have the $500 million to do it? No, we don't. No, we don't, actually. Right. And that makes it economically infeasible right now. So the question really will become for these kind of cool, sexy, super deep systems, is can we get the cost down? Or is something so dramatic going to happen over the next decades in terms of our energy markets, that we're going to be able to afford to develop these systems. And I'm hoping yes. Right. That's my hope.David RobertsWhat you want to do just in terms of broad, big picture for the industry is get the low hanging fruit first. Build a bunch of plants, get the learning, bring the cost down.Jamie BeardLearning curve.David RobertsAnd it's not necessarily the case that the places the coal plants are, are where the low hanging fruit is.Jamie BeardRight, exactly. Though some of them are.David RobertsNo reason to start there.Jamie BeardYes. And we're going to find the ones that are, because some of them are, but not all of them are. And you are exactly right. That where we start is baby steps. And that is exactly, David, how shale happened. Right. We ended up with a little bit, a little bit, a little bit more, uhoh, this is a lot, a lot, a lot, bam. Change the world. Right. And it was just like this was about taking baby steps. And so for geothermal, it'll be the same. Right? Let's go and find the easiest stuff to do first. That's probably going to be in sedimentary basins, because they're soft, the rock is soft, and oil and gas, for instance, understands how to do it because they've been doing it for shale.David RobertsWell, let me ask this, because I had a pod recently on learning curves and on what kinds of technologies do and don't get on them. And a big piece of what gets on a learning curve is technologies that are more modular, more factory produced, and not so kind of bespoke to each individual location. So I'm curious sort of in the current state of play for geothermal, how bespoke is it in an individual location? How modularized is it? And what room is there to sort of modularize it in a way that will accelerate that learning?Jamie BeardIt is the perfect example of getting on a learning curve and particularly transferrin from oil and gas to geothermal. I think, David, you saw it recently we published a report called The Future of Geothermal in Texas. And there was a chapter in that report that dealt with transferable learnings from oil and gas and learning curves. And the outcome of that report was essentially, well, hell, if we just transferred what we've already got, let's not even talk about what we need to develop or what we could. Let's just talk about what we've already got in oil and gas and let's transfer that into geothermal.How much do we reduce cost off the top? Just transfer what they already do in oil and gas into geothermal. And yeah, modular, the way they do oil and gas, David, is called pad drilling. It's manufacturing. It is ultra-modular. I mean, they literally stamp out oil and gas wells, 200ft from one another in a line. Right. It's manufactured. Right. It's the definition of modular. But if we grabbed all of that technology and just transferred it in wholesale to geothermal. No innovations required. We've got 43% cost reduction off the top for geothermal. That's huge, right? I mean, that is not considering new stuff.That is what we've already got. That is a huge opportunity. Huge opportunity.David RobertsThis is another good segue then, because I want to talk about this larger sort of relationship between oil and gas and geothermal. This is of course your bailiwick, your sweet spot. This is your bag. So this is another one of these sort of like folktales about geothermal going around. Oil and gas, You can just transfer to geothermal. Same skills. It's great. It's going to cause this flow.Jamie BeardIt's becoming a headline too. Yeah, it's another cute headline.David RobertsYeah. I'm just curious, to what extent is that a reality? Number one, to what extent are the skills really transferable? And number two, to what extent is it happening? The geothermal industry is so tiny compared to oil and gas, so it's not like leakage to geothermal is going to show up in the statistics of oil and gas employment, I think, anytime soon. In a major way. I mean, tell me if I'm wrong.Jamie BeardBut no, you're not wrong.David RobertsWhat is the nature of that? How much of that is reality and how much of that is acute headline?Jamie BeardSo I think the headlines get it a little bit wrong, but I think we need to look at it differently. So we need to adjust what we're thinking here. So skills transfer and all that? Yes, I mean, almost 100%. It is so synergistic in terms of skill set, transferring from oil and gas to geothermal that we're talking about minimal training certificate level, let's just get you up to speed kind of thing, but otherwise go.David RobertsInteresting, so drilling really is just drilling then.Jamie BeardIt is drilling. Drilling is drilling. You're either drilling for oil, you're drilling for heat, you're drilling for water. It doesn't matter, you're drilling.David RobertsRight.Jamie BeardSo when it comes down to it, awesome. So you've got this highly skilled workforce of millions globally. Let's go, right? We don't have to build that for geothermal. It's there. So how do we transfer it? Right, well, this is my opinion. We transfer it not by taking people out of oil and gas and putting them in this nascent and tiny industry we call geothermal. We do that by turning the geothermal industry into oil and gas or vice versa. Right, so we get the oil and gas industry to look at geothermal as a viable and exciting future business model where they themselves, the oil and gas entities, then become massive geothermal developers and producers using their own workforce.David RobertsRight?Jamie BeardAnd we've started to see that already. We're starting to see the very beginning of that trend where you've got Chevron that's about to develop a geothermal project in California.David RobertsIs there a big major, is there an oil major with like a full fledged geothermal ...Jamie BeardTeam!David RobertsDepartment, team, whatever.Jamie BeardThey all have them now, all of them. And David, in 2020, when you did your article, none of them had them.David RobertsInteresting.Jamie BeardThat's how fast this is happening. Every single oil major has a dedicated geothermal person. Some of them have like VP of geothermal. We've got executives in geothermal now with whole funded teams. Some of them have a portfolio of geothermal companies that they've invested in. I mean, this has all happened in the last three years. So we're talking about traction. Like, read David's article first to get a 2020, but then between 2000 and 2023, there has been so much that's happened within the oil and gas industry for geothermal.David RobertsAnd in terms of their motivations, the oil and gas majors motivations, how much of this is hedging against us being in what is possibly a dying industry and we need something else to do versus geothermal actually being like remunerative to the point that it would actually attract their attention regardless.Jamie BeardAll right, both I think if you're an oilfield service company or a drilling contractor, so you're the one with the skilled labor and the rigs. You're looking at geothermal and thinking, okay, there's our future business, right? They need rigs, they need drillers. That's what we should do. Right? So you have some very fast movers in that space and they are leading the pack in oil and gas. So you have like Baker Hughes is out there kicking butt. They're one of the ones that has a geothermal team and they're out there really pushing another one Neighbors Drilling contractor, just really pushing hard and getting out there and making investments.That's awesome. But you have the operators, the majors, like the Chevron, Shells, BPs of the world who are also looking at geothermal and thinking, where in the world is this most relevant for us in terms of where we own assets, where we operate assets? How can we pull geothermal in as a value add into a portfolio and eventually, maybe, build it into a massive, globally scalable opportunity where we're drilling millions of projects, right? And so you look at geothermal in terms of scale. If we were drilling at the scale of oil and gas, if we're drilling geothermal at the scale of oil and gas, we solve energy.That's it. We solve energy by 2050. Right? And that's the opportunity for oil and gas.David RobertsSo you genuinely think it's not a PR play for the big oil and gas?Jamie BeardNo, I mean, you can't greenwash with geothermal, right? It's core competency. I'll be the first one to say it. You go on any majors website and they've got wind turbines splashed all over the place.David RobertsAlgae. They used to have algae.Jamie BeardYeah, algae, whatever. Solar panels. I mean, you'd think you were at a solar manufacturer or whatever. You're on oil majors website, it's all crap, right? I mean, that is greenwashing. Absolutely. If you look at the scale of their renewables investments versus the scale of their investment and their core competencies. Note, core competencies meaning subsurface. So what do we do with that? Well, we grab that core competency and we turn it to something that is future facing, right? Which is like, fine, stay subsurface experts. Awesome. Do CCUS, geothermal, and mining because we need lithium and we need clean, baseload power, right?And we need to store a whole lot of carbon. So you all are the subsurface experts. Go. And that is really working. And I don't think you can really shake a stick at that in terms of greenwashing because it's core competency. They're doing what they know how to do.David RobertsAnd I have to believe that there are as a card carrying greeny, I have a deep and abiding hostility toward oil and gas companies. But I have to believe there are people in there who are good people and want to do good things. And this is an actual I know you share this sentiment. This whole notion that they were ever going to get into renewable energy in a big way I thought was always kind of silly. It's just a different just a completely different business.Jamie BeardNot the same business model.But this, I have to believe that psychologically, there are a lot of people, oil and gas, who are gratified by this and excited by this because it's a real exit. It's a real exit out of the past into the future, not just BS hand waving.Yeah, you are absolutely right. Over the past three years in some of the majors. The way this has happened and built into what it is is through grassroots movements in the employees. They start beating down the doors of executives and having roundtables about geothermal and all of a sudden it builds into this thing. And all of a sudden they're presenting it to the board and the C suite and then they've got a program. I mean, that's awesome. And I can absolutely attest to oil and gas as a villain industry. It's not so easy to look at an individual across the table that works in the oil and gas industry and be like, you villain.That's not the case. Right. It's just not. I mean, these are people that love the environment and have families and are really freaking skilled at what they do. And they're humans, right? And you sit across the table from these guys and they know how to drill. Good Lord. Y'all go drill. Let's just change what you're drilling for.David RobertsYou made a point. I heard in another interview, which I found really interesting and you sort of implied it or talked around it a little bit so far. But I want to get straight at it, which is the question of how to scale geothermal up so that it's more than a niche, kind of extra. I was looking at the new electricity capacity installed sort of graph that the EIA just came out with and I was sort of gratified that you can actually see geothermal with the naked eye now.Jamie BeardOh, yeah, really? So it's like 1%.David RobertsYeah, it's like a tiny little stripe at the top. You can see it, but so we all want the idea is to scale it up so that it's a big player to rival wind and solar. Your sort of argument is that the way wind and solar got to where they are was by all kinds of policy help and subsidies over the course of decades, basically. And so if we want geothermal to follow that route, it will also take decades. And we don't have decades. So your theory, how do we scale it up quickly? And you have an answer to that, so that's what I like to hear.Jamie BeardYeah, I mean the answer to that is the oil and gas industry, right? So we can sit here and wait 20 years and fund startups to grow into giants and fund RnD and hope for the best. Or we can convince an incredibly capable and skilled industry that there's a market based approach here and that they can do what they know how to do and also solve energy and climate. And we're talking about the type of scale here that we start drilling for geothermal like we drill for oil and gas between 2030 and 2050. That exceeds world energy demand, I mean future world energy demand.David RobertsDo you mean if the scale of geothermal drilling were equal to the scale of oil and gas drilling?Jamie BeardCorrect. In number of wells per year, yes. So we're talking about if we did that, I'm talking about with conservative estimates too. So 70,000 wells a year globally, 10 megawatts a pop, which is pretty damn low for a geothermal project. We end up at 146% of future global energy demand by 2050, and that's for heat and for electricity, 77%. Bam.David RobertsInteresting. I mean, that's not going to happen, is it? That's like a theoretical boundary. But how realistic do you think it is to get to that scale that quickly? Like it would be? Not many industries have ever done that.Jamie BeardWell, oil and gas did it with shale, let's just do it again.David RobertsJust do it again. Is there as much money in geothermal as there was in shale, though?Jamie BeardWell, so, look, I think you have to ... you can't compare geothermal to oil and gas in that way, right? Because geothermal is never going to make for oil and gas companies what oil and gas makes for oil and gas companies. But you also have these companies trying to build offshore wind farms and struggling with single digit returns. Geothermal is going to be higher than that, right? So there's going to have to be a little bit of a shift where you look at geothermal as an oil and gas entity and you say, "Ha, we're probably going to max out at about 15% return, but hell, we can drill a million of them. That sounds pretty good. Let's go." Right, so there's going to be a little shift. It's going to be a lot of wells for less returns than oil and gas. And I think if you compare geothermal with wind and solar, it looks pretty darn good to an oil and gas company.David RobertsYeah. And of course, what the rate of return is, is somewhat affected by policy. So policy could get in there and at least tweak the incentives.Jamie BeardYou can keep having hope for this, David, you keep hoping for the politics and whatever. We'll just go drill in Texas or what ... you know.David RobertsIRA happened. Well, let's conclude here then, and let's just talk because I'm a policy guy. And I have to ...Jamie BeardI know you do that. You keep doing that, David. I love it. Somebody's got to work on it.David RobertsSo, two questions by way of wrapping up. One is, was there anything in IRA in the Inflation Reduction Act or the Infrastructure Act or CHIPS, now that I think about it, in the legislation that Democrats just passed, was there anything for geothermal? And did you feel like in all the frenzy of activity leading to that stuff, that geothermal had a voice up there in those circles? Like, does it yet have a voice? That's my first question. The second question is just what policy, if you were less cynical about policy and still had policy hopes, what would those hopes be for?Jamie BeardOh, good, these are great questions. Okay, so, yes, there was lip service to geothermal in the IRA, unfortunately not well fitted. So it's ITC and PTC, they're meant to apply now across all types of renewables with a longer time frame to benefit from them. The problem, though, with geothermal, particularly on federal land, is the development and the permitting. Time frame is so darn long that you almost can't even make it even with the extended window under the IRA. Your second question was, well, did geothermal have a voice? Clearly no, because we ended up in the same spot.Right. Where it's like, well, we're trying to fit geothermal, which is pretty darn unique, under a one size fits all policy to fit and solar and wind that are very streamlined in terms of permitting and much more predictable with very little ... no subsurface risk. Right, so it's like no, essentially no. Is it better than it was? Yes. But is it going to fix anything? No, probably not. So that's my answer there. I have hope for the future, though. I think when it comes down to geothermal, we're probably going to need to build a lot of individual state alliances that then go and build a coalition that go after federal.Right. So it's like when we get a bunch of states and governors and state legislatures involved and motivated and feeling like that geothermal could be a really viable future economy in those states. And this is what. We're doing right now in Texas, if we can build that across other states that would really benefit from geothermal in the future, we may have a shot at getting geothermal a more impactful voice on the federal level.David RobertsBut if that coalition came together, pressured the feds, and the feds did something, would that just be under the general heading of permitting reform, the kind of permitting reform that everybody is clamoring for now, or is there something more unique?Jamie BeardNo that's so boring. Yeah, you told me I could pick just whatever, right? In terms of what the federal government could do, that would be really cool and impactful. And if you're going to let me have that leash, I will just take it and say, yeah, sure, fix permitting. Yes, please. But that's easy. If we want to really accelerate geothermal in a way that it catches geothermal up with other renewables, that geothermal has been substantially underfunded comparatively. Right. If we really want to catch geothermal up, then we need to say make an office of subsurface energy, put geothermal CCUS and lithium in it, and build it ARPA-E style.Interesting, right? So we've got high risk, high reward type, big investments going toward trying to figure out how to do all these three things really well.David RobertsDOE has got the Earthshot, right? I mean, it's putting some money toward that kind of stuff.Jamie BeardYeah, but David, we're talking about like $200 million here, $100 million there, and we're comparing that for geothermal with a billion here and a billion, right? And so it's like, what are we doing? You all right? What are we doing here? So I would put the billions in the office of subsurface energy, put an industry advisory board, engage with that, and go, that would be ARPA-E style, high risk, high reward. How do we build this fast? Go, if I was in charge, that's what I would do.David RobertsSo the game plan then the strategy here is get oil and gas interested, get them moving, get them funding startups, get them interested, get states interested and on board via oil and gas being interested. And then take your coalition of states and oil and gas industry to the federal level and move the Feds on permitting and just general more attention and money to Geothermal. That's the game plan.Jamie BeardThat's the game plan. InnerSpace is launching ten more. So we did the future of geothermal in Texas. We just published that a couple of months ago. We're launching ten more states this year.David RobertsOh, interesting.Jamie BeardWe're building the coalition.David RobertsIs Washington just at a ...Jamie BeardNo sorryDavid RobertsNo geothermal activity in Washington?Jamie BeardNo, it's not that. Washington is great. You've got awesome geothermal resources. We're focused though, on oil and gas state, traditional energy states, oil and gas states, right. So we're really focused on states that have a real interest in their current oil and gas economies and focused on getting them excited about building that into a geothermal economy.David RobertsI got to say, if you manage to navigate the red-blue divide with an energy source without getting Hoovered into culture war on either side, that's going to be a real historical accomplishment.Jamie BeardYeah, that's something to keep eyes on. More on that later. We'll talk about that one. We'll come back in a couple of years, David. We'll see. How that's going.David RobertsAwesome. Well, the pace things are going, I'd love to have you back in three years. I'm sure it'll be transformed. Exactly. We'll be on to some other use for lasers. All right, Jamie Beard of InnerSpace, thank you so much. I've been meaning to have you on forever. This is beautiful. This is exactly what I wanted. Thank you so much for coming on.Jamie BeardAwesome, David. Thanks so much. This is fun.David RobertsThank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's Volts.wtf so that I can continue doing this work. Thank you so much, and I'll see you next time. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.volts.wtf/subscribe

The exact definition of “clean” hydrogen, interconnected with the definition of “clean” electricity, has enormous implications for the distribution of federal tax credits to boost the industry. In this episode, hydrogen expert Rachel Fakhry of the Natural Resources Defense Council discusses what’s at stake.(PDF transcript)(Active transcript)Text transcript:David RobertsVolts subscribers understand that a decarbonized energy system will require lots and lots of hydrogen, to store energy and to serve as a fuel in applications that are otherwise difficult to decarbonize. They also understand that while 95 percent of the world's hydrogen is currently produced using fossil fuels, there is a carbon-free way to produce hydrogen.It involves running electrical current through an electrolyzer, which splits hydrogen out of water. (Volts listeners heard all about electrolyzers a few episodes ago.) But the resulting hydrogen is clean only if the electricity that is run through the electrolyzer is clean. That's the recipe for clean hydrogen: clean electricity plus electrolyzers.Democrats also understand the need for clean hydrogen to scale up quickly, and they included tax credits for clean hydrogen production in the Inflation Reduction Act. And therein lies the rub. The IRS is currently in the process of determining exactly how those tax credits will be structured and to whom they will be available. At issue is a question that sounds simple but turns out to be devilishly complex: what exactly counts as clean hydrogen? More specifically, what exactly counts as clean electricity?The details matter enormously — up to $100 billion worth of subsidies are on the line. Big companies from BP to NextEra are lining up to try to make the standards as lax as possible, to maximize their short-term profits. But lax standards could perversely end up increasing greenhouse gas emissions, as electrolyzers come online, gobble up the available clean energy, and push grid managers to start up fossil fuel plants. (For more, read Canary Media’s deep-dive series on the hydrogen tax-credit battle.)To get to the bottom of all this, I’m excited to talk with Rachel Fakhry, who runs the hydrogen and energy innovation portfolio at the Natural Resources Defense Council, about the technical details of this fight, the ability of the industry to meet higher standards, and the enormous stakes involved, for the industry and the larger project of decarbonization, in getting it right.So with no further ado, Rachel Fakhry. Welcome to Volts. Thank you so much for coming.Rachel FakhryThanks so much for having me Dave.David RobertsYou're brave to come on and address this subject. It is big and complex and hairy. There's a lot of ins and outs, "a lot of strands in the Duder's head." So let's start. So we get we need a bunch of hydrogen. We get we need it to be clean. We get basically what clean hydrogen is, sort of. So let's just start first by talking about what are these tax credits? What does the Inflation Reduction Act contain for clean hydrogen?Rachel FakhrySo the IRA offers one of the largest subsidies for clean hydrogen in the world. It is a production tax credit which ranges between $0.6 to up to $3 per kilogram of each hydrogen produced. And the three kilogram, as I'm sure we'll talk, is kind of the big prize that all the projects are gunning for. It is a technology-neutral credit. So there's no colors green, blue, pink, any of that. It all depends and is tied to the life cycle greenhouse gas emissions of hydrogen. That top prize of $3 can only be eligible for clean hydrogen that achieves zero point 45 kilogram of carbon per kilogram of hydrogen relative to today's status quo hydrogen that's gas derived uncontrolled, which is roughly around ten.So to get that top rise, you have to reduce emissions from status quo by 95%, which is a lot.David RobertsRight.Rachel FakhryYou have to be very clean to get that. And it's a very long list credit. It lasts for ten years for each project that gets it, and projects that commence construction as late as early 2033 would still be eligible. So what this means is that by 2045, you could still have hydrogen projects that are getting taxpayers dollars. Even if we think the technology is going to improve and drop in price and so on, there are going to be projects still heavily subsidized.David RobertsYeah, it's a lot of money. One thing I would add, just in case listeners are not familiar ... listeners have probably heard production tax credit and investment tax credit, PTC and ITC, tossed around just for anybody who doesn't know a production credit, you get a certain amount of money per quantity of the subsidized thing produced. So, in other words, this is you get the subsidy per ton or per kilogram of hydrogen produced versus the investment tax credit, which subsidizes capital costs of building the thing in the first place. And these have somewhat different dynamics, which I think we can return to later.But this is specifically, it's the production of hydrogen per kilogram that gets the subsidy. And you note the subsidy for the lowest, for the cleanest hydrogen, is $3 a kilogram, which is huge. What's the next tier like? What do you get if you don't quite reach that threshold?Rachel FakhryIt's a big cliff. You drop from three to one dollars per kilogram.David RobertsWhat?Rachel FakhryYeah. And this is, I think, an excellent indicator of the type of hydrogen Congress really wanted to incense. They really wanted to incent the cleanest of the cleanest.David RobertsYeah. So this is actually an important background fact about these subsidies, is they're non-linear. They don't scale up linearly with the cleanness. There's, as you say, a big cliff like the jump from not meeting that top threshold to meeting it gets you from one dollar per kilogram to $3 per kilogram, which is a huge increment. So all of which is to say, how you define how exactly you structure who is in that top tier matters enormously. There's an enormous amount of money on the line.Rachel FakhryAbsolutely, we'll get to that. But it all hinges on how treasury guidelines will look like for determining the life cycle greenhouse gas emissions, which in turn will determine whether you get the top prize or something much more reduced. But since you mentioned that it's a lot of money indeed, this is an uncapped credit. It depends on how much hydrogen you actually produce, but we think this could be more than $100 billion. Our colleagues at Energy Innovation have produced a really useful number, essentially taking one of the larger hydrogen projects being announced in Texas between AES-Air Products, large electrolyzer powered by wind and solar on-site.They estimate that between the hydrogen tax credits and the renewable tax credits, it could be a $30 billion subsidy for just one project.David RobertsHoly s**t. So I just want to flesh that elbow just to make that clear for listeners. You have a big sort of solar and wind renewable energy installation attached to an electrolyzer in this Texas project and you're getting the tax credits for wind and solar and you're getting the tax credits for producing the hydrogen. That just means like, as you say, $13 billion. That's a huge ...Rachel FakhryIt's a $30, actually 3-0.David Roberts$30 billion in subsidy. Criminy, yeah. So the point is, as a background for all the rest of this discussion, we are dumping a ton of money on clean hydrogen specifically, all of which is to say this fight over how to define it, over what counts and what doesn't is not an arcane technical matter here.There are billions and billions and billions of dollars of subsidies on the line depending how we answer these questions that we're going to get into.Rachel FakhryThat's absolutely right, Dave. Yeah.David RobertsSo NRDC and a coalition of partners has put forward what they call the three pillars of clean hydrogen. Did that originate with you? Where did the three pillars framework come from?Rachel FakhryI'm happy to say we had nothing to do with the origination. Also very happy to claim credit. The three pillars are decidedly not new. They're already at the heart of a debate around the effectiveness of voluntary renewable corporate procurement. So these are not new dynamics we're bringing to the hydrogen debate. We're actually having the hydrogen debate ride the broader issues within the market like any other energy resource.David RobertsSo these three pillars are the idea is if you meet these three criteria, then you count as truly clean hydrogen. And every one of these criteria is controversial. Every one of these is being fought out now between industry that wants lax standards and your coalition that wants strict standards. So let's go through the three pillars.Rachel FakhryGreat.David RobertsThe first one is additionality, which I think people probably have some vague familiarity with. But let's spell out what it means in this context.Rachel FakhryBefore we do that actually, just to step back on a couple of things. Yes, you're right. There's a lot of contention around at least two of the three pillars. But it's funny because everyone is kind of picking and choosing what they like and don't like. So you have folks who are fine with hourly matching others who are okay with additionality. So everyone will get to it. But within the opposition, we're seeing this kind of like cherry picking within the bouquet of pillars, what works and what doesn't work. But let's start with why do we even need the pillars? And as you noted, the pillars are additionality, deliverability, and hourly matching.So why do we even need those pillars? As you've alluded to, the credits entirely hinges on how the lifecycle of hydrogen or lifecycle emissions of hydrogen are determined, which means that the Biden administration treasury, in collaboration with the OE, EPA, and the White House, will essentially determine how this credit will impact our energy system. But calculating life cycle greenhouse gas emissions can be quite tricky, and the complexity really varies from project configuration to another. So, for example, if you have an AES-Air Products-like project where you have a big electrolyzer not connected to the grids, only powered by renewable energy on-site, easy, that's a zero emissions rate.However, when you move to a different configuration of electrolyzers that are grid-connected, drawing grid power and buying credits or offsets to net out those emissions, it becomes really complicated. And this is the classic kind of complexity of offset systems.David RobertsYes, anybody familiar with the arguments over offsets will be somewhat familiar with these concepts.Rachel FakhryExactly. So we need some parameters and rules around how these offsets are accounted for since there's so much money at stake and so much emissions at stake. And this is especially true for electrolysis. Now, electrolysis is an energy-hungry process, which means that even if it draws small shares of fossil fuel electricity, that would have significant emissions. So, for example, an electrolyzer that is powered by the average grid today would have twice the emissions of status quo hydrogen and 40 times the threshold of 0.45 threshold to be eligible for the $3 per kilogram.David RobertsYes. That's so wild that I just want to put an exclamation point next to it. So everybody understands our starting point here is if you just make your electrolyzed hydrogen with the average grid electricity, with the sort of average mix of sources that we have on the US grid. Not only will you be 40 times more carbon intensive than the threshold for the subsidy, you'll be twice as carbon-intensive as making the hydrogen directly from fossil fuel. So the difference between drawing on, as you say, this project in Texas has its own renewable energy installation next to it. so right, it's very clear where that's getting energy.The difference between that getting clearly clean energy and getting average grid energy is not a small increment of greenhouse gases. The average grid electricity is vastly more carbon intensive than what we're aiming for here. So all of which is just to say you can't just build an electrolyzer and plug it into the grid and call it clean because you're not getting clean power. Basically.Rachel FakhryThat's absolutely right. So if we are subsidizing projects that have twice the emissions of today's status quo hydrogen, then that's going to increase your emissions of the system as a whole. And now this is inarguable, what we're seeing coming out of Princeton. An upcoming study by Energy Innovation, a recent study by Rhodium Group, all agree that absent the three pillars which we'll discuss, emissions will increase in this decade, completely contrary to where we need to go and subsidized by what is a climate bill.David RobertsYes, it would be wild to spend $100 billion of public money to substantially raise carbon emissions. That would be a perverse outcome, let's just say.Rachel FakhryAbsolutely an awful story. Let's now dig into the pillars. You can think of them as parameters around those offsets that will be used, that are the only ones that will ensure that the offsets are effective at truly netting out all the emissions being driven by electrolysis. Happy to dig into it some more, but I should note from the outset that after a thorough legal analysis, I can announce with confidence that the three pillars are legally necessary and that treasury has all the authority it needs to implement them rigorously.David RobertsAnd I want to get into this a little bit later after we go through them, but my question is, can they not are they legally allowed not to use them? Because the industry is encouraging. But we'll get into that in a minute. First, we've been talking around the three pillars. Let's go through them. The first one is additionality, which people, I think energy aware people understand is if you just plug your electrolyzer into the grid, you're getting grid power, which is dirty. If you plug your electrolyzer into the grid and specifically consume renewable energy from the grid, the way that where you can just buy renewable energy certificates RECs, and say, I consumed this much and I bought this many RECs to offset it.If you're doing that, you're not necessarily using clean energy because you're drawing from existing renewable energy, which means whoever else was using that existing renewable energy now gets bumped to something else, et cetera, et cetera. Bump, bump, bump down the line until the last person in the line is using whatever gets turned on when demand exceeds supply, which is generally fossil fuels. So all of which is just to say you're not using clean energy unless you're using new clean energy that you are bringing online to power your project. Is that roughly the sum of it?Rachel FakhryThat's absolutely correct. If you're going to bring new load on the system as an electrolyzer, you have to support new clean supply or additionality, although we're starting to move more towards new clean supply, which is going to be a more intelligible term for a lot of people. As you said, if you add demand to the grid, you don't bring new supply with it. As you say, the marginal generators will turn on to supply the added demand, and this will be gas. So you're going to end up having highly emitting hydrogen without supporting nuclear supply. And I always like to use this kind of visual of a world where additionality or new clean supply are not required.This means that technically all existing nuclear generator in the US can sell their credits for hydrogen production because there's absolutely no requirement for the credits that will be used to offset emissions to come from new resources. They can come from existing resources which could be nuclear generators. There is enough nuclear generation to supply enough nuclear credits to dwarf even a high estimate of hydrogen production between now and 2030. So what this means is hydrogen production between now and 2030 where hydrogen electrolyzers could plug to the grid, do absolutely nothing, draw on grid power, have high emissions and purchase these cheap nuclear credits without really doing anything to the grids to really net out their emissions.David RobertsRight? And just to reiterate, all that power that is going to the electrolyzers from the nuclear used to be going somewhere else. So whoever was using that power before that's now additional demand on the system. And again, when demand exceeds supply, the marginal generator gets turned on and that's fossil fuels. So all those electrolyzers coming online and simply claiming that nuclear power, you'd get the truly perverse outcome of the electrolyzers claiming to be clean, but total emissions on that grid going up substantially.Rachel FakhryThat's correct. Absolutely. This is becoming, I think, inarguable in many sense that additionality is fundamental for the system to remotely work. And again, this is corroborated by all the studies that we're seeing here princeton Energy Innovation, Rhodium, and many, many EU studies which we can glean a lot of things from.David RobertsBut you say it's clear and fundamental nonetheless. There are industry players specifically saying that the additionality, I mean, the additionality pillar is sort of the main axis of dispute here. This is precisely what big utilities don't want, an additionality requirement. And they have a lot of arguments for why. But one of the things they say, one of the arguments they had, which struck me as at least semi-plausible, is their sort of thing is you're doing these models like Princeton modeled all these electric ledgers coming online without the additionality requirement showing that it raised substantially raised grid emissions.The industry's counter is, well, we have all these broad emission reduction policies. We got like cap-and-trade in Washington and California. We got the EPA coming out with standards on power plants and we got blah, blah, blah. So it's just not plausible that emissions overall are going to go up. It's the broader economy-wide emission reductions that are going to take care of emission reductions that shouldn't be our responsibility, basically, like we should just be able to use the existing clean energy.Rachel FakhryLet's address that because we always hear this argument, right? Like why are you adding all these rules when the grid is getting cleaner and everything's going to be merry and great and we don't need to think about it? Let's take the IRA because it's always posited as the reason why we know the grid is going to get cleaner, so we don't have to worry about anything. The IRA is historic, right, and we're all very excited about it. And it has the potential to be a game-changer for the market. However, it's mostly carrots, very little sticks, so the outcome of it remains really not guaranteed.We have a lot of work to do to make sure it's implemented in a way that actually delivers on all its potential. That's one, two, no matter how clean the grid gets in the next seven, eight years, you're still going to have the issue of marginal emissions. Right. Because marginal generators for the foreseeable futures will still be gas. So even if the grid is getting on the whole cleaner, and your electrolyzers are still running during those evening hours when the sun isn't shining, the wind isn't great, turning on marginal emissions or marginal generators, that would still be, on the whole, a very dirty hydrogen resource.So essentially basing loosening up rules based on the hubris that everything is going to become clean. So when I have to worry about it, it's just demonstrably false.David RobertsYes. It seems premature to be making policy premised on the notion that we're going to succeed in this long term thing of reducing emissions. It's a little early for that.Rachel FakhryExactly. And actually, right before I came in, I was doing a quick back of the napkin envelope calculation. Even if the grid were to be 80 plus percent cleaner than today, by 2030, you really still don't have a lot of margin to use grid power. No more than 10-20%. Again, electrolysis is power hungry, so even the smallest amount of fossil fuels will blow you right out of the IRA threshold.David RobertsRight. And I'll pause to say this, and I might repeat it a couple of times throughout the pod. This is not to say that an electrolyzer can't plug into the grid and start making hydrogen. It's just to say you're not going to get $3 per kilogram of subsidy if you do that. Right. These are not like harsh restrictions. We're talking about whether we're going to give you tens of billions of dollars. That's not the mean parent.Rachel FakhryExactly.David RobertsIt's just some basic rules. We don't want to subsidize increased emissions. So it sounds simple, right? Like, if I'm I'm going to bring an electrolyzer online, I just bring a solar farm along with it. I use the solar farm's energy to run my electrolyzer. That's clearly additional, right. If I'm building on site renewable energy next to my electrolyzer at the same time, that's clearly additional. It's not as clear in some other fuzzy cases. So, like, let's say I come online and I sign a PPA for power with a solar and wind farm that was built a year and a half ago.Right. So it's new-ish, but it's also the case that maybe if my electrolyzer hadn't come online, that clean power would be going to someone else, so I'm just displacing existing clean energy. So what exactly in these edge cases? What are we defining as new and additional? Is there some sort of threshold like the renewable energy must be built within six months, or how do we get specific there?Rachel FakhryYeah, that's a great question. There are several schools of thoughts. We haven't settled it. I think everyone agrees that this has to be the most straightforward way for developers, because, believe it or not, we're not in the business of suffocating this industry, Dave. We just want to make sure it's actually clean and in line with what we need. So you have a school of thought that says, look, simplify, just say anything after the IRA, or anything built after the IRA will count as new.David RobertsFor ten years.Rachel FakhryYes, exactly. Yes. Pro. It's very easy to administer. I'm not a big fan of it because you put it well, this would have been built anyway. So by adding demand to a system that was being built not for me, something else will turn on the system, and that will likely be at least a mix of fossil fuels. You have another school of thought that wants to mirror what the EU did, the Europeans did. So they adopted a moving vintage, as opposed to that fixed vintage, and said, okay, additionality counts as a PPA signed with a new window solar farm that comes online within 36 months of the electrolyzer.That is interesting. It's not perfect, but we have to be able to administer the system. I like this moving vintage. You can add the condition that additionality could be met by showing, say, in signing the PPA, that the electrolyzer accounts for much of the financial risk or helps secure the funding. You could add more conditions, but I like the moving vintage a lot more than the fixed vintage. And then you can layer on some PPA conditions to carve out the incremental financial effect of adding electrolyzer on the grid to window solar farm.David RobertsRight. And we should acknowledge in the end, there's some element of the arbitrary here because there is no absolute metaphysical correct answer in a lot of these cases. Right. Like, these are all about counterfactuals. Would the renewable energy have been built in the absence of this electrolyzer? And like any counterfactual, there's no definitive ... there's no way of being definitive. Right. You're just using heuristics in the end, you have to define some thresholds somewhere. But this is not an area where sort of precision and certainty are really possible.Rachel FakhryThat's correct. A system that works well, that is rigorous enough to minimize against the worst, I think, is good enough for us.David RobertsAnd the last thing about additionality is, of course, the big argument from industry is this will substantially raise costs, it will wipe out the cost advantage we have against existing gray hydrogen and it will strangle the industry in the crib and it will never get going. And in some sense, this is all too about a counterfactual. We're all arguing about what would happen if we did x and so no one can really definitively say, but what evidence do we have that that's wrong?Rachel FakhryThe dead on arrival claims obviously are being branded right that we are going to say ...David RobertsYes, dead on arrival.Rachel FakhryAbsolutely. So I would love to talk about the costs for the three pillars as a package because I think this is the really interesting one.David RobertsOkay, but yeah, let's put the cost off tour through the pillars then. That's a good idea. The second pillar is much more simple, we can get through it pretty quick. So the first pillar is additional. For your electrolyzer to be clean, it has to be drawing from new renewable energy. The second is regionality, which means your electrolyzer has to be drawing new clean electricity from the grid you're on, from the regional grid you're consuming on. So you can't just buy like if you're on a super dirty grid and you're buying clean energy, that's made in California, right?Like clean energy in California is not displacing nearly as much carbon as clean energy on your dirty grid where you're operating would. So grids are not equivalent right, in terms of carbon emissions. So you need to be displacing carbon on your grid. And that's pretty straightforward. And as far as I can tell, most everybody agrees roughly with this idea. I think insofar as there's any controversy, it's just sort of like where do you draw the line? What is the same grid? Is there controversies there worth getting into?Rachel FakhryYou're right, this is one of the least contentious pillars. Everyone agrees that there has to be some geographic bound to the clean energy you claim is netting out your effect.David RobertsRight.Rachel FakhryIn terms of how do you define the boundaries, there are several options that could work. We're still considering which one makes the most sense. The simplest one is to say, look, as long as the electrolyzer and the new clean supply are located in the same load balancing authority, that's good enough for us. That's very simple. However, it could have some issues because some load-balancing authorities are very large and streaked with a lot of congestion. Like for example, MISO is an excellent one, it's the one load-balancing authority and yet there's a big transmission constraint between MISO North and MISO south.Meanwhile, under that system you could still locate your electrolyzer and your new supply anywhere you want with disregard to the actual congestion and whether you're actually netting out your emissions with this clean energy project that you supported or not. So the other approach, which is a hybrid, quite interesting, and I'm leaning towards that one. It says, okay, let's break it out between RTO regions and non-RTO regions. Within RTO regions like PJM, MISO, ERCOT, so on. We have to look at the LMPS, which are a good proxy for congestion, locational, marginal prices, right?David RobertsAnd those are set around a particular node on the grid. And the node on the grid is what just is there a clear definition of what counts as a node? Is it just where there's a transformer or what?Rachel FakhryThat's a good question. I mean, usually, it's going to be the place that sets the price. I don't know how to explain it in engineering terms, unfortunately.David RobertsWell, just say it's the atomic unit. Let's say if you're looking at grids, sort of like a grid is made up of nodes.Rachel FakhryCorrect. And it's the excellent, kind of the best proxy. We have to understand the supply and demand dynamics around a granular piece of the grid. So I like this because RTOs already report LMPs they already report them and collect them and so on. So the notion is that electrolyzers and the clean energy supply that is netting out their emissions need to be located within a region where the LMP differential is not bigger than X.David RobertsRight?Rachel FakhryThat is a very good proxy for okay, there's no congestion between the two that's roughly deliverable or mostly deliverable projects. Developers already hedge against LMPS and signing contracts. This is not new to look at forecast of LMPS. So we think this is a familiar tool.David RobertsRight, so the data and information is there to make these calculations. Now, we wouldn't have to produce any new data, right?Rachel FakhryBut to continue that for non-RTO regions like the Southeast, where utilities don't necessarily report those, we're fine keeping it to the LBA or the load balancing authority because anyway, those tend to fit nicely with state boundaries. So congestion will not be unmanageable there.David RobertsOkay, so that's additionality got a new clean energy, regionality it has to be in some definition, local clean energy. And then the third pillar is another controversial one. This is temporal granularity, which to put it in a more human-normal way is just you need to match your consumption to production of renewable energy or clean energy on an hourly basis rather than the more conventional yearly basis. So again, Volts listeners who have been paying attention will be familiar with this general notion. There are lots of corporate players now like Google. Google wants to go zero energy.And the easiest low-impact way to do that is just say we consume X a year, we're going to go buy renewable energy certificates for X amount. Boom, we offset our use, we're clean. That's sort of like step one. But Google realizes that's not really accurately, that's not accurately about your emissions and how much you're offsetting. So Google wants to move to an hourly system where it's measuring how much its consumption is matching up to renewable energy production on an hour-by-hour basis, so that it can truly be zero carbon, so that it can truly offset its actual emissions in the actual world, not just as an accounting practice, right?So this notion is out there. So the idea here is that electrolyzers that want to be counted as clean should be required to do that. They should be clean on an hourly basis. This is extremely controversial for a bunch of reasons, but let's start what industry wants, or what the constellation or next era the utilities want is just they're like, look, we have this system of yearly renewable energy certificates, yearly RECs, it works perfectly well. Why can't we just offset our energy on a yearly basis like everyone else does? Why are you making us do this bespoke granular thing?So just what's wrong with yearly offsetting?Rachel FakhryYou've already teed it up really well. This is not a new dynamic, right? This is where there's much more demand for granular tracking to really effectively claim that you are powered by clean energy. Annual matching is just no longer seen as an effective way of reducing emissions and still sends a signal that fossil fuels are needed. And this exact same thing applies to hydrogen, right? So suppose there's a Dave Roberts electrolyzer contracted with a new solar power project, but you run this electrolyzer at night or both when the sun is shining, when there's no sun, turning on the marginal generator and producing very high emissions.However, you have the sufficient volumetric amount of solar RECs that were produced from the solar project you contracted with that are enough to on paper.David RobertsRight. So on an accounting basis ...Rachel FakhryCorrect.David RobertsI have offset my emissions. But in the real world, the solar is producing the energy during the day, I'm consuming energy during night. So in the real world, I consumed dirty power almost that entire time.Rachel FakhryAnd there's something perverse here, which is the cleaner the grid gets, the less your solar power will likely start abating emissions during the day because you'll have more solar on the system. And when you turn on at night as an electrolyzer for the foreseeable future, gas will always be the marginal resource. So on the whole, you'll be producing a lot more emissions than you're actually reducing. So it's an interesting perverse effect that may happen with a cleaner grid. All this to say that hourly matching is necessary to meet statutory requirements to meet the IRA threshold of 0.45 kilogram per kilogram to get the $3 per kilogram.And this is corroborated by, again, Princeton, upcoming Energy Innovation study, even Rhodium study, which was not very friendly to hourly launching in near term, found that without hourly matching, emissions could increase cumulatively by roughly 100 million metric tons this decade. Enormous, right?David RobertsWe spent $100 billion to raise emissions. 100 million tons.Rachel FakhryThere we go. That's the US scarce system for you. This is why we absolutely need this. It's corroborated by studies, you cannot reach the IRA threshold without tracking your consumption on an hourly basis with the clean energy project that you procured with.David RobertsRight. So there's two big objections to this from industry. The first is from industry and also is shared by some other analysts, which is just that the system of hourly matching, basically producing hourly RECs rather than yearly RECs is just not mature. It's just not ready. There's not enough people doing it. And forcing the industry to wait on that, getting stood up and sophisticated enough to work would delay the industry in these crucial first few years. So a lot of the argument is just over. How baked is hourly matching? How ready is it?Rachel FakhryYeah. I find this to be a little bit of a lazy argument because it clearly does not look at the state of play on the ground nor what the experts say could happen within less than two years. So I think now even for folks who are out there saying this is not doable in the near term, it needs time. Even those folks agree that there are no technical challenges to doing this. This is really not rocket science. Generation is already metered. Consumption is already metered. You just need a REC in the middle that can capture the hourly variations.David RobertsAnd people are doing it. It's not just that it's doable now, but people are doing it.Rachel FakhryExactly. The two biggest registries in the US. M-RETS and PJM are now offering hourly tracking. M-RETS has been doing this for three years, even in places where M-RETS and PJM, I mean PJM is new. But even in places where M-RETS does not track, there are third-party tracking mechanisms. There are utilities that are not sophisticated, necessarily smaller, kind of like Madison Gas and Electric, for instance, in Wisconsin offering 24/7 tariffs that require hourly matching. The momentum is in this direction. The Biden administration put out an executive order now requiring that the federal government by 2030 hourly amount.David RobertsThe federal government's going to have to start accounting for hourly ...Rachel FakhryIf the Feds can do it anyone can do it.David RobertsYeah. And let's just pause and stress here that PJM is a big Midwestern wholesale power market and balancing area that has developed and implemented hourly matching just in the last year. So this is like a big industry player. These are not like little startups or whatever that are doing this.Rachel FakhryAnd they did that because of customer demand. Right. Again, everyone tries to blame the pillars on hydrogen. The market is heading in this direction anyway. This is just about meeting what the law requires and making sure we're actually consistent with the direction of the market. So it's already being done. M-RETS has said multiple times, look, we're willing to track anywhere in the US or roughly anywhere in the US. But if registries want to scale themselves from annual to hourly, experts say, look, you can scale very fast because there are no technical issues here. You could scale within 12 to 18 months.That is much less than what electrolyzers will need to scale. Right. They'll need two years plus. So again, I always say it's a lazy argument because it doesn't take into account what's already happening, how long it took for it to happen, and how fast things can scale if everyone else wants to do it as well.David RobertsYes, and one thing I also point out is right now the big companies that don't want to mess with it, don't want to mess with hourly matching are whinging and whining about it. But if you put it on paper and made it a requirement, all of a sudden they would be advocates for it and boosters of it and would be accelerating it. This is the thing. It's like if there's $100 billion pot at the end of the rainbow, of course, utilities are going to figure out how to hourly match. Like utilities will do a lot of things for $100 billion, you know what I mean?So this whole idea that like, oh, thanks for offering the $100 billion, but it's such a hassle, come on guys, if there was $100 billion on the line, I'm pretty sure you all could figure out how to do this.Rachel FakhryAbsolutely. I mean, Hydrogen Europe in the European context was a big trade group for hydrogen companies and so on, who fought the European Commission tooth and nail for two years against hourly branding messages that this is not doable it's. Impossible after the passage of the European rules requiring hourly starting in 2030 but with no grandfathering. Which means project have to start doing hourly really effectively today. Anyway, they came out to say, yeah, this is doable, singing the same song. It's going to be more expensive, but hey, it's going to be doable. So it's a really interesting sneak peek into what you were saying of when there's such a big prize at the end of the tunnel and something already happening with all the technical elements already in place, we should not be worried, it should not happen, it can't happen, it will happen and it can't happen.David RobertsRight. Like you say, this whole fight went down in Europe and got settled and now they're doing it. So it's doable. So you're confident that if this was made a requirement by the time the first electrolyzers started coming online, which would be two or three years out at least, just to get them built, hourly matching could be ready. You're confident of that?Rachel FakhryYes, and I'm definitely not the expert about that. I have listened to the big experts who have done this, who are the ones who have the biggest stake in doing this. They all agree this could be done in a very short period of time and it's already being done. So technically, M-RETS, again, I have to repeat, can do it almost everywhere in the country. If there needs to be some nationwide harmonization between various regions and so on. This could be done really fast.David RobertsRight. So the other thing that sometimes comes up in the context of this hourly idea is that if you are really only going to be operating your electrolyzer in the actual hours where clean energy is producing, you are by necessity going to be starting and stopping your electrolyzer. You're going to be cranking it up when the clean power comes online and cranking it back down when the clean power goes offline because there's no point in producing if you're not getting that big fat subsidy. And the sort of conventional wisdom is, I think that electrolyzers are one of these big industrial applications where the finances, the business case depends on it running constantly and that if you force it to ramp up and down to matched coming and going power, you're going to ruin the economics and people won't build them.What do you say about that flexibility question of electrolyzers?Rachel FakhryGreat, let's address that and then definitely want to get to the cost because the jury is no longer out as to whether it's doable. Hourly margin is doable. Now the jury is out as to, wow, is it going to be super costly and suffocate the industry. So I would love to get to the cost piece, but on the flexibility, false period. Electrolyzers are designed for intermittency, specifically PEM electrolyzers. And I know you've had that great conversation with Electric Hydrogen and Raffi Garabedian. They're one of the foremost PEM manufacturers. They're designed for intermittency, so they can absolutely handle that. Now, this is where kind of okay, from a technical standpoint, there's nothing that stops electrolyzers from ramping up and down.Let's get to the cost piece, which is the real big one here. I think the first question we need to ask is what are the operational parameters that will make electrolyzer pencil out? Is it running 24/7 or something less than that? And what we're seeing is that they don't need to run 24/7 to achieve cost-competitive economics. It's somewhere closer to 50% to 70%. And the reason is that the more you operate, that's okay for your CapEx, that's good, but you're going to start capturing higher and higher power prices. Electricity prices are the biggest cost component of electrolyzer.So at some point you're going to start having diminishing returns with higher and higher operations. And that is not at all kind of new information. We've known this for a while. The IEA, IRENA, even Hydrogen Europe. Again, that industry trade group I mentioned have all agreed that or shown that really optimal operations are between 50% to 70%. So we've established it. We don't need 24/7 operations. We need somewhere between 50% and 70%.David RobertsAnd 70% capacity factor, what they call running 50% to 70% of the time.Rachel FakhryCorrect. Absolutely. The good news is what we're seeing from a range of analyses being done by developers, OEMs, independent research groups, is that with hourly matching. You can achieve those levels in many places in the US. And the winning strategy is to oversize a wind and solar hybrid in a region with decent wind and solar, it doesn't have to be best in class and you can achieve those levels of operation and be very cost competitive.David RobertsRight, just to flesh out that picture you just painted, because I think it's really interesting. So we were talking about how if you build an electrolysis and you build say, a wind and solar hybrid power plant next to it, attached to it, not even attached to the grid, just attached to it, obviously the resulting hydrogen is clean, right? That's the unambiguous case. Then there's a second option which is also unambiguously clean, which is building the same arrangement, connecting it to the grid, but never drawing power from the grid. Right. Only using the locally produced power, but then overbuilding that wind and solar power so that it's producing more than you need.And then exporting the extra to the grid as another income stream. So you get a couple of things from that. One, wind and solar tend to be anti-correlated, right? So like one's on when the other is not. So you're going to cover more of your get your capacity factor up and you get extra money from selling your extra renewable energy to the grid so that's the completely off-grid and then the sort of one-way connection to the grid. Both those are viable options where you're only consuming the local clean energy you generate. But in the second case, you're also selling excess clean energy, which is improving your economics.Rachel FakhryAbsolutely. And it could be good for the grid too because you're probably only going to sell that power during high grid hours or high grid prices.David RobertsRight.Rachel FakhryWhich means that the grid really needs it, right? So you could actually be helpful. You don't need to sell that much excess, right, because some folks are saying, well, what if you don't have that ability to sell your excess? The economics will still work. Oversizing a wind and solar hybrid seems to be a really interesting case for those early electrolyzers that need to run more than a certain share because they're so expensive.David RobertsSo you oversize your wind and solar to the point that you get your electrolyzer up to the capacity factor that you need it to be economic. And then if you just curtail the rest of that wind and solar waste, it basically still the economics work out you say.Rachel FakhryWhat we're seeing, yes, it would still work. The credits are rich enough to make things work. And let's translate the credit from a dollar per kilogram to a dollar per megawatt hour because folks kind of understand the dollar per megawatt hour a little bit more.David RobertsRight.Rachel FakhryAt the current efficiency of electrolyzers, you can generally produce about 20 kilograms hydrogen per megawatt hour of power you consume. You're getting $3 per kilogram for every kilogram of hydrogen you're producing. So that's a total of roughly $60 per megawatt hour of subsidy, which means that you're willing to pay power price of up to $60 per megawatt hour and the PTC is still going to kind of make you whole. Now, things are a little bit more complicated than that, but this shows you just the significance of this subsidy in terms of how much it could reduce the input costs to your system.David RobertsRight. Coming back again to the enormous size of this subsidy relative to the industry. So the industry's sort of complaint, as is familiar with the proposal for any new regulation of any kind, is that this regulation will cripple the industry. It's too much, too restrictive, too much hassle. It's going to strangle the industry in the crib. It's not affordable. And just to throw a specific worry in there amidst that, one of the sort of concrete worries is that if these restrictions raise the price of green hydrogen in the short term, one perverse effect might be that more of the market turns to blue hydrogen, which is hydrogen made with fossil fuels, but then with carbon capture and storage attached to it.And that carbon capture and storage is also going to get a big fat subsidy out of the inflation reduction act. So the worry here that I've heard articulated is you make truly clean hydrogen more expensive. You're just going to shift the whole market to blue hydrogen and then they're going to get sort of locked in. You're going to get path dependence, you're going to get blue hydrogen sort of making itself a place in the market, even though everybody knows in the long, long term we need it all to be green.Rachel FakhryRight.David RobertsDo you think there's anything to those worries?Rachel FakhryI would love to say one more thing before we close up on the pillars because it kind of is related to this argument that oh, we're going to suffocate the market so much that blue is going to win. What is really interesting in what we're seeing from opposition to the pillars is something I alluded to earlier, which is we're now seeing the opposition sort of splitting. And you have renewable developers that do not like any of that starting to come around to additionality or new supply because it's like, hey, I could sell more wind turbines.David RobertsRight. Why on earth would they be opposed to this? This is a requirement that a bunch more renewable energy get built.Rachel FakhryExactly. This is where the hourly matching piece comes in. Right. So you have a next era in Florida that has very little access to wind, if any. Well, maybe it can't do hourly matching because it's going to be pretty low utilization of its electrolyzer if it's only following solar. Today that may not work. Now, in a few years, as electrolyzer prices drop and you can run your electrolyzer much less, hey, let the market be the market. Right? But today what we're subsidizing, we want to make sure they're actually clean projects. NextEra may not be able to do that.So now you have NextEra kind of saying, "Maybe additionality is fine, hourly matching is out of the picture." Meanwhile, you have Constellation, the nuclear giant, right? Would love to talk more about their plans because they're truly incredible. They're fiercely fighting additionality or new supply because it doesn't allow them to utilize a lot of their existing nuclear plants. But they love hourly because nuclear generates 24/7.David RobertsHourly is nothing to nuclear.Rachel FakhryNothing to nuclear, right? They come on top compared to any other resource. So you have Constellation fiercely supporting hourly, fiercely opposing additionality. So it's kind of a bouquet where everyone just chooses whatever maximizes their own.David RobertsWhatever is going to work best for their short-term profits. Let's just say.Rachel FakhryEmissions be damned. Right. But let's get to the blue hydrogen question because this is a new argument that I'm truly fascinated by. I don't see any evidence of that. So the 45Q carbon capture and storage tax credits are indeed generous and in some pockets of the US. Yes, indeed. We expect that blue hydrogen could be competitive and be deployed by utilizing the 45Q credits. But we're not seeing blue hydrogen projects' levelized cost of hydrogen dropping to less than $1, which is kind of the threshold for today's hydrogen, or dropping to even zero and negative, which we're seeing in some places in the US.Where renewables are particularly great. We're hovering around zero, right? So I don't see the huge subsidy that we're seeing in some pockets for electrolytic hydrogen. And blue deals with its own challenges. Right. You need to be close to a carbon storage basin. You may need carbon pipelines.David RobertsWell, you need carbon capture.Rachel FakhryCorrect.David RobertsThat works, which is itself. It's not something that's been shown in the US.Rachel FakhryExactly. Blue hasn't had a merry, or CCS hasn't had a merry trajectory so far. I don't know why blue hydrogen is going to just mushroom all over the place. If you take the one blue hydrogen project that's been proposed in Louisiana by Air Products, that's been held up in public opposition for months now. So besides the fact that CCS has not been easy to deploy, you have to be close to a carbon storage basin. You may need pipelines. Public opposition is a real thing here for more gas infrastructure. So it's one of these illusory scare tactics being branded that if you actually unpack dynamics, I don't see any evidence of that.David RobertsSo no worry about blue hydrogen. And I kind of agree. Everybody keeps deploying CCS in these theoretical model ways and I keep kind of thinking like somebody needs to actually go build a couple of these things and show that they work. Before we continue any of these conversations.Rachel FakhryBuild a couple that work. First yeah.David RobertsOne way to address the sort of notion that these three pillars raise costs too much is to point out that there are existing projects being built that will meet the three pillars that are penciling out. Talk a little bit about what we're seeing happen now.Rachel FakhrySure. The AES-Air Products project that we discussed, that's one of the bigger projects in the US. That's going to be three-pillar compliance.David RobertsAre they building on-site? They're entirely on-site renewables?Rachel FakhryI believe so, yes. Fully hourly matched. So it will go up and down with the production of wind and solar. Intersect Power, historically, big solar developer moving into hydrogen. They have a bunch of projects in the pipeline that are three pillars compliant. They're one of the best voices out there demonstrating this is doable. Right. And I do want to point that I know we've joked around and there's a lot of industry players that are trying to steer billions of dollars to maximize their profits. But there's a subset of industry players have been just excellent. Right.Intersect Power, Electric Hydrogen, whom you met with, Synergetic, others have been really just fantastic at showing that this is absolutely feasible. And if you look at Europe and the rest of the world, these three pillars compliant projects are popping up everywhere.David RobertsAnd the European hydrogen, whatever, body that has more or less came out and said, "We've looked into this, we believe the three pillars are doable."Rachel FakhryAbsolutely. I mean, everyone keeps pointing to and happy to speak to the EU case, but everyone keeps saying, look, they pushed their hourly matching to 2030. That's not doable. It's a wildly different context. First of all, if you look at, there's no grandfathering. So projects can start monthly, that's fine, but they have to switch to hourly by 2030. They sign long-term contracts. No one's going to sign a contract for 15-20 years based on first monthly matching and then hourly, they're going to set themselves up from the outset to be able to hourly match that's one.Two, the Europeans have a regulatory barrier to implementing hourly matching that we don't. They have to pass a federal law first, have it translated to 27 member state laws.David RobertsYeah.Rachel FakhryThat was one of the reasons why the delayed hourly matching, again, without allowing grandfathering, we don't have any of that. Right. So just the EU context keeps getting branded left and right, but the devil is in the details and we can glean a lot from that. And I'm hoping we can get back to that because it's an important example.David RobertsOne of the things you hear industry say is if you force us to make the hydrogen in close physical proximity to the renewable energy, we're going to end up like renewable energy far away from load. And that will mean we'll have to transport the hydrogen, we make long distances to where it needs to be used and that transport, the building of that transport infrastructure is going to sort of offset whatever emission gains you think you're making by forcing us to be near the renewable energy. You're not taking hydrogen, the transport of the produced hydrogen into account. So how do you think about that?Rachel FakhryWell, first of all, no one's opposed to grid-connected projects. So I don't know where this hypothesis comes from that we're forcing projects to be very close to renewables.David RobertsHey, if you well, at least in the region, right? The same region.Rachel FakhryCorrect. If you can do your three pillars and connect to the grids and produce your hydrogen closer to your load, that's great. We support that as long as you do your pillars. The second kind of comment I have to this is if you look at the map of where hydrogen demand is today, it's going to be in areas where there's a good resource of renewable energy. So it's mostly Texas and the Gulf, but also in the Great Plains midwest region for ammonia and refineries. And we know that those existing customers will likely be the biggest source of demand in this decade for clean hydrogen because they already have existing supply chains, and so onDavid RobertsMaking clean fuels.Rachel FakhryYeah, replacing existing status quo hydrogen with cleaner hydrogen. Let's put it this way. Yeah, that's going to be the bulk of demand in this decade. Which means that if you look at the map, you're not far off from sources of good within solar. Which means that this transport thing looks pretty manageable. If you consider where the sources of clean hydrogen in this decade will likely be, they're in pretty good resource regions. The third piece that I think is key to keep in mind is that the 45V tax credits are not the only subsidy on the table.Right? They can't solve every single industry problem. This is where it becomes kind of part of a menu of subsidies. So the DOE Hydrogen hubs, money biggest DOE demonstration project in its history, is going to help address a lot of these ecosystem issues.David RobertsYeah, the idea is to build these hubs where you're sort of like you've got the renewable energy and the electrolysis and the hydrogen consuming end use basically being built next to one another. So you eliminate ...Rachel FakhryAbsolutely. You have other stuff that you have the hubs. The Doe hydrogen shot is also spending a lot of money to create a hydrogen ecosystem. States are now passing and contemplating hydrogen-specific tax credits for end uses. So all this to say that we can't burden the tax credits with solving every single industry question, we can't gut them just because we want to think about all these things.David RobertsAnd also I'm inclined to say, like, look, guys, we're like we're subsidizing the crap out of the renewable energy, we're subsidizing the crap out of the electrolysis to the point that some of these projects basically the US government is going to be paying you to do this. You guys can maybe cover transport. It doesn't seem like a huge ask.Rachel FakhryI have a feeling they'll figure that one out. This feels to me like a grasping-at-straws kind of thing, but the transport is going to be impossible. There are options. Do grid connections just meet your pillars? Essentially.David RobertsLet's go back to Constellation for a minute because this is just a gripe, but I feel like I want to cover it. Constellation is a utility that is benefiting from recently passed subsidies designed to keep existing nuclear plants open. Right? There's a whole separate debate in the energy world. People are familiar with it. Should we let them close on schedule? Should we pay to keep them open? A couple of states have passed these huge subsidies to keep them open, and Constellation is currently wallowing in those subsidies. And it's worth noting a lot of the people who it is now criticizing and fighting against in this hydrogen debate are some of the very people who went to bat for it to get it those nuclear subsidies, right?Like it's now badmouthing Princeton's modeling. But of course, that crew at Princeton has been laying itself on the railroad tracks trying to get these existing nuclear plants subsidized. So just to say, like, we're wallowing in nuclear subsidies and now we want to turn around and be allowed to just plug electrolyzers into our existing nuclear plants and layer on a whole new giant subsidy is just like I don't know what the right word is. It's greedy. It seems crude and greedy if I'm being totally honest. Maybe you have nicer words.Rachel FakhrySadly, don't. Well, yeah, of course, they're not very happy with the Princeton folks who are kind of standing between them and enormous profits above and beyond what they were already doing. So fully agree with you. First of all, I think Constellation is basking in subsidies at this point. They're very well taken care of. Actually, right before this podcast, I was speaking to a nuclear lawyer, NRDC, and kind of asking her, hey, could you just remind me of all the subsidies that the nuclear can now tap into? She actually had to take a couple of seconds just to see where she could where to start because there are so many buckets.David RobertsGet the calculator out.Rachel FakhryExactly. So Constellation, as I alluded to earlier, is fiercely fighting and loving policymakers against requiring additionality or new clean supply because that would not allow them to utilize their existing nuclear plants for hydrogen production and maximum profits. No new clean supply or no additionality would be an absolute gold mine for Constellation.Yeah.They have two very lucrative options. One is to divert their existing nuclear power to hydrogen projects. So essentially collocate electrolyzer with their nuclear plant and divert a share of the output of that nuclear plant to hydrogen production. And this seems to be Constellation's main plan.As I mentioned earlier, the tax credits, the hydrogen tax credits are roughly equivalent to $60 per megawatt hour. Constellation is not getting that at the market. On the market, power prices are way lower than that. Maybe 2022 was an off-year, but generally, they're way lower than that. So they're like, "Light bulb. There's a huge lucrative opportunity for us to divert our power away from the grid and utilize this very lucrative opportunity to produce hydrogen with our power."David RobertsBasically changing nothing else, right, like just harvesting a giant new set of subsidies, having changed operationally almost nothing.Rachel FakhryAbsolutely. And that would be terrible for emissions. Could you imagine megawatts and gigawatts of diverted nuclear energy from the grid? That would be terrible for emissions, result in nefarious grid impacts in terms of prices, reliability, and emissions be damned. Actually, this is playing out in Illinois right now. This is Constellation's powerhouse where they have a lot of their nuclear capacity. They have plans to divert their power away from the grid. We estimate that emissions in Illinois could increase by 7% somewhere up to 45%, depending on how much of the output you're actually diverting and completely torpedoing over the state's clean energy goals.David RobertsYeah, basically wiping out the gains of their big, hard-fought, complex clean energy legislation, which they just passed.Which, by the way, supported Constellation, even if they're not getting a lot of money from it for multiple reasons. But it supported Constellation because supposedly it was helping support that decarbonization. So it's a perilous terrain that's, number one, it's divert our power, get $60 per megawatt hour. We're not getting on the market. Hugely lucrative option number two is just sell large volumes of credits, kind of like Rex, but for nuclear from their existing nukes, because there's currently no market for those credits outside of a few states. And this is a huge volume of credits. Right. As I mentioned to earlier, there's enough potential nuclear credits to completely cover all hydrogen production that we could expect between now and 2030.Rachel FakhrySo this is the same thing, is you're doing nothing on the grid, getting paid for generation already very heavily subsidized by the US taxpayer, and allowing electrolyzers to just plug on the grid, purchase credits that mean nothing, and increase emissions, right? So to sum up, this is a gold mine for Constellation without doing anything.David RobertsI mean, it's a gold mine for them, whichever way it turns out. That's kind of the rub here. Like they're awash in subsidy money no matter what they do. They're just trying to stack it now.Rachel FakhryAbsolutely. And again, emissions, impacts on the grid, so on and so forth, to be damned. So it is, unfortunately, blatant greed. And they're out there claiming that nuclear is getting left out and that this is unlawful. And the best part is that no one wants to outlaw the use of nuclear for hydrogen. There are options, right? For instance, if you operate your nuclear plant that can count as nuclear supply, you could do that. They refuse that, not lucrative enough.David RobertsYou could build new nuclear. Everybody keeps saying how great nuclear is, but why didn't build some new on it and hook that up to electrolyzer?Rachel FakhryWe even gave them the option of, hey, look at what the Europeans did. They said during low-priced hours, which are a good proxy for clean grid, we can relax hourly requirements and sell your credits during those low-priced hours because it's a proxy for some generator curtailing somewhere. So this kind of can count as nuclear supply if you spur that generator. Not enough hours for us. So we are not in the business of suffocating nuclear. We're in the business of making sure it meets the same requirements as everyone else.David RobertsRight. Or they could just make the hydrogen and not get a giant subsidy. There's no one telling them they can't do that. Again, nothing's being prohibited here.Rachel FakhryCorrect.David RobertsIt's just like if we're going to give you a bunch of money, we'd like to have a few conditions on it.Rachel FakhryAbsolutely. That's absolutely right.David RobertsSo just to review where we've been so far, there's these three pillars that characterize truly clean hydrogen. It's additional. It comes from new energy, comes from energy that's on the same grid you're on and it is matched up hourly with your consumption. Europe has more or less embraced these conditions. It's different timing on the hourly for various reasons. But the European Commission has said these are absolutely doable. This will not strangle the industry in the crib. So I have two questions about this. One is one argument you hear is it just stands to reason that more requirements and tighter requirements are going to slow the pace of development relative to no requirements.Right. We'd build more electrolyzers if we could get the subsidy for any damn thing we do. So it's going to slow the industry. And what's most important here, and this is the argument I think appeals to a lot of people and this is the argument Rhodium uses, I'm sure you're familiar. Their whole thing is, yes, slightly looser additionality requirements would potentially raise greenhouse gas emissions in the near term. But that is worth it because you're radically accelerating the scaling up of electrolyzers and the scaling up of green hydrogen, which is going to reduce way more emissions in the long term than whatever this short-term surge is.So basically like the short-term surge is worth it because you're buying huge long-term reductions. So what do you make of that trade-off is my first question.Rachel FakhryFirst of all, increasing emissions is against statutory requirements.David RobertsI want to get back to that. But first, on the merits.Yeah, you're blatantly flouting the law, right? The IRA is meant to be given to projects that reduce emissions by 95% relative to today's hydrogen. You are subsidizing projects that have twice as much. So if you're already flouting statutory requirements by adopting some sort of a phase-in or transition periods like what Rhodium suggests. That's one. Two, I have full respect for Rhodium and we have worked with them a ton, but fully disagree with this notion of a trade-off. Right. As I mentioned earlier, what we're seeing from financial analyses, from projects already being kind of doing the three pillars.Rachel FakhryThe three pillars will not harm scale. They will ensure healthy, durable scale. NRDC has been one of the first big enviros to come out in support of hydrogen three years ago and say, look, this is an important tool in the toolbox, we should scale it. However, this doesn't mean we have to scale it recklessly. Right. We have to make sure it's actually being done right. So I fully disagree with this notion of a trade-off between near-term emission increases against the law and scaling the industry. You could do both. The third piece, which people tend to forget, what will slow down this industry is public opposition.Could you imagine if the US taxpayer knows that they're subsidizing increased emissions? That's not going to be pretty. And hydrogen is already a very contentious resource.David RobertsYeah, it's contentious, but also it's still a little bit kind of undefined, a little bit it's a little bit fuzzy. So like, these next few years and how it gets treated and how it gets introduced to the broader public is very important. Right.Rachel FakhryThat is the first touch point. I fully agree with you and I love one of the quotes by Paul Wilkins, I think is the vice president of Electric Hydrogen in Washington Post. He said, look, if in five years this tax credit shows that this industry is increasing emissions, that's going to be terrible for our industry. So that will slow down scale. It's not the and that always gets just glossed over.David RobertsRight.Rachel FakhryLove to discuss this EU approach because I know that Rhodium ended up recommending that, but keeping it quite open ended.David RobertsYeah, and I think Rhodium endorsed the idea is just that you start with yearly accounting and work your way up to hourly. You start with sort of broad regional requirements and then work your way up to more specific. It's same like you start with I think they want to start with monthly RECs and work their way, this idea of phasing in, so you can get started quickly and then phase in tighter requirements over time. What do you think is wrong with that approach?Rachel FakhryIt's trying to mirror the EU, and I think this is very misguided. Right. Because the EU has a wildly different context. First of all, the EU has sticks. They have their emissions trading system which will help climb down and really minimize any emissions increases from loose rules in the near term. We don't have that. That's one. Two, the EU does not have a production tax credit like we do. All of their subsidies are more on the demand side. So creating demand signals. That means that there's going to be a rush to the cheapest supply. Cheapest supply generally means that you want to operate during low-priced hours as an electrolyzer because that's the biggest cost for you.And this generally means you're going to hover around the cleaner hours. We don't have that. We have a production tax credit that is worth $60 per megawatt hour that will incentivize electrolyzers to keep running as much as they can because ...David RobertsThey're going to run maximal. When you're paid not for your sort of CapEx to build, but for your output, you obviously are incentivized to output as much as possible, as many hours as possible.Rachel FakhryAbsolutely. And then the third piece, which I alluded to earlier, the hourly matching phase in wildly different contexts in the EU, again, they have a regulatory barrier we don't, which is one of the reasons why they delayed it. We don't need to do that. Wildly different context. We should not be blindly mirroring the EU. So I think we're open to discuss what a rigorous phase-in period could look like for the US, but it should not be mirroring the EU.David RobertsRight, well, energy Innovation, and by the way, I should just say a lot of what I learned about this, I learned by listening to Chris Nelder's Energy Transition Show where he interviewed Eric Gimon from Energy Innovation. If you want, like the super nerdy technical dive into all this, if this isn't giving you enough, whatever freaks out there who still don't feel like they got enough from this, there's plenty more there. But one of the things energy innovation is recommending is a phase-in but sort of different starting strict but crude, not relying on sort of sophisticated hourly matching at the beginning but just starting with sort of rough and ready but relatively strict guidelines. And then evolving over time to something that's a little bit more granular and precise and a little bit looser.Because Eric's point, which makes sense to me, is you don't often see industry passively agreeing to standards that they've gotten used to getting tighter. Right. But every industry would welcome standards that they're getting used to getting looser. Right. So his sort of thing is like, we don't have the sophistication to do it precisely. Now let's be strict and crude and then evolve toward slightly looser and smart. What do you make of that?Rachel FakhryYeah, I think this is more related to the point they made in their comments that the most precise way of calculating life cycle greenhouse gas emissions of hydrogen projects is to adopt the marginal emissions approach, which I know you hate that term, Dave, but emissionality essentially you net out. You have to have a very granular way of accounting for what you're inducing on the grid and what you're netting out by locating somewhere and kind of going that way. I know that they're slightly moving away from that because it's not easily implementable that's something we flirted with as well a few months ago. And what we're hearing is like this is elegant and nice, but from a developer standpoint this may not be very workable.So the three pillars are very good proxy right, for ensuring that your emissions are close to zero.David RobertsRight. The ideal here is a sort of shimmering ideal in the distance is that for any given hour of power consumption, you know, in the end eventually you're going to be able to know specifically which generators provided it and specifically how much greenhouse gas were involved. Like just as you can precisely know how much power you're using, you're eventually going to be able to precisely know how many greenhouse gases you're producing or displacing or avoiding. Right? That's all going to be sort of available in one giant transparent registry and everybody's going to agree how to calculate it and we're going to be able to base a lot of policy on that.I mean, it's going to solve a lot of tricky kind of short-term accounting and tracking and policy puzzles are going to be solved once all that information is transparent and available. But as you say, that's a ways off.Rachel FakhryAbsolutely. We strongly support this move to more granularity to give really the more accurate signals for what to invest in. I don't think it's necessary for this credit. The three pillars are straightforward enough for developers. They're rigorous enough to meet the IOA requirements. I'm supportive of just retaining that. Now one can create a little bit of exceptions or derogations like what the EU did. So for example, if the grid gets really clean, like 90-95% clean, then maybe we can relax the additionality required. Or if LMPS are extremely low, which indicates renewable energy curtailment for instance, then maybe we can relax hourly matching.We're open to that as long as the rigor of the system is maintained. So I don't think we need to completely overhaul to a marginal emissions approach to bake in a little bit more precisions for the outer years.David RobertsRight. And presumably, there'll be a lot of learning as we do this, how to make it work better. So this might be a dumb question but so say you're treasury and you read the Rhodium report and for whatever reason, it strikes you as highly compelling and you're thinking, yeah, let's set some relatively loose additionality requirements. Even though we'll get a little bit more greenhouse gas emissions in the short term, we'll get a lot more reductions in the long term. My thing is which, as you said, that's just against the law. The law says very clearly 0.45 threshold for greenhouse life cycle emissions is very clear.So I guess my question is just isn't some of this kind of an academic debate? Like the IRS can't just contravene the clear written intent of the law. It's got to hold whatever details it puts in, it's got to result in that threshold, or else it doesn't meet the law. Right. So is a lot of this just an academic debate? Like, what am I missing? They don't seem to have the latitude that industry is acting like they have.Rachel FakhryAbsolutely fully agree with that. And the treasury has been pretty tight-lipped about all this, so it's really hard to see where they're landing. But you're spot on. Weak rules that clearly flout statutory requirements would be both unlawful and a complete abdication of responsibility. So I wouldn't be surprised at all if many groups end up suing, should the rules be very weak. But let's talk about this legal piece. We have been doing a bunch of legal analyses with other groups, and look, the case for the pillars is ironclad, right? Because the way lifecycle emissions are defined in the law requires that they account for emissions that projects induce on the system.So if I'm an electrolyzer and I'm purchasing cheap credits from the existing nuke or renewable or so on and driving more gas on the system.Right, you induce that grid operator to turn on that extra gas.Correct. There is virtually no project in the US that today will qualify under this boundary of emissions. If they're not driving nuclear supply that is hourly match and deliverable, it's impossible for them to comply with 0.45 without these three pillars.David RobertsRight.Rachel FakhryIf you want to make this credit workable, those need to be in. If you want no projects to qualify unless they're colocated with a new source of supply, then you can do that. But I don't think that's the intent of the law. I don't think developers will be happy with that if it's only the behind-the-meter projects are able to qualify. So the three pillars are absolutely necessary, and if they're flouted so blatantly then that's just unlawful in a sense.David RobertsAll this feels a little bit pointless to me because the law is super clear and if they come out with standards that allow higher threshold they're just going to get sued by a bunch of environmental groups. I mean that would be a crappy outcome to have to wait. We don't have a lot of time to wait and mess around with lawsuits. But surely treasury knows it doesn't have as much latitude as industry seems to frame it as having.Rachel FakhryHopefully, Dave, let's send them this little excerpt.David RobertsYou don't have to; it's crazy. I'm not a lawyer, but the law is so clearly written that there just doesn't seem to be a lot of fuzziness here. But who knows what our beloved Supreme Court could find if it ever finds its way up there. It's just a small side question in terms of projects built entirely off-grid, right? One and then projects built with a one-way connection to the grid. Two and then projects that are just grid connected that just contract to have new solar and wind added to that grid. Do you have any sense of what the balance will be like right now?There's some off-grid projects being built. Right. So clearly, those are workable. Are people going to gravitate toward grid-connected over the long term because it's cheaper, or do you have any sense of what kinds of projects are most likely to get built?Rachel FakhryYeah, that's very unclear. What we're seeing is most of the projects moving now are behind a meter. Indeed.David RobertsDo you know why? Is there a clear answer to why?Rachel FakhryIf I had to speculate, there's so much less risk.David RobertsYeah, everything's much cleaner. Every answer is much clearer.Rachel FakhryExactly. There's less risk overall, which I'm sure is very great for your rate of capital and so on.David RobertsYeah, right.Rachel FakhryBut the level of fierce opposition we're seeing for the grid-connected kind of three-pillar system tells me, oh, there's a lot of interest in connecting to the grid at some point soon. So we're seeing mostly behind the meter. But I expect that the grid-connected projects will certainly start popping up soon.David RobertsBe really interesting to see how that plays out. Okay, final question, and God bless all you listeners for your extraordinary patience. This is a complicated one. There was really no way to boil this one down. But final question. This is like everything in IRA. This is a carrot, right? A big subsidy, a big payout, and specifically, it's a supply-side subsidy. This is literally a per kilogram of output subsidy. So it's all about supply. If you are taking a step back and thinking about, in the long term, how to construct a robust and effective market for hydrogen in the clean energy system, are there demand-side policies that you think would work well to complement this really giant battering ram of a supply-side subsidy?What should we be doing on the demand side? Or is supply side is the battering ram enough?Rachel FakhryGreat question. And this really gets to the core of, look, the tax credits are a big prize. They're not the only one, right? So we can't burden them and loosen the crap out of them because we're worried that the industry won't scale otherwise. I disagree with that. I think there's a good analogy to the renewable energy growth. The wind and solar tax credits obviously were a big driver of deployment. They were not the only driver. Right. State RTS has played an important role, corporate voluntary procurements played a really big role.David RobertsYeah, demand side was huge all along.Rachel FakhryAbsolutely. So that's exactly the same case here. There's this giant, generous supply side push. It has to be and already is coupled by subsidies on the other side. What we're seeing globally, and this applies to the US, is one of the main barriers of getting hydrogen projects built is the lack of end uses. It's the lack of demand. Right. That's why only a very small share of projects go from announcement to FID.David RobertsAnd just to be clear, this is not lack of demand for hydrogen. There's lots of hydrogen used. It's lack of specifically demand for the still slightly, somewhat more expensive clean hydrogen.Rachel FakhryCorrect. No longer in many places. Yes, spurring end-use is going to be important, especially since we didn't speak of that, but maybe that's another episode. Hydrogen should not be used everywhere. Right. This is a resource that is energy intensive. It has its place in some important hard-to-electrify sectors like steel and maybe shipping and so on. Not widespread in the economy. So focus demand side policies could be really interesting here to really divert the market to the, quote unquote, "good uses." Right. So the hydrogen hubs are going to be really interesting. And again, this is a big subsidy we keep forgetting.David RobertsYeah. Have they talked about what end uses qualify or what they're going to put in those hubs as end uses?Rachel FakhryIt's very unclear. But the DOE's hydrogen roadmap, which kind of sets the vision for the department, for how they will go about their hydrogen deployment, is pretty damn good. It's all focused on deploying hydrogen in hard-to-electrify applications where it's actually needed and doesn't have better alternatives. So if they were to make good on that roadmap, and I really hope they do, they will select the hubs that actually have the high-value end uses and not the low-value end uses like blending in pipes.David RobertsYes. Let's just say when we talk about low value, like the idea of blending hydrogen into natural gas pipelines to marginally reduce the climate impact of natural gas just seems to me like the lowest possible use of what is effectively like champagne. Be like dumping champagne in your water supply or something. I don't know what the right analogy is. You want to save champagne, it's expensive and you want to save it for the best highest uses of it. And this is a big fight with the natural gas industry, of course, because they want their natural gas pipelines to stay up and running as long as possible.They want all that infrastructure, they want themselves to survive. And so the idea that they could mix in a little hydrogen and go on, they love it. But as you say, that's a whole separate fight, a whole separate pod about hydrogen end uses.Rachel FakhryAbsolutely. And this has a real implication on the production because if we recklessly open the floodgates of supply in this decade with very loose rules, then where is this hydrogen all going to go? Right. The end uses that are the most primed to go, unfortunately, today are the ... Barring, replacing existing hydrogen with cleaner, which is good. It's all these other bad end-uses, including blending, because steel and other good end uses aren't quite commercially viable just yet. So all this to say the hubs are going to be a big end-use driver. Public procurement tools are really interesting.So the federal government is one of the largest buyers, for instance, of steel for public infrastructure projects. There's a lot of money in the IRA now for the federal government to clean up some of their cement and steel and so on that they purchase. If there is a procurement for green steel that is hydrogen derived, then that's really interesting. Right. You're trying to create a very strong, stable demand signal, and we're seeing some states like Colorado, Illinois, Pennsylvania starting to contemplate state-specific tax credits focused on using hydrogen in specific end uses. I'm not going to get behind those proposals.They're not great, but I think it's the right kind of thinking, right? Let's start trying to be more targeted with where we're driving this resource in the economy.David RobertsRight. So you're saying if we're going to sort of jam an enormous amount of supply into the system really quickly, we should also implement some demand-side policies to guide the hydrogen thusly produced to its highest and best uses?Rachel FakhryAbsolutely. We have to be very cautious about where we're using it and divert it to the right places, for sure.David RobertsOkay. Goodness, that's a lot. It just goes to show in the energy world, you're like, clean hydrogen. Let's do that. And then so many devils in the details.Rachel FakhryI'm hoping this was less wonky than Eric Gimon, whom I have utmost respect to, but even my mind was turned into a pretzel listening to that episode.David RobertsYeah, I think we hit a nice, good middle spot. This is like the 301 class. More than the 101, but less than the grad seminar. That's my aspiration.Rachel FakhryThat's where students either drop or ...David RobertsThe ones who can get past this pod. They're definitely headed for expert expertise. Rachel Fakhry of NRDC, thank you so much for coming on and talking through this all so plainly and simply and clearly. I super appreciate it.Rachel FakhryThanks so much, Dave.David RobertsThank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf, so that I can continue doing this work. Thank you so much, and I'll see you next time. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.volts.wtf/subscribe

A full quarter of global energy use goes toward heat that powers industrial processes. To provide clean industrial heat but avoid the variability often associated with renewable energy, a company called Rondo makes a thermal battery, storing renewable-energy heat in bricks. In this episode, Rondo CEO John O’Donnell talks about this breakthrough technology and the opportunities that thermal storage promises to open.(PDF transcript)(Active transcript)Text transcript:David RobertsElectricity gets the bulk of the attention in clean-energy discourse (this newsletter is, after all, called Volts) but half of global final energy consumption comes in the form not of electricity, but of heat. When it comes to reaching net zero emissions, heat is half the problem.Roughly half of heat is used for space and water heating, which I have covered on other pods. The other half — a quarter of all energy humans use — is found in high-temperature industrial processes, everything from manufacturing dog food to making steel or cement. The vast bulk of industrial heat today is provided by fossil fuels, usually natural gas or specialized forms of coal. Conventional wisdom has had it that these sectors are “difficult to decarbonize” because alternatives are either more expensive or nowhere to be found. Indeed, when I covered an exhaustive report on industrial heat back in 2019, the conclusion was that the cheapest decarbonization option was probably CCS, capturing carbon post-combustion and burying it.A lot has changed in the last few years. Most notably, renewable energy has gotten extremely cheap, which makes it an attractive source of heat. However, it is variable, while industrial processes cannot afford to start and stop. Enter the thermal battery, a way to store clean electricity as heat until it is needed.A new class of battery — “rocks in a box” — stores renewable energy as heat in a variety of different materials from sand to graphite, delivering a steady supply to various end uses. One of the more promising companies in this area is Rondo, which makes a battery that stores heat in bricks.I talked with Rondo CEO John O'Donnell about the importance of heat in the clean-energy discussion, the technological changes that have made thermal storage viable, and the enormous future opportunities for clean heat and a renewables-based grid to grow together.All right, John O'Donnell of Rondo. Welcome to Volts. Thank you for coming.John O'DonnellThank you. It's a great pleasure.David RobertsI am so excited to talk to you. I've been geeking out about thermal storage for over a year now, just wanting to do something on it, and there's so much there. And I find that unlike a lot of electricity topics which I cover, there's just not a lot of baseline familiarity out there among, let's say, normal people. So there's a ton to cover from the ground up. So I want to start at the highest possible level, which is to say, let's just talk about heat. Like in the clean energy world, electrical power gets a lot of attention, a lot of discussion, a lot of technological development.Everybody's got their favorites, everybody knows what's going on. But then there's also heat, which is the sort of weirdly ignored not so much anymore, but up till pretty recently ignored. So maybe just start with an explanation of why heat is important if you care about clean energy, why you should care about heat?John O'DonnellThank you. Sure. That's a great question. And that context you just provided is, of course, dead on. There's a really simple answer. Heat. Industrial heat is 26% of total world final energy consumption. Whether you are making baby food, or fuel, or cement, or steel, the manufacturing processes vastly predominantly use energy in the form of heat, not electricity. Globally, it's three quarters of all the energy used by industry is in the form of heat. Again, whether you're pasteurizing milk or melting steel. And the DOE has just created a new office focused on this topic. We're thrilled about it.Their assessment is that industrial heat is 11%, I think, of all total US CO2 I'm in California. Here in California, we burn more natural gas for industrial process heat than we do for electric power generation. And to a first approximation, as you just mentioned, no one knows that.David RobertsRight. So heat is a huge portion of final energy consumption. It's a huge portion of global CO2 emissions. So maybe give a sense of like, what percentage of total heat final consumption is industry, like how's the total heat-pie divided up.John O'DonnellSo when I said 26% of world — that's industrial heat, right. So that's not buildings, that's not other heating sources.David RobertsRight. Heat is a bigger category than that.John O'DonnellI mean, if you take actually heat for buildings and heat for industry, together they're like 60% of all the natural gas used in Europe. But within industrial heat, people sort it out by a couple of different things. One of them is the temperature. There's a lot of heat in cooking processes. That's around 150°C in the form of steam all the way up to the highest temperature heat in making cement, that's around 1800°C. About 95% of total heat is used in processes that need it below 1500°C, about maybe half to two thirds of industrial heat is below about 400°C.There's a fairly steep curve. About half of all industrial heat, something like that, is delivered as steam.David RobertsRight. Steam is the lower end of the temperature spectrum. I recall looking at these charts of sort of what industries use, what levels of heat. Up at the super high heat, you have pretty singular industries, like steel's up there and concrete's up there. But down in the lower heat registers, where you're using just steam, there's a bunch of little industries clustered up there. Most of the industries are using that.John O'DonnellThat's right. All of these have been things that people say are hard to decarbonize because across many of these industries, they're making commodities, whether it's steel or tomato paste that are relatively low margin and for which the cost of heat is a very significant portion of the total cost of production. So this is a sector where all these processes use heat in somewhat different ways. The cost of that energy is really critical to the competitiveness of that industry and what commodities cost consumers. And there have not been great solutions until recently that could provide decarbonized heat at the same or lower cost.David RobertsSo the situation is there's a huge chunk of our energy that goes toward heat, a huge chunk of that goes toward industrial heat. And there's been comparatively little work on finding zero carbon versions of that heat. That's the problem we discussed the last time we talked, probably three or four, five years ago. Everything pre-pandemic is a haze. But I think it was around five years ago I covered this big comprehensive report on industrial heat options, like, what can we do about industrial heat? And it went through the options, and basically the conclusion was that continuing to do it with fossil fuels and just capturing the emissions post combustion was the cheapest option for a lot of these heat uses.And I dutifully reported that. But I didn't like it. I didn't like the idea that that's the best we can do is create these Rube Goldberg machines where we're digging up carbon, burning it, capturing the carbon, burying the carbon again, et cetera. I was like, surely that's not the best we could do. But things have changed a lot, since then. So maybe just run through what are the low carbon heat alternatives and which ones have emerged recently, and what has changed that has helped them emerge?John O'DonnellYeah. Thank you. You said for a long time there hasn't been much work on this. I would say partly there hasn't been so much success on it. I've been working on for 15 years.David RobertsNo offense, John.John O'DonnellAnd in two previous solar companies we wound — who are a lot of the team here at Rondo worked with me there — we wound up delivering more than half of all the solar industrial heat that's running worldwide right now. But to say that's a drop in the bucket is oversizing a drop you asked exactly the right question. What are the options? Because the world has really changed.There has always been the option of burning biomass, which is more or less sustainable, but very high cost, high air pollution, and very, very limited availability. Other kinds of biofuels, like renewable natural gas, if we take it to a giant scale, it might power as much as 1% of our industrial heat. And it's easy to laugh about, but it's true. The thing that has profoundly changed is what the wind and solar PV industries have accomplished over the last 15 years. The 95% reduction in cost means that intermittent electricity is becoming — has become — the cheapest form of energy that humans have ever known.And it's now cheaper than burning stuff as a source of heat, but it's intermittent. So how do we take that intermittent electricity and use it to deliver the continuous heat? I mean, you turn on a smelter or a factory or even a tomato paste plant, you run it for months or a year on end, it has to have continuous heat or it will be damaged.David RobertsIt's worth just pausing to emphasize this. The vast majority of industrial processes are continuous. They cannot run intermittently. They cannot stop and start with the sun and the wind. It just would be wildly uneconomic.John O'DonnellThat's a beautiful and concise way of saying it. Like there are processes where if they get a half second interruption in their energy supply, it takes a week to restart the process. Reliability is a very big deal. So what are the tools we have for that? Intermittent electricity, which is becoming plentiful. And in places right now, you can have essentially unlimited amounts briefly every day at prices far below fuel prices. We have hydrogen, electrolytic hydrogen, make hydrogen, compress it, store it, and then combust it. That works. Although electrolyzers are today expensive, they're coming down in cost.But the laws of physics bite you in that you get about one unit of heat for every two units of electricity because of the chemical steps involved.David RobertsRight. All the conversions.John O'DonnellYes.David RobertsBut can you just dump hydrogen into existing boilers and kilns? Like, is existing equipment hydrogen ready, as they say?John O'DonnellNot exactly. It's hydrogen ready for a few percentage of hydrogen. But when you look at a boiler, 95% of its lifetime cost is the fuel, not the boiler. So upgrading boilers to run that other fuel, that's something that you would do if the economics of that fuel were sensible.David RobertsGot it.John O'DonnellRight? Now at taxpayer expense. We're creating a period where hydrogen, electrolytic hydrogen is going to get down to the same cost as fossil fuel in the US with tax credits. But again, intermittent electricity by itself today is cheaper than fossil fuel. Doesn't need tax credits to get it to that point. And now there is this emerging class of electric thermal energy storage systems that don't do chemistry. They just convert electricity to heat directly and then store the heat. Because heat storage, another thing you could do I skipped over is you could, of course, store electricity in a battery.Right.Which would be the most expensive thing.But if you have a coffee thermos on your desk, it's storing energy as it happens. The energy stored in your coffee thermos is more energy than the energy stored in your laptop battery, and it's a bit cheaper than your laptop battery. Storing heat is cheap right now in the thermos. What do you have? You have hot water, which stores a lot of energy per degree, and an insulation thing around it, depending on how good the insulation is, that'll tell you how long that thing will store energy. All those things have been around for a long time, and suddenly, okay, how are we going to heat these things electrically?How are we going to use simple technology? Because most people who are working on electric thermal storage are doing simple things. There are some exotic things using conductive materials, liquid metal things, but there are simple things that people are doing also.David RobertsYou're hitting directly on something. That is why I love this area so much, why it sort of kind of caught my imagination so much. Like, you really have a situation here where electricity was just more expensive than fossil fuels for these purposes up until like five minutes ago.John O'DonnellExactly.David RobertsIn terms of looking for opportunities for just storing. Now that electricity is cheap, we're looking for ways to store it and use it as heat in a lot of ways for the first time. And what that means is there's like, very simple low hanging fruit all over the place. The way I think about it is, like, my generation maybe like younger people than me, when we think of technology or advanced technology, we generally think digital, and that generally means opaque. Like, we don't know what's going on in there. Even cars these days. Like, so little of it is mechanical anymore and so much of it is digital and computerized.It just seems opaque to us. And these technologies of storing electricity as heat are so delightfully simple. Like, you're literally just heating up a rock and that's, like, you might say that heating up a rock is literally the oldest energy transfer mechanism that humans have available to them. It's probably the very first way we moved energy ever, literally. So it's just fun to me in that it's almost like a childlike sense of discovery to it. Anyway, that's just my that's completely off topic, but ...John O'DonnellOne of the electric thermal energy storage technologies actually uses rock. And on the outside of the pilot it says, welcome to the new Stone Age. And there's a mastodon as the mascot. So, yes, it's a well understood thing.David RobertsSo just to sort of summarize where we've been so far, you need all this heat. Up until very recently, it was overwhelmingly cheaper to do it by combusting fossil fuels. A lot of the alternatives to fossil fuels are more expensive than fossil fuels. But now recently, along comes renewable wind and solar electricity, which are cheaper than anything. So now the challenge is, well, how do you get the heat from the wind and solar electricity? As you say, the applications are running around the clock. Wind and solar come and go. So in between the wind and solar and the applications, you need something that's going to store that wind and solar that can release it in a steady flow.John O'DonnellExactly.David RobertsSo that's the new thermal storage technologies that are emerging now are sitting right in that space, including Rondo. So if you're talking about something sitting in that space, what do you need out of it? What are the sort of metrics by which you judge the performance of that thing that's sitting in between the renewables and the application?John O'DonnellGreat question. So obviously you need safety, efficiency, cost, temperature at which the heat can be delivered.Right.Some other things as well. One of them is the faster that you can charge the system and deliver energy continuously. If you can charge it, if it takes you typical batteries, they charge and discharge at the same rate. But here we'd like to charge perhaps during the solar day in six or 8 hours and deliver for 24 hours continuous. If you could charge in about 4 hours, we find that's even more valuable. The periods of curtailment and the periods of zero and negative electricity prices in electricity grids are short.So the ideal thermal storage can charge very rapidly. You can control its charging like other batteries, it could participate in providing grid services and it can run continuously, shut it down once a year for inspection and when the factory that it's connected to is shut down and just sit there and require low O and M, operating and maintenance, costs.David RobertsYeah, and I presume low losses too.John O'DonnellYeah, that's right.David RobertsBut I want to pause and just emphasize the first point you made just so people get it. We have these wind and solar all come online at the same time because they're all using the same wind and sun. So what you have are these periods of oversupply. I think people are familiar with this. You get oversupply more than the grid can use and today that just goes to waste. It's curtailed. That energy is not used. And so what you're doing is proposing to come along and use it. But if that's your economic sweet spot, those couple of hours of curtailed energy, you need your battery to charge as much as possible during those couple of hours.In other words, charge really quickly because the amount of energy available in those curtailed hours, especially in coming years, is going to be potentially huge. Right. So you need to stuff a lot of energy in your heat battery really quickly.John O'DonnellThat's right. Now the early deployments of heat batteries will use what is curtailed today. One of the things that we see that's uniquely pretty cool about this class of electric thermal storage is the total amount of energy that industrial heat needs is really large for scale. I think we had a 52 gigawatt system peak in California not long ago. We've got about 20 gigawatts of PV in the state. Just repowering the boilers and furnaces that we have right now in California needs 100 gigawatts of new generation to replace those fuel BTUs, about 40 of those gigawatts can actually be built without any connection to an electricity grid.One of the things that's great about ETES powering industry is we're headed for a world where industrial electrification is not creating more problems for the grid, but we'll get there. But this matter of fast charging rate means that new generation projects that are serving the grid, the best ones, the cheapest ones, will be built selling part of their power to thermal storage. Like during the peak and curtailed hours and then delivering those broader shoulder renewable power to the electricity grid. And we're seeing again and again that that's a formula for low energy prices for the industrial and for lower prices to the grid.There's an interesting synergy.David RobertsYeah, we're going to get into that synergy in just a second, but I want to focus on how we're evaluating the heat battery. So we want it to absorb a bunch of energy quickly.John O'DonnellFast, charge. Yeah.David RobertsAnd then we want it to hold that energy with very little losses. And this is the other fact about thermal storage that blew my mind that I do not think is widely appreciated, which is the incredibly low losses here. People are accustomed to, I think if you want to store energy in hydrogen, you're losing about 50% of your energy through all the convergence. Like a 50% efficiency ish yes, batteries, lithium-ion, depending, you're getting up to don't know what the standard average is, but just heating up a rock, you get 90% to 95% of that heat back out of that rock.That is wild to me.John O'DonnellThat's right. Yeah. The least efficient of the thermal energy storage systems are around 90%. We happen to be 98%.David RobertsThat's just crazy. So the heat just sits there in the rock and doesn't go anywhere?John O'DonnellWell, fill up your thermos with hot coffee, take the thermos and wrap it in a couple of blankets, open it up, three days later the coffee is still hot. It's not like a chemical system where there's self discharge or something. The only place energy can go is either lost to the environment through insulation or delivered to the target. So it's a lot easier than it sounds. A lot of people think, "Oh, this efficiency couldn't be possibly the case." It really is almost embarrassingly simple.David RobertsAnd now my question though is when we say 95-98%, what are the time horizons of that? Like if I fully charge your thermal battery and we're going to get into the guts of your thermal battery here in a second, but if I fully charge a Rondo battery and then just don't do anything to it, how long would it take for all that heat to be lost? Like what is the time horizons we're discussing here?John O'DonnellAgain, the use case that we're considering that we're targeting, is it's discharging continuously?David RobertsRight. It doesn't need to hold it that long. Theoretically, I'm wondering.John O'DonnellTheoretically that's right, because the one place where you are holding energy, we've got a food factory that runs shift work. They operate one shift five days a week. So yeah, you're storing some energy and you got more energy on Monday than you did on Friday afternoon. The short answer is we lose about 2%, 2.5% per day. So if you were holding energy multiple days, there would be self discharge. But that's because we were designing for a particular use case. Again, you could decide the rate at which your thermos loses heat by if you wrap it in a blanket ... you could make it store energy for months on end.Then the question is, is that valuable? If you really want to store energy for months on end? If you want to move energy from July to January, chemical storage is a great thing because it doesn't have self discharge.David RobertsRight.John O'DonnellIf you are in a place where you can have a salt cavern and you can make hydrogen in July and pull out in January, okay, that's great.David RobertsRight? Because the hydrogen you pull out in January contains the exact same amount of energy ...John O'DonnellExactly.David Roberts... as you put in the hydrogen.John O'DonnellAs long as it didn't leak out. But yes.David RobertsSo in the hours today's, maybe multiple days, rarely a week time horizon that you're working in, you're getting 98% efficiency. 98% of the energy that goes in comes back out to the application.John O'DonnellYes. In that use case. That's right.David RobertsI think now that we're focused in here on the heat battery, let's just discuss what the Rondo heat battery is, and maybe while you're telling us, tell us what some of the other options in this space are. I know people are heating up. You're heating up bricks. Some people are heating up giant chunks of graphite. I think sand is on the table. I don't even know what all the options are. But what are people trying in that space?John O'DonnellThe one technology that's been at scale for quite a while, that's been used by the solar industry since the 1980s is using nitrate salts, which melt at around 250 degrees. Salts? That's right. They're stable up to about 600°C. And so you can have a big tank of cold salt, which is something like 600 degrees Fahrenheit. It looks like a transparent liquid, but stay away from it. And a tank of hot salt, and you heat by pumping from one to the other and pull the heat out going the other way. I built my first molten salt test facility back in 2008 at a national lab.David RobertsI remember there was a hype cycle around molten salts that has kind of faded. Why has it faded? Like, why are rocks preferable?John O'DonnellThe more you know about it, the less you like it. It's one thing to use it in a solar power station where there's nothing in there for a mile away except for the turbine. It's quite another thing for an energy storage facility to be put inside a factory where people are working. When I mentioned safety first, you don't want a system that can catch fire or spill a superheated liquid that would burn everybody or release toxic gases. I'm not aware of any molten salt projects that haven't sent at least one person to the hospital. So there's the molten salt systems.And again, they work. They're proven but they have proven challenges.David RobertsThey just require a lot of engineering to contain.John O'DonnellWell, and that's another matter that you've talked about previously, which technologies get cheap, right? Molten salt systems are a lot like they have the nuclear reactor characteristic that everyone is bespoke, those tanks at that site with that engineering and there has not been much learning capable to drive cost out. The modular approach, the factory manufactured approach, eludes that technology. Now there are a lot of people exploring how do we do modular factory manage. And one of the things that you first do if you want to store heat is, okay, what's it cheap to store heat in?As you mentioned stone, crushed rock, various kinds of rocks in a box or sand in a cylinder where you build an industrial strength hairdryer. You blow superheated air through the rock or the sand bed. And then when you want heat, you push cool air the other way through the sand or the rock bed. That works. There are people taking it to scale. It has temperature and cost challenges. What you find in every one of these cases, the rock is cheap, but the box costs a lot.David RobertsAnd the fans, I assume like the fans and that kind of engineering adds to the ...John O'DonnellThat's right. And remember now that your fan has to blow at your peak charging rate. And there's an example of a technology that leads you to it's more expensive to charge fast. But the big problem with those unstructured materials is when they heat up, they expand and you have to have a container strong enough and then when they cool, they shrink and settle and then the next day they expand again and they slowly turn into dust over at a rate. So the material looks really cheap, but the system turns out to be not so cheap.Right then you mentioned there are a lot of interesting science experiments with new materials that have never been used this way before. When we started Rondo, we did a really careful look at everything that's out there. There are people using liquid silicon. It melts at 14° Celsius stores a lot of heat. Just like ice melting in a glass absorbs a lot of heat melting and releasing silicon. Freezing silicon is a really good thing for high temperature heat. But what do you make the glass that's holding that silicon-ice? How do you keep it like there are a lot of challenges that companies have been working on for years and it's probably going to take another decade before that technology is at the point that an ordinary project finance guy will say, yes, that's as low risk as PV. I'll invest in that at the same finance rate. And that time to bank ability is one of the biggest issues. If you want a technology to go big fast, everybody's got to agree it's boring and low risk and that's a challenge with new materials. Graphite is another material that's interesting. It has higher heat capacity than rock or brick, especially when it gets hot, but it catches fire at 560°C. So you want to store energy at 1500° or 2000°.You've got to keep it in some atmosphere so that it can't catch fire for 30 years and it's conductive electrically, which could be great. But anyway, there are interesting engineering challenges and there are at least four companies working on that. One of them is also looking at using that graphite not for electricity to heat, but electricity to heat to electricity. Using PV cells to capture the light from the graphite.David RobertsIs that Indora?John O'DonnellAntora.David RobertsAntora. Yeah, I talked to them, too. And in terms of like science-fiction geeky fun, that one is just a great one. They heat the graphite up, it gets so hot that the energy comes back out as light.John O'DonnellLight.David RobertsSo they have it covered in shutters that they can open incrementally. And the light can either shine on tubes full of fluid if you want heat, or these special PV modules that they built especially for it. If you want electricity, like the whole conceptually, that's very satisfying.John O'DonnellIt's super cool. My first job was infusion power, where you have a reactor that wants 100 million degree plasma right next to a superconducting magnet that has to be five degrees. The Antora PV challenge when they solve that that technology is cool for electricity to electricity because it could turn out to be long duration, no moving parts storage. It's hard for us to see that. That's an example of we're going to do something deeply innovative. How long will it take to prove that it's bankable and what we're doing is much more boring? The back to electricity is their superpower is back to electricity.David RobertsYeah, I want to discuss that. Like the ability to go back to electricity and what, you'll come to that. We'll get to that. But you guys have settled on rather than any of these materials science fun time experiments. Bricks.John O'DonnellYeah. Okay. Somebody told me this the other day. How many gigawatts of batteries are there in the world right now, do you know?David RobertsI don't.John O'DonnellSomebody told me there are about three gigawatts of batteries in the world right now.David RobertsLithium-ion batteries, you mean?John O'DonnellYeah. So how much heat storage is running in the world right now? As we speak, there's about 30 gigawatts of heat storage running right now. In 1828 was the first patent for a thing called a cowper stove, which is a tower with a thousand tons of brick in it that has air passages that on a 1 hour cycle. The still combusting exhaust of the blast furnace is blown down through that tower and heats all the brick to about 1500°C. And then for about 20 minutes, fresh air is drawn up through the tower and it's providing the inlet air to the furnace and it's delivering 115 megawatts heat for about 20 minutes.David RobertsCrazy.John O'DonnellAnd then it's heated again. These. Things are heated and cooled 24 times a day. They last 30 years. There's a million tons of that brick in service right now at the blast furnaces around the world.David RobertsAnd these are just ordinary brick-bricks that people are familiar with. Like, what are bricks made of?John O'DonnellWhat, are they the term they use? Yeah, there are a bunch of different materials, but two of the most abundant elements in Earth's crust are silicon and aluminum. Silica, silicon dioxide, alumina, aluminum oxide are two of the most important minerals. Different bricks are made of different mixtures of silica and alumina. And there are other kinds of bricks as well that are even higher temperature, but they call it aluminosilicate brick. It's higher temperature brick than in your fireplace. Looks a lot like it. And it's what is in every if you have a ceramics kiln, that's what's in your ceramics kiln liner.It's in a cement kiln, and it's again, used in all kinds of areas. People have been making brick like this for thousands of years. Brick is made from dirt. I mean, certain kinds of dirt. You mix it up, you put a little binder, you throw it in a kiln, and you've got your brick.David RobertsSo if I'm looking inside a Rondo box, am I literally just looking at a stack of bricks?John O'DonnellPretty much. The one thing that's different ... our breakthrough. So the brick, as you know about brick, it's brittle. If you drop a brick, it'll break.David RobertsRight.John O'DonnellYou also know that brick is not a good heat conductor. That's why we make fireplaces out of it. So if we want to heat it fast, we have to heat it uniformly. If you stuck a brick and you had, like, one side in a bucket of water and the other side in a fire, the brick might fracture. But if you put the brick in the middle of the fire, it'll heat up rapidly to the temperature of the fire. It's one of those ideas that once you see it, it's obvious. But it only took 80 design revisions.If you look inside a Rondo unit, what you'll see is a brick stack that's full of these open chambers. It's a checkerboard of open boxes surrounded by brick, and brick surrounded by these open boxes. And electrical heaters are embedded directly in the stack, and they provide radiant heat within those open boxes. And because thermal radiation of every object in the universe goes as the fourth power of its temperature in degrees Kelvin, as I know you remember.David RobertsOf course.John O'DonnellThings that can see each other get to become the same temperature by exchanging heat. So the result of this was we found a way to directly, rapidly heat the brick.David RobertsAnd this is an alternative to blowing hot air over the bricks.John O'DonnellThat's right.David RobertsWhich, a. would require more engineering and more money, but b. also might not heat them uniformly, like might heat one side before the other side or something like that.John O'DonnellHot air. You can heat them uniformly, like the blast furnaces do that. But in that case, you have the same electrical heater that's in something like a hairdryer. And inside a hairdryer, the heaters are mostly radiating to the metal plates, which in turn are heating the air, which in turn would in this case, heat the brick. There'd be a couple of hundred degrees difference between the final temperature of the brick and the temperature of the wire. In our case, that's about five degrees.David RobertsSo instead of using the wire to heat the air, to heat the brick, you're just sticking the wire in the brick, and the wire is heating the brick directly.John O'DonnellThat's right. So we just last week, we announced the world's highest temperature thermal energy storage system running. That's not because we use different heating materials than others. It's because of that physics insight that led to that structure. That's right.David RobertsGot it. Okay, just quickly, what are some of the engineering challenges here? Do the bricks expand and contract when they are heated, or do they degrade over time? What sort of things are you dealing with here with bricks that you had to overcome?John O'DonnellYeah, there were lots of things because what we're talking about is kind of at some level obvious, and people have done really good work on this previously. But the challenge is you have to think about, yes, the bricks expand and contract, so build your structure. But the nice thing is they're freestanding. They don't need a container to hold them in. So if you build your structure properly, it can freely expand and contract.David RobertsSo there are like spaces between the bricks in which they can ...Where they're touching when they're hot and spaces open up when it's cold. Exactly. Other big challenges consider if you have a storage system and one area has some airflow blockage so that during discharge, it's not getting as cool as another area the next day when you put heat in, it's going to wind up hotter than another area. And the day after that, even hotter thermal runaway that would cause failure because one part was too hot. If you have that possibility, you have to run the whole thing cooler. So it turns out one of the hard problems, one of the hard engineering problems is making sure that the temperature inside the material is uniform.John O'DonnellAnd it's uniform not just when the unit is new, but when it's 30 years old.David RobertsYour promise here is that this Rondo battery has the same capacity and the same performance characteristics in 30 years that it does today. Is that the idea?John O'DonnellThat's exactly right, yeah.David RobertsAnd no other battery? There's no other battery that can say that.John O'DonnellI think that's true. But here, there's a million tons of this material running in the world, and those guys have much higher mechanical force on it. They build 30 meters tall things. We build eight meter tall things. They heat and cool it 24 times a day. We heat and cool it once a day. Lasts 30 years for them. Pretty clear it's going to last longer than that for us. Yeah.David RobertsAnd let me ask about getting the heat out to where it needs to go, because as I have been reading about, I did a thing on a company a while back that was using concentrating solar to superheat a fluid. And they could get to these levels of heat that are germane to concrete and whatever the higher end, the higher temperature applications, but only at a particular spot. Right. It's got to be right where the sun is and where everything's coming together in that one spot. And then, of course, you face the challenge of how do I get that heat to where it needs to be without losing a bunch of the heat?And this is sort of, obviously the other half of the thermal energy challenge. And there's sort of two challenges. One is making it into steam right. For all these lower temperature applications, and then, I don't know, making it into what, for the steel or the super high energy. I don't even know how you transfer that high version of heat. So what are you using on the back end?John O'DonnellYeah. So every combined cycle power station in the world has a jet engine that's generating electric power. Its exhaust is around 605 C. That exhaust is passed through a boiler, a heat recovery steam generator that drives a steam turbine that makes extra electric power. So the world knows how to build those boilers that run on about 600 C air.David RobertsGot it.John O'DonnellThe Rondo storage is much hotter temperature than that we mix down. And for the systems that are delivering steam, we work with leaders who build conventional boilers and we've engineered the heat battery to include that boiler. So the basic heat battery models are exact drop in replacements for particular models of industrial boilers. They're just about the same size. Stick us next to your existing one, hook us up to the pipe.David RobertsYou're replacing a fossil fuel run boiler with a heat battery and a boiler in the same space.John O'DonnellYeah. We think of the heat battery as from the substation to the steam flange in that case. So it is a like for like drop in replacement. The less work the customer has to do, the better off we are.David RobertsYeah, I was going to ask it. We might as well discuss this now, because this is obviously one of the this is something you run into with battery chemistries all the time. Right. Which is just like there's so much existing infrastructure that even if you have something clever and fancy and new that's super cheap, if it requires all the facilities to update themselves, you're just starting way, way behind the eight ball.John O'DonnellThat's right.David RobertsSo to what extent is the sort of Rondo heat battery plug and play like in a low temperature steam application and like a steel plant, can you wander into any of these and just switch out with no pause.John O'DonnellAll of the energy. So the top four categories in the United States, the Doe just gave a talk recently and the top four categories in descending order of industrial heat use are chemicals, food and beverage, paper products (That includes everything from toilet paper to cardboard,) then cement, and then steel. So for chemicals, about a third to 50% of all the heat is steam. For food and bev and paper products, it's all steam. And for cement and steel, none of it is steam. So we are simultaneously, we're delivering drop in boilers today and simultaneously with our investors and partners building and developing the calciners, the ethylene crackers, the kilns, to drive particular industrial processes.Because you made this point about the solar tower. Yeah, you have a spot that's 100 meters up in the air where you can have your heat. But what we want, the heat is in some process unit. And look, we have 200 years of designing industrial process units that are powered by fuel. Which of those can we retrofit? Where will we need to design new things? We were given a grant by the Danish government. We have a project underway to design and pilot a true-zero cement process, intermittent electricity to zero-emission cement. Most of the work in that project is the design of a calciner that instead of internal combustion, runs on superheated air or superheated CO2.So it doesn't all happen all at once, but it does all happen, but some of it will. The high temperature things will take more work to integrate because industrial plants today were designed with magnificent engineering and heat balance and efficiency burning fuel. And so, as it happens, everything that runs on steam, easy drop in all the high temperature processes. We have work underway now and hope to have results over the next couple of years that use the same thermal storage platform.David RobertsBut this first commercial battery that you've deployed now, which by the way was just last week, I think, what application is that or what temperature level is that?John O'DonnellYeah, that's targeting steam, steam, steam, steam and steam. The particular installation is at a fuel producer and it's at a biofuel producer. Whether you're making renewable diesel from soybeans or animal fat or ethanol from corn, about half the total carbon intensity of that fuel is fossil fuel that was burned to produce that biofuel. And we can set that to zero. So we can produce biofuels that are about half the carbon intensity of what they are today. Interesting, our customer is really a visionary that's going to zero because the other thing that's been talked about a lot with biofuels is combining carbon capture of the biogenic CO2 in those facilities.As it happens, using Rondo for the heat eliminates about half the total carbon intensity using carbon capture, eliminates about the other half and together you get about essentially a zero-CI, zero-carbon-intensity fuel. That little unit we just started up is the pilot for deployment of a series of larger ones to do exactly that, to produce zero carbon biofuel.David RobertsVery interesting. So let's pull the lens back a little bit, maybe talk about business model. Is the idea long term that if I'm say I'm a manufacturing facility and I'm making I don't know what baby food, is the idea that I buy a Rondo unit and install it in my factory? Or is the idea that Rondo comes in, sets things up and sells me heat as a service? In other words, am I buying the equipment or am I buying the heat? Or some of both.John O'DonnellYeah. Over time, there are as many answers to that question as there are to how conventional gas turbines and steam turbines are sold. Right. Sometimes people own their own cogeneration plant. Sometimes they contract with someone else to provide them electricity or heat as a service. The renewable heat as a service business will develop the same way. In the United States today, there's a huge community of developers who know how to shave a few pennies off solar and wind electrons, but have never really looked at these industrial facilities. In Europe, actually, there are already renewable developers who are out there originating renewable industrial heat projects.So, first of all, Rondo is offering, on four continents, commissioned, guaranteed installed heat batteries. That's the foundation. We are also originating and financing heat as a service, principally in North America.Interesting.Because, again, whether you make baby food, as you said, or steel, you don't drill gas wells to get the fuel to run your process. You buy energy as a service, your capital dollars, most folks want to spend it on their own processes. And this class, this thermal energy storage class, is arguably creating one of the great business opportunities of our time for the development community, because we all know wind and solar deployment is slowing down, not because of reduced demand, but because of congestion.And I think the interconnection queue time in England is now 13 years.David RobertsYes, there's like a terawatt now, I think, waiting in the queues.John O'DonnellRight. Rondo heat batteries. Our basic unit, the RHB 300, needs 70 megawatts of generation. Typical installations may have two to ten at a single site. These are utility scale energy demand and they can be built with no grid connection.David RobertsRight. So the idea is you go build a solar farm or a wind farm that is just attached to these batteries.John O'DonnellThat's right.David RobertsAnd then you're selling the heat from the batteries. So at no point do you need the electricity grid. You're not waiting for the interconnection or anything else, that these are a coupled unit. Wind and solar being so cheap, the implications are endless and often counterintuitive. Like when I hear I could either buy heat from a conventional boiler or I could buy heat from someone who had to go out and build an entire utility scale renewable energy installation and a couple of heat batteries. Intuitively, that just sounds more expensive. But are wind and solar so cheap now that that's competitive?John O'DonnellYes, absolutely. And it depends, right, because one of the things that's exactly the right matter that you just raised someone is making an investment that's going to provide 40 years of energy to your facility. They're going to sell it to you on a contract, they're going to care about your credit worthiness and your willingness to sign that contract. That's one of the things that's unique here. It's different than selling electricity to a utility. On the other hand, from your standpoint, someone is saying you can get off the fossil fuel price roller coaster. Not surprisingly, there are a lot of people in Europe who ... and we've seen that in US.Prices have been fourteen, they've been two, they're ten. And they are also in places that have carbon prices. You can have a permanent. This lack of volatility and exposure to regulatory matters also is a strategic advantage. A friend of mine said, why were all the factories in England built on the coast? Because where it was cheap to bring the coal, low cost, reliable energy supplies are the foundation for industrial investment.David RobertsSo you're free from fluctuations in fossil fuel prices and you're free from any worry about escalating carbon prices or other carbon related regulations. Basically, like two huge worries because as you say, for a lot of these facilities, the cost of energy is the bulk of the costs. And to have the bulk of your costs fluctuating 500x back and forth over the course of a couple of years is just an insane way to try to run an industrial facility.John O'DonnellThat's right. This matter of what kind of risks do we take? People say, oh, it's risky to work with this new technology, but look at the risks that we just were used to taking. And we're entering this new world where we're not talking about a green premium, we're talking about the same or lower energy cost with these reduced risks. And then, of course, depending on what the commodity is, low carbon aluminum trades at a price premium on the London Metals Exchange. Low carbon fuels trade at much higher prices in California and Germany. And for consumer facing brands, there are buyers, coops of producers who are seeking low cost effective renewable heat sources so they can offer to the market low carbon commodities.David RobertsYeah, I mean, it seems like there ought to be a bunch of market actors that are just ready to embrace this. Like, for one thing, as you say, just on a quantity basis. If you take all that energy that we're using for heat and transfer that to electricity, you need a lot of new electricity and a lot of new clean electricity. So it seems to me like renewable energy developers ought to be over the moon about this, like beating down your door. Are they lining up to be proponents for renewable heat in the industry generally or have they not caught on yet?John O'DonnellIn some places the answer is yes. As I mentioned, Europe is very aggressively moving in this direction and a number of folks over the last few years have said "this Rondo thing sounds too good to be true. Come back to me when you're operating something commercial." We're now operating something commercial. So the short answer to your question is yes, because again, these projects offer this mix of speed and certainty that we're not tied up in a grid queue. Scale, utility scale, there's a lot of commercial industrial C&I Solar, where people are building 2 MW here, 2 MW there.It takes the same amount of brain power and lawyer time to do the two megawatt project versus the 400 megawatt project that the same facility would use for heat, and returns now that we're in an era where that's the coolest thing is that the numbers work for the heat user, they work for the financier, they work for the builders of the solar fields and they work for us. And that's a new world and economic tailwinds driving it. It will keep going faster and faster. The size you mentioned, I think at the end of 2021, there was about 1000 gigawatts of wind and 1000 gigawatts of solar each in the world.The IEA did an assessment of industrial heat and their number is it's about 9000 gigawatts of new generation that's going to be required to replace the oil, coal and natural gas now being burned.David RobertsGood grief.John O'DonnellThat's worldwide, right? And so it's only, what is it, 20% of that in the US. Yeah, that's right. It's only a few thousand gigawatts in the US.David RobertsAn enormous opportunity to build more renewable energy.John O'DonnellYeah.David RobertsA similar question is, and I have always had this question about electric vehicles too, which is electric utilities are sort of notoriously stressed, worried about this death spiral, they're worried about grid defection. And you represent potentially just a wild new load, a new responsibility for them. Something that natural gas utilities were doing, were handling, is now all going to transfer and be their responsibility, which is just a way for them to grow and invest and just a wild new opportunity for them. Why aren't they at the front of the line beating down the door, trying to make this happen faster?John O'DonnellThat's a great question, and they are. One of our investors is Energy Impact Partners, whose backers are the North American electric power industry. And for sure the lowest cost way that we're going to decarbonize all of civilization is electrification. And for sure the electric industry is at the heart of that. One of the things that's really profound about what we're doing for them is that electrification, you install an electric furnace. That furnace is now running on wind power 30% of the hours of the year. And the other 70%, it's a new load on gas fired or coal fired power stations until the grid has fully decarbonized.David RobertsRight.John O'DonnellThese thermal storage systems, these things can be dispatched by the utility the same way they dispatch generation. The deal is not that I want a megawatt continuously, the deal is I want 24 megawatt hours today. You deliver them when it's convenient. These things become an asset in the electricity grid and a solution to these problems of variability and over generation and balancing.David RobertsRight. In the same way that sort of any controllable load helps grid stability. These are controllable.John O'DonnellYeah, but people talk about controllable load, demand response, for example, is a load that you expect to run all the time, but you can turn it off during emergencies. That's not this, this is something that no, no, you're going to dispatch it so that it never takes a single megawatt hour of spinning reserve or gas fired power generation. You're going to dispatch it so that it never raises the peak demand on your transmission or distribution system. You can manage it with telemetry from the grid operator. It's different than anything that's come before. It's like lithium-ion batteries in that sense, but at a tiny fraction of the cost.And we're not trying to solve from moving electric power from noon to 07:00 p.m.David RobertsRight.John O'DonnellWe are taking that electric power and replacing gas combustion principally in North America, and oil and coal combustion. We're opening an entirely new segment to renewable deployment. So, yeah, the electric utilities are getting engaged now. They face all kinds of issues with the regulatory frame that we have for electricity. Of course, they're already facing those matters as renewables deploy. And there are some new challenges, but there are people actively working that issue and we're thrilled to be working with them.David RobertsSo if I'm, I've got this manufacturing facility, I've got a big Rondo battery and I'm trying to decide between two options. One is I could build my own off-grid behind the meter generation, solar and wind. I could put my own solar and wind up, or I could just get on the grid and time my charging so that I'm chasing the clean energy on the grid so that I'm only charging when there's clean energy on the grid. Do we have any sense of which of those will be more economic or why you'd want to go one way rather than the other?I'm just wondering how many of these sort of self contained, off-grid, purpose built renewable energy installations there are going to be, it seems to me intuitively like that ought to be more expensive and what you ought to prefer is just for the grid itself to clean up so you have more, so it's easier. But what are the choices there?John O'DonnellThese questions are right at the heart of the matter. You're dead on. And I'll give you the long answer. The short answer is it depends. And it depends primarily on where you are. Pre-war economics, one project in Europe, large operation, that wanted to replace a 250 megawatt gas boiler. They could install a 250 megawatt electric boiler and eliminate their scope one. Their actual scope one, plus scope two would go up because they're in an area that's about 40% wind. And now, if 60% of the energy is coming from a coal plant, you were worse off.But from an economic standpoint, they were paying $35 a megawatt hour for gas fired heat. The electricity price annually would have been about €68 sorry. Per megawatt hour. But upon a study, given the presence of offshore wind in that area, their expected energy price on a long term buying in the cheapest 4 hours a day was under €10 a megawatt hour. So that's an example where the grid connected thing is exactly right, and it will only take four years to get the grid upgrade done, of which about three months is construction. So in a lot of places, the grid connection for grid projects is a matter.Oklahoma last year had 2000 hours of negative wholesale prices. If you put a project in Kansas or Oklahoma, you have energy prices that are slightly negative on an annual basis. If you can charge very rapidly, if you are allowed to participate in the wholesale market, there are regulatory obstacles.David RobertsBut in theory, in Oklahoma, during a time of negative wholesale prices, your facility that's running off a Rondo heat battery could be paid to charge itself.John O'DonnellThat's right.David RobertsIs that how that works? Is that what negative prices means?John O'DonnellThat's what negative prices means.David RobertsThat's so mind-blowing.John O'DonnellWell, again, and we have lots more of that coming. I know you've spoken to folks about the IRA. The production tax credit coming to solar is going to broaden the areas of the country where we see intermittent negative prices. Because, of course, if I'm getting $20 megawatt hour for tax credit, I'm perfectly happy to generate when prices are negative $19, right?David RobertsYeah. That's just crazy.John O'DonnellTechnologies like this that can absorb those periods are going to lift the price floor. They're going to benefit all the generators, especially the generators that can't turn off. And we're pretty excited. But again, it's can we connect to the grid? Can we capture those prices?David RobertsBecause if you can, there's enough heat to absorb all the curtailed power in the US, times a gazillion. Theoretically, if you could hook up all heat to electricity, you'd never curtail again, or at least not for decades. Probably.John O'DonnellOf course, subject to where is the heat-load versus where is the curtailment? Some curtailment is regional associated with total generation. You know, some of it is transmission constrained. But to a first approximation of the answer yet, that was correct, yes?David RobertsYeah, that again, seems just a crazy business opportunity for everyone involved.John O'DonnellYeah, we agree.David RobertsBut you do expect to see these off grid, custom built renewable energy installations, purely powering heat batteries in areas, say, where the grid is congested, or the grid is dirty or the interconnection queue is unusually long. You do expect to see those pop up?John O'DonnellWell, as I mentioned earlier, and just for scale, California has on the order of 20 gigawatts today. We need 100 gigawatts of new PV just to replace the BTUs of fuel now being burned for industrial heat. About 40 of those gigawatts, because of where the things are cited, could be built with no grid connection at all. And most of them will need some kind of grid connection. We see again and again that the new renewable project development model is going to be building a project that part of its electricity goes to industrial heat, into a heat battery, and part of it goes to the grid.And that, that's the sweet spot that delivers lower cost electricity to the grid. And we're absorbing what would have been curtailed power from that new purpose built thing to get all the power we need for the factory or the cement kiln or whatever.David RobertsRight. Yeah, if I'm a renewable developer and I catch wind, that there's this whole category of renewable projects that don't require this unholy paperwork nightmare that they all go through. Now again, I just can't imagine that they're not going to be stampeding in this direction. I mean, I hear them complain about this constantly.John O'DonnellWhat are the required conditions? Obviously the financial community we have to get our minds around. Okay, how are we structuring these projects where most of the energy is going to a single factory rather than to the utility? Let me think about the credit worthiness of that. And then for the moment, how long will it take to retire the Rondo technology risk? How do we backstop that? And we're busy building systems and projects that this first one of course, is the first step at commercial scale to build the track record. But again, there's a reason why we chose these century proven materials specifically, so that once you turn one of these things on and operate for six months, there's nothing left to prove.We know it works and we already know everything is durable.David RobertsThe brick heats up, the brick cools down. It's not again, it's so simple.And exact ... but that exact material, there's a million tons of doing that around the world. Doing that right now in much more severe service. But yes, it's simple. That's right.And I would imagine also that this space is going to see a lot more entrance competition. Of course, once it's kind of uncorked and it becomes clear what the opportunity is.John O'DonnellLook, trillion dollar markets don't happen without lots of people trying to enter them and nothing could be better, right? That's what we urgently need.David RobertsRight. One other question about industry, about location matters. You mentioned industry clustering along a coast where the coal is available. As more and more of our industrial activity in general and civilization gets hooked up to cheap renewable energy. Do you see something like over the course of I mean, I guess this will take years and decades, but do you imagine areas of intense renewable capacity like with lots of sun and lots of wind becoming new attractors to industry? Do you see global industry starting to migrate to renewable energy? Is it that much of a chunk of the cost of an industrial facility that it might be worth someday literally moving to it?John O'DonnellThe short answer to your question is yes. Just look at what happened with the shale gas revolution in the US. Vast investments in petrochemical and other manufacturing immediately shifted to where huge employment growth shifted to where that low cost energy was. And there's a question of how fast these transitions happen. Vasila Smill likes to talk about, "oh, it takes a really long time," but there are lots of examples where that is not true. Just, again, when the rules changed and combined cycle gas fired power generation was allowed in the US. We saw giant capital flows and giant rates of transformation.Now, that took awareness. It took enough experience that investors could say, oh yeah, I'll build that giga project because I know it's going to work. It took awareness of the kind that you are building that these opportunities exist, but the long term. Yes, absolutely. That's right.David RobertsThat'll be such an interesting geopolitical like of all the forces in the last 50 years or whatever that have moved industry around the globe, this will be just a completely new version of that. It's going to scramble all the previous alliances.John O'DonnellYeah, but there is one example that's even faster, which is not just the long term, but the right now. A couple of weeks ago, I spoke at the Munich Security Conference in a session with a number of industry CEOs and Ursula von der Leyen, the European Commission president and president. Wevine said, look, there are three wars underway. There's the ground war, there's the energy war. He thought he would bring us to our knees. And there's a clean energy war, mostly with China. And a huge challenge before us today is how do we get off gas? But we need to get off gas without deindustrializing.There have already been giant plant shutdowns and layoffs because of the unavailability of gas right now and the forecast unavailability of gas longer term. Europe's bullets in the energy war are clean electrons, domestically produced, stable, low cost sources of energy. And again, we and all the other electric thermal storage technologies because we save twice as much gas per kilowatt hour as hydrogen. We're an important part of speeding up that transition there and preserving an existing industrial base. I think the same thing is true in the US as well as carbon prices come into the world. As gas prices rise, the competitiveness of US manufacturing on the world stage is going to be affected by how fast can we make this transition to renewables.And it doesn't happen all at once. But there are beyond the climate drivers, beyond the huge business response that we've just seen in the last five years, to the climate drivers, the pledges, and not just pledges, but action that we're seeing across all kinds of industrial producers. We are really at an amazing moment. I kind of wish we had gotten started with what we're doing here at Rondo five years ago. But five years ago what we were doing was stupid, right?I mean, go back ten. What we're doing somebody could have figured out earlier.David RobertsI said it at the outset, I'll say it again, I say it over and over again. Wind and solar being as much cheaper now as they were five to ten years ago is just like it's not an incremental change, it's a phase change. It's a flip to a different system. All we're doing now is just like sort of one at a time here and there in different industries, in different places, kind of opening our eyes to like, oh, this is a completely different landscape, like completely new opportunities. It's a different world now. It's going to take a while just to absorb the implications of super cheap renewables.John O'DonnellYes. And the thing we know for sure is that every year somehow those cost reductions will continue, right? We have some short term supply chain things, but somehow, I mean, I worked in the electronics industry for decades and everybody every year said, oh, Moore's Law is over, it can't keep getting better.David RobertsThey say it every year for wind and solar too, right?John O'DonnellYeah, exactly. And you look back over every five year period, every year's forecast was wrong, it fell faster than that. It's reasonable to assume we're going to continue to be in that, so that this era that we're entering, it keeps getting better and better. Our storage technology and the other storage technologies will cost reduce as they come down. But the storage technology is only 20% of the cost of the total project. The fact that the wind and solar are coming down so steeply, this cost advantage is going to continue to open for the people who have made this transition onto renewables.David RobertsIt's really interesting watching people in industry try to sort of skate to where the puck is going to be, as they say, sort of like start off on something that might not be economic when you first start developing it, but you're going to meet that cost curve, right, in five years, and then your business model will become viable. It's a real tricky timing there. There's a lot of people trying to sort of coordinate that dance just right.John O'DonnellYes, but my point is we're already at that point where we're at break even or better, we're not waiting five years. That's one of the big difference of this class versus there are a lot of things that are just as you said, we're investing now because we're hope it's going to be cheaper in the future.David RobertsWe're already at that point, right, so a final question. I wanted to ask you a little bit more about this, but maybe we can try to do it quick, which is just you've got these things that store electricity as heat, fairly cheaply for a long time, with very low losses. The applications you're overwhelmingly focused on are industrial, because as we've discussed, industrial heat is huge, difficult to decarbonize, giant market opportunity. But I'm just wondering, it seems like there are probably other uses that we could think of for boxes of heat. Are you actively pursuing any or alternatively, like, do you see any out there over the horizon that you might get to eventually?What else could we do with heat batteries?John O'DonnellThere are two big things we've been pulled into that. If you'd asked me a couple of years ago, I would have said, oh, that's going to happen much later. One of them is industrial Cogeneration. PURPA back in the 1980s established special tariffs for Cogens because it's the most thermodynamically efficient way of delivering electric power and heat. Repowering Cogens with renewable heat makes them more efficient. A unit that delivers industrial steam and electric power is 95% efficient. It's more efficient than any lithium-ion battery, although it's only delivering about 20 or 25% of its energy as electricity, and the rest is heat.Almost every industrial Cogen, the industrial needs so much heat that that Cogen is exporting power to the grid as a side effect of delivering all that steam. So, renewable cogeneration, or they also call it combined heat and power, is an area that we see distributed generation. 20 MW here, 50 there, ten there. That is decarbonizing small industries, but providing baseload distributed high value generation to the grid.David RobertsBriefly, what does that look like, though? What is a cogen? Because cogen, just for listeners maybe, who aren't familiar, you're using a turbine to generate electricity and then you use the excess heat from the turbine ...John O'DonnellThat's right.David RobertsFor whatever you need. So what does it look like in this case?John O'DonnellYou said it exactly right. Instead of throwing the heat away into a condenser, you are using that heat as medium pressure steam, making tomato paste or paper or chemicals or any of the things. And so you have a facility that the heat battery, or today, a natural gas boiler makes high pressure steam, goes through a turbine, medium pressure steam goes to the factory and electricity comes out from the turbine. Exactly the same thing. Now you've got a heat battery making high pressure steam and driving combined heat and power. So really it's 95% efficient. Electricity in to heat and electricity out and you are exporting back to the grid.So that's one. The other has been a surprise. Again, it's something I would have said we wouldn't be engaged in. I think just today there was the announcement that the latest EPA rule is going to cause another 15 gigawatts of coal retirements. Coal-fired power stations people think of as about 40% efficient. That's about right. But that's about an 85% efficient boiler, times a 47% efficient turbine, minus the loads associated with air pollution cleanup.David RobertsRight. All the filters and whatnot.Keep the turbine, knock down the boiler, make that a giant long duration electricity storage. That's now in one of those places where there was negative prices, you have anchors for development. We have several projects where developers are looking at these conversions as enabling the construction of a huge renewables cluster, sometimes an offshore wind landing point, or onshore wind development. And right there, reusing one of those things.So this would look like, say, a bunch of offshore wind turbines generate electricity. They generate excess. The excess is stored in a heat battery, and then that heat battery is used to run an existing turbine.John O'DonnellThat's right.David RobertsLike at a coal plant to produce power. It would just be a dispatchable. It would be like a peaker plant.John O'DonnellHowever you want to use it. That's right. Whether you want to use that to take intermittent and now get to base load underneath the intermittent. But it's an electricity storage approach that reuses all the infrastructure, including the turbine. It is lower efficiency than electrochemical batteries. It's far lower cost. Those are large projects. I'd say that's the other one that's a little longer term out the cogeneration, though, the combined heat and power is more efficient than any other electricity storage technology. Right. More efficient. So I think those things will happen first, and we'll see about both of them.David RobertsIf I'm repowering a coal plant turbine, that electricity to heat to electricity conversion is lower efficiency than what I would get from electricity to lithium-ion battery to electricity.John O'DonnellThat's right. But the coal turbine provides other services, like inertia that are needed to make the grid work.David RobertsAnd it's already there.John O'DonnellIt's already there. It's already operating. There's. The first of these conversions using molten salt. That's underway right now in Chile.David RobertsInteresting.John O'DonnellAES announced a project recently that had been in development for a long time. We're very interested to see how fast that sector moves. And all of our focus is on the industrial side. But as I said, we've been pulled into some of these projects.David RobertsYeah, that's interesting. There's a lot of talk from a lot of different directions about repowering these turbines, these existing turbines that exist. I know the geothermal people are big into that idea, but it just does make intuitive sense. Like, you have all these quite sophisticated and expensive turbines built all over the place. Why not just go take out boilers and use renewable heat instead? To power them and then sort of like open your eyes, you're like, oh, we're like we're surrounded with turbines.John O'DonnellYes. But this brings us back to one of the little laws of physics about temperature. The higher the temperature of heat, the more efficiently it can be converted to electricity. Those coal plants use burning coal. Geothermal systems make heat at lower temperatures. They can't directly because we're the highest temperature storage. We're the only one today that can repower those coal plants at higher than their original efficiency.David RobertsIs that, no limit?John O'DonnellNo, it's removing the losses from the boiler and removing the losses from the station load. So basically, it's getting the net power efficiency much closer to the gross and leaving the gross unchanged.David RobertsInteresting.John O'DonnellPardon me, diving in too deep. But there's very interesting synergy with other lower temperature heat, with waste heat recapture and with geothermal heat, where some of our customers are showing us stuff, where they're combining high temperature heat from storage and recapturing some lower temperature heat. And it's going to be very interesting to see how that develops.In terms of innovation for Rondo itself. And I promise this really will be the last question. I'm just wondering, brick is simple and the whole system is simple. As we've been saying, that's part of the that's part of the delight of it. But I'm wondering, where are opportunities for big innovation? Do you have materials science? Is it within reach to heat bricks up hotter than you've got them to get up to the full, whatever 1500°C or whatever insane super hot? What's the innovation horizon for you?Well, the driver for us, first of all, is speed, speed and speed to scale.David RobertsRight?John O'DonnellWe're manufacturing in two locations now. A lot of our material science will be driven by qualifying other sources of materials. We've produced now on three continents, little pilot scale things. So one chunk of material science is about just getting this 2 million ton a year scale. The company formal goals are 1% of world CO2 in a decade and 15% in 15 years. And there are no material blockers to doing that. It's okay. Did we execute properly? Did we find the finance and developer partners? But to your point, the pieces today we're using the most expensive brick materials, the highest temperature, highest strength there will be innovations in simply reducing cost by the system is way overdesigned for reliability as we gain experience.All kinds of cost reductions come from that. But as I mentioned, we have two international cement manufacturers today as investors. We have this project with some Danish universities and a cement plant builder. We're working on high temperature applications where most of the development is the process equipment that will need the heat. And then we'll be taking this core technology and connecting it to those other things. But speed, scale, cost and then temperature and serving these other industries are the priorities.David RobertsThank you so much. For spending all this time with me. As you can tell, I find this particular area so interesting and fascinating. And it will be interesting to come back and talk again. Maybe in two or three years, who knows?John O'DonnellThank you, Dave. It's a real privilege to speak with you. I'm just delighted. Thanks so much.David RobertsThank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf so that I can continue doing this work. Thank you so much. And I'll see you next time. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.volts.wtf/subscribe

What do the US 2022 midterm elections mean for climate and energy policy? To help go through the results, I contacted Whitney Stanco, a senior analyst at Washington Analysis LLC, an independent research firm out of Washington, DC. She has been tracking energy policy for decades and in particular has kept a close watch on the states. With Whitney's help, I walk through the election results, first at the Congressional level and then in the states, and contemplate their implications for energy policy. We pay special attention to the four states where Democrats have new trifectas and the power see their policy preferences made into law. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.volts.wtf/subscribe

BIPOC communities are most likely to bear the effects of climate change, but BIPOC-led environmental justice groups are severely underfunded in climate philanthropy. In this episode, Abdul Dosunmu of the Climate Funders Justice Pledge talks about his group’s aim to challenge big donors to give more equitably.(PDF transcript)(Active transcript)Text transcript:David RobertsWhether it’s suffering the effects of fossil fuel pollution or fighting back against it, black, indigenous, and people of color (BIPOC) are on the front lines of climate change. Yet they are starved for resources. More than a billion dollars a year goes toward climate philanthropy, but of that amount, little more than 1 percent goes to BIPOC-led environmental justice groups.The two-year-old Climate Funders Justice Pledge, run by the Donors of Color Network, is trying to change that. It challenges big donors to a) be more transparent about where their grants are going, and b) within two years of signing the pledge, raise the amount going to BIPOC-led groups to 30 percent.The pledge, featured in a just-released report from Morgan Stanley and the Aspen Institute on how to increase the impact of climate philanthropy, has already led to more than $100 million in annual commitments to BIPOC-led groups.I talked with Abdul Dosunmu, who runs the pledge campaign, about why BIPOC leadership is important to the climate fight, how transparency changes the behavior of foundations, and how to improve the relationship between environmental justice groups and big funders.Alright. Abdul Dosunmu. Welcome to Volts. Thank you so much for coming.Abdul DosunmuThank you so much for having me.David RobertsThis is an interesting topic to me with lots of ins and outs, but let's start with just, I'd like to get a sense of what is the pool of philanthropic money available to climate and environmental organizations? And then how much of that currently is going to EJ groups?Abdul DosunmuThe Morgan Stanley-Aspen report, that we were honored to be part of, and was just released really details a stark challenge in terms of what the author of the report, Randall Kempner, says is both the quantity of climate philanthropy and the quality of climate philanthropy. So, on the quantity side, according to the report, only about 2% of all global philanthropy is focused on climate.David RobertsThat's wild to begin with, honestly.Abdul DosunmuInsanely wild. And what's interesting about that, what's hard to square about that is the fact that if you ask philanthropists how urgent the crisis is, 85% of them say it's extremely urgent. So they're talking one game but walking another game.David RobertsRight.Abdul DosunmuSo, of all global philanthropy, only about 2% is focused on climate. And then of that 2%, only about 1.3% of it is focused on BIPOC-led environmental justice organizations. So if you think about the quantity versus quality framework that Randall has, the Morgan Stanley-Aspen report is really focused on the quantity side of it. The climate funders justice pledge, which I lead, is focused on the quality side of it.David RobertsRight. We'll get to that in just one second. I got a bunch of questions about that, but I just want to in terms of quantity, do we know that 2% that goes to climate related stuff. Do we know what that number is? I don't have any sense of scale at all.David RobertsIs that a billion dollars? A few million?Abdul DosunmuSo our data, and I'm not sure Randall goes into this in the report, but our data is really focused on about 1.3 billion or so of climate funding.David RobertsGot it.Abdul DosunmuSo we're looking at single digit billions. But we also know that in recent years, frankly in recent weeks, that number is steadily escalating as new Climate Funders come onto the scene with last names like Bezos, and Powell, Jobs, and others. And so we really don't have a solid sense of what that new number is.David RobertsRight.Abdul DosunmuBut in terms of the 1.3% number that we focus on at CFJP, we're looking at about 1.34 billion of that which was awarded to National Climate Funders. And of that, only about 1.3% is going to BIPOC-led environmental groups.David RobertsSo that's less than 20 million. Say something in that neighborhood, right?Abdul DosunmuAbsolutely.David RobertsOne other distinction on this is I know that there is giving that gets categorized under EJ activities, which is separate from money actually going to EJ led groups.Abdul DosunmuThat's right. So that's a critical distinction, and you've really just jumped in on the core part of the work that I do. We believe that it's important that EJ work is funded when it is BIPOC-led just as much as it's funded when it's not. And currently what we have is a system where EJ work led by communities of color, conceptualizing communities of color is not funded at the same scale that other work might be funded. And the reality of that is that there are deep consequences because as we often say, the communities that are closest to the problem are closest to the solutions, but they're also the furthest away from the resources.David RobertsSo let's get right into that then. I guess probably a lot of listeners will take this as self-evident, but when you go to big funders, people sitting on big endowments and stuff, and you are trying to make the case that BIPOC-led groups are important to tackling climate change, what's the case? What's the evidence? What do you tell them?Abdul DosunmuWell, we start with a basic concept that says that the climate does not discriminate, people and systems do. And the reason we start there is that we really want to drive them to the data that most of your audience will probably be familiar with around the fact that most frontline communities, the communities that are hit first and worse by the effects of climate change are Black and Brown communities. Most fenceline communities are Black and Brown communities that when it comes to the ways in which this crisis is manifesting itself on the ground and in people's lives, it disproportionately impacts BIPOC communities. So we start there.That if you're actually interested in mitigating the effects of this crisis, by necessity, you would start with BIPOC communities, right? The second piece is if you're actually interested in shifting the systemic landscape that has led to this crisis, you would start with BIPOC communities. And here's what I mean by that. Power differentials in society is what has created the condition for exploitation, extraction, and pollution. It's the power differentials that have created the foundations of this crisis. It's the fact that certain communities have been politically disenfranchised and subjugated and those are also the communities that have been impacted by environmental exploitation and extraction.David RobertsYeah, I feel like this is an important point because sometimes what you hear from, I don't know that they'll say it publicly a lot anymore, but sometimes what you hear in private from climate people is climate is about emissions. And we should attack emissions, right? We should be lowering emissions. And insofar as you are being distracted by other social, like you're mixing your ice cream of peanut butter or whatever, like you're letting your social issues get involved in your emissions issues, you're just going to be less effective at reducing emissions. I think that mindset still has quite a hold on quite a few people.So this point that they're linked is important, I think.Abdul DosunmuYou said. You don't know if people will actually share it publicly. I hear it almost every day.David RobertsSo they still do say it publicly.Abdul DosunmuThey still do say it publicly.David RobertsRight, that there is a sense that you can somehow disconnect the climate crisis from the social and racial inequities that exist in our society, when in fact, the communities that have been the most exploited and the most extracted have been communities that have been denied political voice, right. And they've been BIPOC communities. I often tell the story of a neighborhood in my hometown, Dallas, Texas, called the West Dallas neighborhood. And it's largely Black and Brown, historically has been as a result of housing segregation. And this community was home for 50 years to a lead smelter plant. And this lead smelter plant obviously polluted the environment.Abdul DosunmuIt also poisoned generations of young Black and Brown kids growing up in that community. And it was the political powerlessness of that community, it was the political subjugation of that community that allowed that lead smelter plant to operate with impunity for 50 years. And this is the critical point that we make. It was the rising up of that community. It was the mobilization of that community that ultimately booted that lead smelter plant from the community. And so it's important for us to see that these things are linkedDavid RobertsJust to sort of restate, the whole problem of environmental pollution generally, including climate, is this ability to basically produce waste and impacts that you don't pay for.Abdul DosunmuThat's right.David RobertsBut you can't do that unless there's some community that's disempowered enough that it can't stop you from doing it, right? I mean, the whole setup relies on there being disempowered communities that have no choice but to accept this junk.Abdul DosunmuThat's exactly right. I have a dear friend in the movement, Felicia Davis from HBCU Green Fund, who says we don't just have a climate crisis, we have a power injustice crisis.David RobertsRight. And relatedly, I think, another old piece of conventional wisdom, though, this I think has been changing in recent years. But if you go back I've been doing this for close to 20 years now, and if you go back like 15 years, I think the sort of conventional wisdom was climate is something that educated, affluent, White people worry about because they have the luxury and time to worry about it. And BIPOC communities, vulnerable communities, EJ communities have other things to worry about that are more proximate and more difficult and they don't have time to worry about climate change.And thus those communities are not going to be a big part of a social movement for climate change. And of course, now the data shows that that's wrong, like almost inversely wrong. So what is the level of kind of knowledge and engagement among these communities on the subject of climate change?Abdul DosunmuWell, and this is a key point that I like to make. The first part of that that I would like to deconstruct is this notion that climate is separate from the other issues that impact these communities, right? That in many ways, part of the innovation and the imagination that these communities are bringing to the fight is to recognize the interconnections between climate and housing, climate and labor policy, climate and transportation, right? That they are uniquely positioned to see that climate is connected to a whole range of other systems that decide and define how we live. So that's part of the deconstruction that has to be made.David RobertsAnd you might also say that a White affluent businessman is uniquely positioned to want to not see those interconnections, right? Like there's a lot of incentive not to see them if you benefit from them, basically.Abdul DosunmuRight. There is a desire to focus the fight against the climate crisis on a little intervention here, a little technology here. And the reality is that the crisis is the result of systems that shape how we live. And in order to fight the crisis, we've got to actually change those systems, right? And communities of color are uniquely positioned to be able to understand that and to lead that fight.David RobertsAnd that shows up in the data, and surveys, and polls and stuff. Do you feel like that sentiment, that knowledge is pretty widely dispersed in those communities at this point?Abdul DosunmuOh, absolutely. I think one of the things that we do at CFJP is we actually look at and profile a lot of the movement work that is happening on the ground in communities. And so we're not just talking at a level of theory, we're talking at a level of understanding the movements that are being led by communities of color. So there is a reason that billions of tons of greenhouse gas emissions are disrupted every year by indigenous organizers. There is a reason that it was the BIPOC-led organizations that pushed President Biden on Justice40, and that conceptualized the New Jersey and California environmental justice laws that preceded Justice40.There is a reason that the Climate Justice Alliance, for instance, has had a massive impact on shifting away from extractive energy practices. And so it's important for us to see that we don't need a poll to tell us, all we need to do is look at the work and the organizing that is happening in these communities and see the ways in which it is moving the needle on this conversation.David RobertsYeah, and I'll just say, from my perch, my perspective, like, I remember when the climate bill was being put together back in 2008 and 2009, I don't know if you were unfortunate enough to be in this area when that was happening, but EJ was it wasn't absent, but it was clearly an add on, right? It was like an amendment. It was like a thing you stick on at the end as an afterthought. And it's been remarkable to me just to see, over the years, EJ just becoming much more assertive and having a much bigger place at the table.David RobertsTo the point now that the Democratic, official sort of Democratic Party climate agenda has it right there at the core, and it's included in a lot of these Inflation Reduction Act grants. So it's like night and day in terms of the engagement on both sides. To me, obviously there's a long way to go, but I've seen the change.Abdul DosunmuThat's absolutely right. And that change was led by BIPOC-led organizations. And here's why that's important, right? Obviously, you know this better than I do. We're dealing with a movement that has historically excluded and alienated the voices of People of Color. And there are organizations out there that are doing this work around diversity, equity, and inclusion in the environmental movement, right? And the data has never been good. It's always been bad. And here's the core point that we make. I draw an analogy. One of my favorite football teams, I'm a great Texan, I'm a great Dallasite.So the Dallas Cowboys, what we're doing right now in the climate movement is the equivalent of the Dallas Cowboys finally making it to the Super Bowl but fielding only about a 10th of a team on the field. That's what we're doing right now in the movement. Our best players, our most imaginative players are not on the field because we have historically excluded them.David RobertsLet's talk about that. So the Climate Funders Justice Pledge, what is it specifically? What is it asking of large philanthropies?Abdul DosunmuSo it's pretty simple, which is not to say that they always receive it as such.David RobertsNot easy. Easy and simple are different.Abdul DosunmuEasy and simple are different. But it's pretty simple. It says two things. Number one, it says commit to transparency. So we call on the nation's top climate funders, primarily institutional funders, so we're talking foundations, big foundations to commit to transparency, right? And what that means is we ask them specifically, "how much of your current climate giving is focused on BIPOC-led environmental justice organizations? Not just environmental justice organizations, but BIPOC-led EJ organizations." And we define that very concretely.We say 50% of your board has to be People of Color, 50% of your senior staff has to be People of Color, and you have to have an explicit mission of serving communities of color. So how much in dollar amounts of your current climate giving is going to BIPOC-led environmental justice organizations? That's a transparency component.David RobertsAnd that information is not available today.Abdul DosunmuIt's not easily available. And to be honest with you, most funders have not asked themselves those questions, right?So one of the things that has been a learning journey for us is actually getting feedback from funders that have taken the pledge. And what they tell us is that for them, the most transformative part of it has been the transparency component because they had never actually looked at the data.David RobertsI bet they're not finding out good things, right? They're not pleasantly surprised.Abdul DosunmuNo, they're not. In the main, they are not pleasantly surprised. I mean, the data is what it is, right, nationally. And part of what we wanted to do with this pledge is we wanted to make that data available to communities and movements so that they could actually hold these funders accountable, right? And so that the funders who are committed to environmental justice can hold themselves accountable. So it matters that a Kresge Foundation, for instance, says, "you know what, what has been most imaginative about this for us is that it has forced us to go internal and look at our data."So that matters. And we don't just ask for the data, and hoard it, or put it in a report that we release annually. We actually post that number on our website. So if you go to our website, you can find that number for each of the funders that have taken the pledge. And then we do a whole bunch of media amplification around it because we actually want communities to organize around this data.David RobertsWhat's a typical number, like Kresge or whatever, once they looked, what are they finding?Abdul DosunmuWell, Kresge is actually, they're an anchor pledger of ours, which is great. And I don't want to misquote their number. If I'm remembering correctly, they were under the 30%, probably in the 20s range. And it's important to note that, again, they have had this as a commitment for a very long time. So actually challenging them to, "okay, let's look at the data," has been super helpful for them.David RobertsInteresting. Okay, so transparency is step one.Abdul DosunmuStep one is transparency. And I actually looked at the number. They're actually at 33%. Let me give Kresge their credit, they're at 33%.David RobertsI'm going to guess that's unusually high.Abdul DosunmuThey are one of the leaders in the field, no question about it. It is very high for the pledgers that we have, and they are making continued strides. So the transparency piece is very important because it allows us to have conversations like this one. "Where is this funder? Where is that funder, and how can we hold them accountable to the commitments that many of them have?" Right? So let me just put a pin in this and say after George Floyd, we saw a number of funders make new commitments around environmental justice, around BIPOC communities. And in the couple of years since, we've seen most of those commitments fade into the background, right?And so this has become a tool that communities can use to actually hold funders accountable to what they say they're going to do.David RobertsGot it.Abdul DosunmuAnd then the second component of the pledge is the 30% requirement. So what we say is after you tell us your number, if you're not at 30% and a good number or not, we challenge you to within two years of taking the pledge to get to 30%. So scale your grant making to at least 30% going to BIPOC-led environmental justice organizations over the course of two years.David RobertsCan I ask where 30% came from? I mean, is it just sounds reasonable or is there something more to it than that?Abdul DosunmuYou know, if you look at it, BIPOC communities, about 40% of the population, what we said was 30% seems like a good floor. It is not intended to be a ceiling. And what we hope to see is that over time, that number is far exceeding 30%. But at least as a floor, 30% felt right to the networks of movement organizers and leaders that we pulled together to help develop this campaign.David RobertsAnd so this funders pledge has been going on for how long, and what's the state of play? Are foundations signing on? How much money have you shifted? How long has this been running?Abdul DosunmuSo you're talking to me pretty much on the eve of our two year anniversary. And so we've been around for a couple of years. And to date, twelve of the Top 40 climate funders have taken the pledge.David RobertsInteresting.Abdul Dosunmu32 foundations overall have committed to at least one portion of the pledge. And so some of them will say we'll do transparency, but we're not quite ready to go to 30%.David RobertsRight.Abdul DosunmuAnd we accept that because sunlight is the best disinfectant.David RobertsYeah, I think you're right that transparency is the big piece here. It's like that dream where you wake up in school, and you're naked in school or whatever, all of a sudden everybody can see ... that alone, I think is going to create a lot of push.Abdul DosunmuRight. Nobody wants to be at the bottom of the list, right. Nobody wants to be in single digits when everybody else is in double digits. And the ones who are in double digits, like Kresge, they want to do better, right? They want to get more shine. They want to tell their story, more impactfully. And so we offer the transparency piece not just as stick, but also as carrot to those who are doing well in this fight, and want to help us tell the story, and amplify the mission. And so what we have seen is that there is momentum around the pledge.And we're very proud to say that we have helped to catalyze a new baseline, funding baseline through the pledge for BIPOC-led organizations of around $100 million in the two years that we have been around. But $100 million is really just a drop in the bucket because right now we're seeing, again, as I said earlier, new funders come into the field every single day.David RobertsWell, this was my very next question, is do we have any sense of what sort of dollar figure we would be talking about if this succeeded, if all the big philanthropies signed on, and if all the big philanthropies actually did it? Do we have any idea sort of like, what the ultimate pool of money is?Abdul DosunmuSo I don't have that hard number, but I can tell you that our campaign has a goal, right? An aim of catalyzing $500 million. So if we could get to $500 million, we feel like we would be radically transforming the possibilities for BIPOC-led environmental justice organizations. But that's going to require that we make the transition, the pivot, from what I would call the legacy funders, right? So legacy funders like Pisces, and Kresge, and Schmidt, and Rockefeller Brothers and Hewlett and ... a number of the ... MacArthur, a number of the others that have Heising-Simon's Energy Foundation, Packard Foundation, a number of those that have taken the pledge.We've got to make the transition from just those to now some of these more entrepreneurial startup funders in the space, like a Bezos, like a Waverley Street, like a Sequoia.David RobertsHave you talked to any of them? I mean, I assume you're reaching out. I guess one of the questions I'm sort of curious about is, is there a big difference in culture that you found between these established groups and the new ones coming in?Abdul DosunmuThere is. We are outreaching every day to the new funders. One of the reasons I make the distinction between legacy and entrepreneurial is that when you're a legacy funder, you have deeper roots in communities because you've been funding them for a long time, or at least you've been giving lip service to funding them for a long time, right? And so you're more susceptible to their accountability, right?David RobertsRight.Abdul DosunmuYou're more accountable to them than a new funder who's coming in, who is somebody who's made a bunch of money in tech and just wants to give it away out of a good spirit and a good heart. But there isn't the same level of connectivity there to communities, and so that has been the biggest challenge. And then the other piece of this is when you're an entrepreneur and you've come in right on the heels of having made a lot of money, a lot of money in business, you tend to think you know how to do things.David RobertsWhat? Tech guys?Abdul DosunmuI know, it's a crazy thought, right?David RobertsYeah. I was going to say I don't want to cast aspersions, or use any stereotypes, but when I think about tech-bros fresh off making billions of dollars like sensitivity to racial justice is not what leaps to mind.Abdul DosunmuWell and they may have the sensitivity, some of them, but they also have the kinds of neurosis that come from having made a lot of money and been very successful, and you think you kind of know everything, right? And so oftentimes they will come into the field and say, "here is what I want to do on climate," and it has no relationship to what communities actually are doing and need to do. That's really probably the biggest culture challenge that we face is that it's both the accountability piece, and it's the part of this that understands that, ultimately, this is a learning experience both for the funder and for the broader field. This is not top down, it's bottom up, and the best solutions come from the bottom up.David RobertsAs you've talked to foundations, have you received any straight up kind of disagreement about your goals?Abdul DosunmuWell, we mostly don't get that, right. We mostly get, "well ... we're going to work on ... " That's my impersonation. "We're going to work on it, and we're going to see, and talk to us in six months and ..." that sort of thing. But every now and then you do just hear "no, we're just not going to do it."David RobertsRight.Abdul DosunmuBut generally that doesn't come from a disagreement with the goals or the objectives of the campaign because it's hard to disagree with the goals and objectives of the campaign. It generally comes from a sense of, "you know what, this is just not part of our agenda. This is not what we do, and we're not going to have anybody external to our organization directing our strategy."David RobertsYeah.Abdul DosunmuAnd so that's generally where most of the resistance comes from.David RobertsIf you imagine a huge new flood of money descending on these groups, over the course of the next two or three years, you can imagine ways that that could go poorly. That's a big disruptive thing. And one of the things I was thinking about is when you talk to these small groups, often what they'll tell you they need is just operating expenses. Like they need to be able to pay decent salaries, right? Just to begin with. Trying to run a whole movement on underpaid people is difficult, and they need sort of just like cost of living, cost of operations, operations money.Abdul DosunmuRight.David RobertsAnd what you often find, or what they tell me they run into when they talk to funders is, of course, funders are wealthy, and therefore overestimate their own cleverness, and often have their own ideas about what they want groups to do. So I worry, like, is this going to be the right kind of support? And you can certainly imagine a big new pot of money coming with a bunch of sort of big footed demands about how these groups do things, right? Like, you can imagine big funders trying to sort of dictate the strategies of these groups rather than listening and learning from them.So I don't know how you go about, I mean, I don't know exactly what I want you to say in the switch, but are we confident that this support is going to be the kind of support that these sort of small struggling groups need most?Abdul DosunmuRight. You are really touching on a critical part of this that our campaign is going to be doing more work on. It hasn't been a core part of it thus far because we really see ourselves as the accountability mechanism in the field, but we do think there's an opportunity for us to engage on these questions. So to start, what we really need is a shift in the culture of philanthropy, right? And so part of that shift is a shift in the "philanthropy knows best" mindset. And we've been talking about that. Part of that shift is a shift in the desire of philanthropy to really dictate all of the terms of engagement. And they do that primarily by focusing most of their grant making on program grants.Right.And so you might get a grant to run a specific program, but you're not going to get a grant to actually scale your organizational capacity.David RobertsRight. This is a notorious complaint from nonprofits across the board from time immemorial, right. They're like, we can get a grant to do a specific thing, but we just need, like, printer paper,Abdul DosunmuRight! "We can get a grant to do a specific thing, but we need to hire people to do the thing, and we need to be able to offer them insurance, health insurance, and we need to be able to keep the lights on in the building." And that is a part of this conversation that, again, we have not touched on, but we see there's an opportunity for us to touch on as we continue to move forward. So those are really the two of the areas where there's room for additional intervention. The other thing I'll say is this. It's a bit of a vicious cycle that these groups are in because they don't get the funding, so they can't build the capacity. And because they don't have the capacity, that lack of capacity is used as a pretext to deny them more funding, right?So it's a vicious cycle. And now we're in a moment where there's some $500 billion coming down from the federal government, on climate related resources. And a lot of that is sort of focused on, or earmarked on a climate justice lens. And we're happy about that, right? We fought for that, the movement organized for that. But the concern that we have now is that because of this disparity in funding and private philanthropy, many of the organizations that are BIPOC-led, that are going after these grants won't be able to successfully compete because they've been locked out of the private funding, right?And so a lot of work is being done on the ground, and movements, and organizations to actually try to help organizations build capacity over time to be able to compete for these new dollars that are coming down and to actually be able to fulfill the spirit of Justice40, but we need more funding to do that, and the private funding market is critical.David RobertsYeah. And another thing I've heard from these groups, these are most often pretty small under-resourced groups. And another thing I've heard is that even the process of applying ...Right ...For these things, is burdensome, and difficult, and expensive. Like, if you're a two, or three, or four person operation, it's nothing for a Kresge to sort of send someone out to hear your pitch. But for you to make the pitch is a lot of hours of labor which you can't really well afford. And I've heard from groups where they say, they'll come consult with us and ask us how to do better in their EJ funding and et cetera, et cetera, and we make these elaborate presentations and then they vanish and we never hear from them again.So I just wonder, are there broader ... you could imagine a regime where a big wealthy funder pays some small stipend to a group to offset the cost of consulting, the sort of free consulting they do, or the cost of applying for grants or something like that. And that would just be can you think of are there larger ways that we need to change the relationship between small EJ groups and big funders, beyond just the monetary beyond just giving them money, in terms of just the kind of social aspects and cultural aspects of their interaction? Are there larger reforms we need in that aspect?Abdul DosunmuHow much time do we have?David RobertsI thought you might have something to say about that.Abdul DosunmuRight. I have the privilege of wearing a bunch of hats in my work.David RobertsYeah, I meant to say, I read your LinkedIn page. I had to take a nap halfway through. You're a busy man.Abdul DosunmuI'm a busy man. I do a lot, and I sit across a lot of different buckets, right. And so on the CFJP side of things, obviously, I'm wearing a bit of a philanthropic hat. We don't necessarily consider ourselves philanthropy, but we're not movement. We're somewhere in between, right. But we definitely wear a philanthropic hat. And then in my other work, I actually lead a grassroots voting organization of Black lawyers and law students. And so on one side of my work, I am challenging funders to do more. And then on the other side of my work, I am living every day the ways in which this system is inequitable toward founders of color and leaders of color.And so I see this from both sides. Really, I think the first place to start in this conversation is with a conversation. And so typically the exchange between funder and organization is a one-way conversation, right. It's a one-way street.David RobertsYeah. Speaking of power differentials.Abdul DosunmuExactly. These broader power differentials in society are being replicated in how foundations engage with organizations. "And so you can apply for a grant if we invite you to apply, we want it in this 60-page application format."David RobertsAnd then you get the grant. And like we need a 60-page report every year.Abdul DosunmuThat's right, "we need the 60-page report every year. Oh, and by the way, you probably won't get the grant in time to actually do the work you need to do with it because we're going to take our time delivering the grant to you, and you interface with us and interact with us when we invite you to."David RobertsRight.Abdul DosunmuThat has to change. And so part of the culture change that you're talking about that so many organizations are advocating for, starts with making that one-way conversation, a two-way conversation, and actually listening to organizations on the ground and having those organizations inform your grant making practices, right?So let me go back to Kresge for a minute. One of the other things that they have said to us has been impactful for them is actually the transformation that the pledge has wrought in their grant making practices, in their day to day grant making practices, and how they engage, and how they interact with grantees.David RobertsSo that just means they've been learning by doing, they've been learning by interacting with these groups?Abdul DosunmuThat's right. That's right. Absolutely. And we've heard that from multiple funders. And so really what has to happen is that the funder has to become a learner, right. And that's what we're pushing through this pledge. We're challenging funders to become listeners and learners and actually hear from the organizations on the ground about what needs to change in their grant making practices in order to be more equitable. And a lot of them are making changes. I think that's really where this starts is the conversation, shifting it from one-way to two-way.And one of the things, by the way, that we have tried to do is that a number of these funders have said, "well, how do I actually get this data? How do I actually get the demographic data information? How do we kind of navigate that?" And what we have done is actually provide resources for them, so that when they're seeking out this data, they're not creating more layers of burden on these groups, right? So we have tried to incorporate that even into our own program.Right, so these groups don't have to sort of do another report on our demographic makeup, et cetera, et cetera. So that's a little bit more public. And it also occurs to me I mean, maybe this is even too obvious to point out, but it also occurs to me that it would be nice if these big funders going to these groups were not like 18th century British royals visiting the islands like strangers in a strange land. Like, it might be nice if they were composed if the makeup of the actual big funders changed.Well, there you go. There you go. I mean, you've made exactly one of the critical points, which is that the work that Green 2.0 and so many other organizations are doing to actually change the makeup of these funders is directly connected to our work. Because you're absolutely right. You should not be visiting these communities as though you're visiting from Mars. You should have people on staff in senior positions who are deeply rooted in these communities, that know the work that's happening, that know the challenges facing these organizations and are directly invested in this work, right? Part of what I have seen in the time that I've been doing this work is that there are so many brilliant folks across the country who are directly and deeply invested in this work, and they are the people who have been laboring in obscurity.They are the people who've been laboring without resources. And in order for this system to change, the system of philanthropy to shift, part of what we've got to do is bring those voices from the outside in and make sure that they actually have the ability to transform these funding institutions. And that last point is critical because it is not enough to have People of Color faces in high places if they do not have the ability to actually engineer change.David RobertsI used to work for a nonprofit. The first journalistic organization I worked for, Grist, was a nonprofit. And especially back when I first started, we were very small. There's like four or five of us. So I became intimately familiar with the grind of begging foundations for money. Luckily, I didn't have to do that part for long, but I saw enough of it. And one thing that just struck me immediately and overwhelmingly is that we were an organization that was specifically targeting young people. We wanted to be sort of irreverent, and funny, and just all these kind of things that appeal to young people.But the people we're talking to and begging for money are, to put it bluntly, White boomers. They're older White people who are not necessarily who you'd go to to learn about what the youth of today want out of a journalistic outlet, right? And so I wonder if you have gotten any sense that younger people in general are hipper to this issue than their elders?Abdul DosunmuIn some ways, yes, and in some ways, no, right. And so what's clear is that younger people just generally understand the climate crisis better than their elders. So we start there, right. You have less of a case to make to younger folks about the urgency of this crisis, but I think it's important for us to be clear that when it comes to age, that does not necessarily portend more enlightenment on racial justice issues.David RobertsYes.Abdul DosunmuAgain, I work in sort of the democracy space, and I think there's always this assumption that the younger the electorate gets, the more progressive it's going to get, just because younger people have grown up in more diverse environments. On some level, I think that is true, but I would not want to bet the house on that. And I think we have to continue to be more intentional about cultivating, even among younger people, an understanding of the racial justice implications of this crisis. And so, as a case in point, I was in Miami for the Aspen Climate Conference last week.David RobertsYes.Abdul DosunmuAnd I did a number of panels during the week, and most of the programming had a climate justice angle to it, right. Most of the speakers referenced it. It was rare that you would sit through an hour long panel, and it wouldn't come up.David RobertsRight.Abdul DosunmuBut I'll be honest, there were still rooms that I walked into where I was the only Black person in the room. And I don't want to put any blame on anybody. This is not me trying to do that. This is not about assigning blame. But it is about recognizing that even among the cool, hip kids who are invested in the climate movement, that investment in racial justice still needs to be intentionally and actively cultivated. And we cannot assume that it is going to happen by osmosis.David RobertsRight.Abdul DosunmuOr that it will happen just because younger people are younger people, right.David RobertsJust because the arc of history right.Abdul DosunmuThe arc of history is long, but it bends towards justice. I firmly believe that. But I also believe that we have to bend it.David RobertsYeah, there's a reason it bends towards justice, because all the people are working to bend it, right?Abdul DosunmuAll the people are working to bend it. And so I think there is more consciousness than ever about climate, and there's more consciousness than ever about racial justice, but we still have to do the work to actually translate that consciousness into action.David RobertsWell said. Well said. Thank you. Abdul Dasumo, thank you so much for coming on. This is very illuminating. I'm glad you took the time.Abdul DosunmuThank you so much for having me. Thank you for the platform. It was an honor to be with you.David RobertsThank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf, so that I can continue doing this work. Thank you so much, and I'll see you next time. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.volts.wtf/subscribe

In this episode, Erik M. Conway discusses his new book The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market, coauthored with Naomi Oreskes.(PDF transcript)(Active transcript)Text transcript:David RobertsIn 2010, historians of technology Erik M. Conway and Naomi Oreskes released Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming, a book about weaponized misinformation that proved to be extraordinarily prescient and influential.Now Oreskes and Conway are back with a new book: The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market. It's about the laissez-faire ideology of unfettered, unrestrained markets, which was invented and sold to the American people in the 20th century through waves of well-funded propaganda campaigns. The success of that propaganda has left the US ill-equipped to address its modern challenges.On March 8, I interviewed Conway at an event for Seattle's Town Hall, where we discussed the themes of the book, the hold free-market ideology still has over us, and the prospects for new thinking. The organizers were kind enough to allow me to share the recording with you as an episode of Volts. Enjoy!Megan CastilloGood evening, everybody. My name is Megan Castillo. I'm Town Hall's program manager. On behalf of the staff here at Town Hall Seattle and our friends at Finney books, it's my pleasure to welcome you to our presentation with Eric Conway and David Roberts. Conway's new book, "The Big Myth," is the subject of tonight's talk. Please join me in welcoming Eric Conway and David Roberts.David RobertsHey, everybody. Thanks. I'm just going to jump right in. Several things I'd like to get into, but just to start, one of the things that really the book really gets across well, I thought, which I don't know that I fully appreciated, is the extent to which this idea of unfettered, unregulated free capitalism is an invention of the 20th century. It's not what capitalism ... the founders and architects of capitalism, it very much goes against their larger philosophy and their larger kind of moral sentiments. And the way it does this is by elevating property rights, basically trying to they call it the "indivisibility thesis" that property rights and political freedom are one and the same.And any limitation on property rights is de facto a limitation on political freedom. That's new, that was not original to capitalism. So maybe talk a little bit about property rights and how they sort of what the pivot these groups did with that concept in the 20th century, in the early 20th century.Erik ConwayOkay, so that's a jump forward from a book that starts with child labor laws in the 19th century. What I think you're bringing up is the tripod of freedom that the National Association of Manufacturers concocts in the late 1930s as part of their effort to undo the New Deal of the Roosevelt administration. And the idea of the tripod of freedom was, if you think about a three-legged stool there's what they would call industrial freedom or business freedom, religious freedom, and political freedom are the three legs of the stool. So if you remove industrial freedom, businesses freedom to do what they want, then the stool falls.This is a slippery slope argument that equates business freedom with the other two first amendment freedoms. That's what they spent a decade and millions of dollars, 1930s dollars, promoting through billboard campaigns and materials made for schools and movies and so forth in order to try to convince the public that that's the American way, even though it is a pure invention. In the 19th century, of course, lots of business was regulated and the corporate form itself was primarily a tool used by states. States would create a corporation to accomplish a thing like the Erie Canal Corporation to build and run that canal system for the state.And roads were done this way and so forth. And through a whole complicated process, the corporation sort of slowly gets disentangled from the state in the 19th century so that by 1935, we can imagine corporations that are no longer state functions.David RobertsYeah, one of the wild things is learning that early corporations had to go to states and say, "Can we be a corporation?" And the states would be like justify why? Like tell us why. What public good are you serving? It's just a wild inversion of things. And also another piece of this is, and maybe this doesn't come into it as much until the Austrian economists that get brought over, and I guess this would be in the 60s, kind of 50s and 60s, Hayek and the other one whose name is not coming to my mind. Yeah, but this idea that not only is business freedom core to American freedom but the role of the business person, businessman, I guess they always said back then, is explicitly not to be decent, not to be good, solely to make money.So the idea is that if you have these like purely self-interested actors, the magic of aggregating them produces social good, but the individual not only has no obligation to do public good with their business or their corporation, in a sense they're sort of like violating the spirit of capitalism if they do it. Which again is like would send Adam Smith rolling in his grave. Only if you could just say a little bit about how they conceive of the morality of the business person or the morality of business and how that changed from what Adam Smith laid out.Erik ConwaySo that invention of what we now call shareholder value we can trace really back to Chicago school economist. It's mostly popularized by Milton Friedman, though he didn't concoct the term. The idea is, in his 1962 book Capitalism and Freedom he takes a more extreme view of that than the Austrian economist did. Hayek, for example, actually thought there was grounds for workmen's rights of some kind and that there were some justifiable kinds of social mitigations of industrial freedom, as did Adam Smith. Yet Friedman's ideals are what take over in the course of the early eighties. I think it's in the 1980s that the idea really takes off around General Electric Corporation.For example, those of us of a certain age remember Neutron Jack just dismantling General Electric and removing the basic ideas that the company had served in the 30s and 40s, for example, of investing in its community in order to have healthy communities around its plants and so forth. And all that goes away in that era of the 80s. So you can see, for example, in the movie "Wall Street," if anybody remembers that from the 80s, there's a great speech about Teldar paper by Michael Douglas and how it exists only to serve its shareholders. And that's where all the profits should go, and its only social good should be ensuring the continued flow of finance to the shareholders.And all other good things are supposed to fall out of that, except what else actually fell out of that is workers livelihoods and so forth. It's a fascinating reinvention. In fact, as we begin to bring those Austrian ideas into the US in the 30s and 40s, they become simplified, and they become oversimplified as they're put through the businessmen cycle. Because the businessmen in the United States were simply unwilling to accept even the social protections that Hayek and Adam Smith and so forth had thought were necessary in that decade. And so they commissioned economists to essentially rewrite Hayek.David RobertsGlobalization goes with this too, because the more you're a multinational company, the less pretense or need you have to pretend like you need to nurture a particular community, right? If one falls apart, you just go find cheap workers somewhere else. Another thing the book really brought home that I did not fully appreciate... I mean, I guess I knew just from being a journalist that business is out there advocating for leave us alone. But I don't think I appreciated the scale and how long that's been going on. I mean, your book sort of describes waves starting in the late 19th century of government would try to do some decent thing.There'd be a huge propaganda effort against it. Finally, government would win some new protection for workers. Then business turns around, claims moral credit for the protection against workers, and argues against the new thing that's about to happen via billions of dollars of propaganda over and over. There's like three or four waves of this. So maybe just talk a little bit about how extensive this effort was. Like they're going after schools and libraries, morning cartoons. I mean, they really thought it through about how to go wide.Erik ConwayWell, so we started the book with child labor laws in the 19th century because it's the beginning of the conversion of the National Association of Manufacturers from what had originally been a very protectionist organization. They were founded not at all for free markets, they were founded to promote tariffs, the idea being that tariff walls would protect American manufacturing during the period in which the United States developed. And they begin turning against the idea of government itself around the issue of child labor and workplace safety because those things both threatened to cost the money in various ways. They used child labor in order to reduce wages, and they used well, frankly, they managed to convince the courts that workplace safety problems were actually the fault of the workers and not themselves.And so there's a long fight by reformers in the United States to both provide better workplace protections and to eliminate child labor that ultimately businesses lose and then basically change their tune and decide that, well, we supported removal of child labor all along. That's sort of the first wave of the story. And that first wave takes it set in in the 1930s and then NAM changes actually kind of fundamentally in the 30s for a very internalist sort of reasons. The National Association of Manufacturers had originally largely represented small businesses, not large. They have a leadership change in the 30s in which essentially they're taken over by large manufacturers.And then those large and much wealthier manufacturers begin to believe that it's in their interests to try to change the political tone of the United States. And World War II really helps them show how the Roosevelt administration engaged in an enormous public propaganda campaign to support the war. And our manufacturing friends learn a whole lot about how to spread messages. And we don't get into it a great deal in the book because there's so much material. But for example, I pick up with a story of a congregationalist minister in los Angeles becomes quite famous nationwide for setting up an organization known as Spiritual Mobilization.Spiritual Mobilization's idea was to try to reconvince Americans of the moral basis for free market capitalism and to spread that through the churches. He was a minister. He attracted, of course, the interest of the National Association of Manufacturers, very key to our story. And in particular, one of their leaders by the name of J. Howard Pew, who is president of Sun Oil and Pew, becomes Fifield's biggest backer for spiritual mobilization. Spiritual mobilization operates throughout World War II, actually and into the 1950s. And they tried to develop curriculum to push out into seminaries as well as putting materials out into churches and so forth for free market ideals.Now, it's important to understand that as a congregationalist, Fifield was a theological liberal and J. Howard Pew was not. He was very much a theological conservative. So he takes that idea in 1946 and he starts founding new organizations to do the same thing but into the conservative churches. And so the Christian Freedom Foundation was one of his creations. Magazine Christianity Today is one of his creations. He attracts Norman Vincent Peale from the first marble church and so on. And he becomes an enormously successful entrepreneur of the idea of shoving free market capitalist views into American religion.And that's just one thread of the propaganda story that we tell.David RobertsYeah, I was going to say it's creepy enough trying to sort of conflate free market capitalism with America, with America's founding and America's founding values, but then it gets conflated with Christianity. They get merged in a way that only has gotten creepier and creepier over time. I frequently look around today at various and sundry propaganda campaigns still ongoing and wish to myself that the institutions we have set up to seek truth and accuracy, namely academia and journalism, would be more stalwart in their resistance to propaganda campaigns. And it's tempting for people in the present day to say, oh, what's happened to the media?What happened to the old media? But you read through your book and you sort of realize, like academia and journalism were never particularly they didn't put up a very good fight, let's say, against all this stuff.Erik ConwayNo. Another of the stories we tell again about the breadth of these campaigns, it's around the National Electric Light Association, which doesn't exist anymore. It folded after its propaganda campaign was exposed. This is an organization that existed into the 1920s, like the National Association of Manufacturers. It took up the effort to prevent regulation of the electrical utility industry. And one of the ways they did it was by paying academics to author studies that they could use to prove, quote unquote, "that privately provided electrical power was cheaper and more reliable than publicly provided and produced power." Except there was lots of evidence that that wasn't true for both Europe and Canada, which not only tended to have cheaper electricity rates, but also much more widespread electrification.One of the things that we've all forgotten by now, because we were almost all, maybe all of us, were born after electrification is completed. But in the United States, electrification stalled at the city borders and it stalled at the city borders for decades because utilities figured it simply wasn't profitable for them to string lines across rural America.David RobertsEurope beat us to rural electrification. I don't think I really knew that before I read ...Erik ConwayYeah, well, most people have forgotten, but they beat us to rural electrification because they saw it, well, in a couple of different ways. One was program of improvement, but another big one was, remember, there really was a threat of the communists and socialists taking over in Europe, and that was, of course, used as a foil here in the United States, too. But what the European politicians did was they simply decided, well, we're going to take on some of the claims of the reformers and actually do them in order to forestall the revolution. Bismarck was actually pretty successful for a while, and many other of the European countries were successful at more than a little while.And we kind of tell that story, too. But to answer your question is there were paid academics then as well who were not only not attempting to get at the truth, but were fairly well, I would say that they had already been indoctrinated. They already believed that free market, if you couldn't even say such a thing existed, was the proper way. I would say the better way to say it really is private enterprise is a better way to do it. It's a better frame. One thing I haven't said yet, but I want to make sure I do, is that Naomi and I don't believe there's such a thing as a free market.Markets are constructs. They're social constructs. Birds and bees and so forth don't have them. We all regulate markets in some way, either by law or by the guys that break your knees if you don't pay up. They're all forms of market regulation, and some are preferable to others.David RobertsYeah, and they bought off so many editors and newspapers, too, in just like the chintziest ways. They just mail them a pamphlet or take them out to dinner and boom, they got great press coverage. It's very disheartening.Erik ConwayBut I would even say that they didn't have to be bought off, necessarily. Partly that's social pressure you're talking about, which we've all experienced, being invited to the right parties and so forth, and we don't really get into that because sociology is not our subject. But it's also the case that many of these editors were raised in the same propaganda, especially nowadays were raised in the same propagandaized malu that everybody else was. And it's hard to decide that all these things you've been taught for most of your life are wrong. It's very hard to decide that.I'm sure that most of what I've been taught through most of my life is sort of true, at least. But I'm not always sure, and I have to think hard about it nowadays.David RobertsOne thing that comes across also is big business has been organized and at this for a long time, well over a century now. But they weren't really successful for a while. Like, they fought and fought and fought against the New Deal. But the New Deal mostly went forward and mostly remained popular. And it's like wave after wave of propaganda until around, like, the 70s Carter era and Reagan era. So what converged there in history to allow this to break out from basically being kind of a fringe view to it's common sense now, sort of common wisdom, meddlesome bureaucrats and government inefficiency and picking winners.These are all phrases that ordinary people know now sort of sifted down into the popular consciousness now. So what was it that allowed it to finally overwhelm resistance and win?Erik ConwayWell, I think the first thing we've already said we've had this decades long propaganda campaign that helped lay the groundwork, and that's the main subject of our book. And then part two is the 70s. We have a whole series of intersecting crises in the United States. And we talk about the inflation of the 70s from the economic perspective being that big crisis. And the advantage that the free marketeers had was that they had an answer that was different than the standard answer. And Naomi and I are not the first to think about it this way. They had a different answer than the economics of the last 40 years, which had been successful, maintained a relatively growing and prosperous economy, much more prosperous for how do I want to put it more equitable prosperity than what we have now or prior to World War II, frankly.And yet that seemed to be breaking down in the so that's the way we see it. And because they had an answer and because Carter then has, of course, a great foreign policy crisis as well. And honestly, I think Jimmy Carter believed some of the free market mantra in that his administration really launches the era of deregulation, right? It's the Carter administration that undoes airline regulation and trucking regulation and begins undoing rail regulation. And there's even banking deregulation in the Carter administration. And so they begin getting rid of a lot of, in fact, the leftover artifacts of the New Deal in the Carter administration.And what Naomi and I do is we discuss that, what was done, what effects they began to have. And honestly, to some degree, we are supporters of it. Except there's one place that we think they went wrong, really, and that is they didn't apply labor protections that had existed under the New Deal laws. So trucking, for example. And that's they're kind of the poster child for deregulation because ten years after the trucking deregulation law, most of the trucking unions had collapsed. Most of the trucking businesses that had existed collapsed and they'd been reformed into new nonunion trucking organizations.Wages collapsed and so on. And so deregulation helped reduce the inflationary period. Trucking is a major expense to move stuff around, but at the same time it also crushed wages, which benefits inflation, but not the workers and so on. So that's our story of the conversion. And I'm sure you could write others because in the couple of chapters we had, we could barely scratch the surface of what it was, I think, a very complex and challenging period.David RobertsI know you're a historian, so history is your thing. But as you look around now, maybe you and Naomi have talked about this. Do you feel like the hold of kind of the free market mythology is loosening? Do you think we're heading in another direction now? What's your take on the current state of this? Because it seemed to sort of hit its peak in sort of like Bill Clinton. When you got a Democratic president saying the era of big government is over, you've sort of, like, won at that point. You've won the argument. Where do you think we are now with all this stuff?Erik ConwayBoy, I wish I knew. Being a historian, we're bad at crystal ball kinds of things. It's certainly interesting to me that the current president and his predecessor are not free marketeers, neither of them, but in quite different ways. Right. Trump is still backers of kind of Reagan style deregulation gutting environmental agencies and that sort of thing. He did those kinds of things but at the same time was almost doing the 19th century idea of tariff protectionism.David RobertsReally old school.Erik ConwayReally old school. I know some people have called it neo-feudalism, but I don't see it that way. But then again, since I'm a 20th century guy, there wasn't a lot of feudalism for me to study. So maybe I'm wrong. But I do find it intriguing that it's no longer the default position of either party, that the idea of unregulated markets are to continue to be dominant. But what comes next? I don't know. That's the challenging and terrifying part to some.David RobertsAnd neither of them seem to get much internal pushback from their own party over that.Erik ConwayNo, exactly.David RobertsThere doesn't seem to be like an organized presence for it anymore.Erik ConwayRight. And instead it's patchwork. But that's not the word I want. It's more a matter of what they perceive to be immediate self interest at the party level. And so there's lots of discussion now of big-tech regulation and to some degree I would support it depending on the details, but it's not clear to me what that would be. For example, it's an interesting political moment to live in.David RobertsAntitrust is sort of poking its head up again.Erik ConwayYeah, we might actually enforce antitrust statutes for the first time in decades, maybe.David RobertsFinal question, and this is my plaintive question I ask everyone, and especially when I spend a lot of time talking about the media environment, the sort of epistemic environment and Fox and the right wing media and all of this misinformation and stuff. But one thing I'm constantly lamenting or wondering about is why, when you look back over this 150 year period almost, and you see these repeated waves of propaganda against government, basically against government as such, not against this or that in particular, but just government is bad. Like government's inefficient and bad, wave after wave. Why do liberals or progressives or whatever you want to call them, why does the left, why do the people who believe that government can improve people's lives as it demonstrably has many times through our history?Where are their propaganda campaigns? Where is the think tank that's just devoted to arguing that government is good? I can name ten on the right that are devoted purely to the subject of how government is bad. Is there one on the left that's just government is good as opposed to this immigration group and this crime group, whatever? Why does the side of social democracy, mixed capitalism, the stuff that seems to work, why does it not have a propaganda arm or effort? Or why does it never seem to fight for itself as such? Do you have an answer to that question?Erik ConwayI don't have a good answer. The usual joke you get is that they just don't have the money. And maybe that's true, but I think there's actually a better argument in another book, and I'm really hoping the name of this author comes to me. But unfortunately, I read this. It was published after we'd finished our manuscript. But there's an argument about back in the 1970s that the Consumers Rights Movement undermined precisely that argument because the government was so complicit in allowing itself to be used by corporate lobbyists because the corporate lobbyists had been so successful in ensuring regulations were written in ways that benefited the incumbents right.The existing big three carb manufacturers and so forth. And I can remember when we were doing the book tour for what little book tour we had for Merchants of Doubt. I was up in, I think, Alberta province in Canada, and I wish I knew who this was, but I was talking to an economist over a beer who told me a great story about one of the Carter administration's economists. And the person I was talking to was saying that really, it's not that he believed in free markets, it's that he believed that corporations could rig government to do essentially whatever they want to use the government to build and sustain their own monopolies.And the only solution to this was to sweep away all the rules. The problem with that is that then you have to keep doing that, right? Because every generation of corporate titan gets the rules written again to protect itself. And I mean, that was the only fly I could see in that argument. But to go back to your question, the problem that liberal activists would have is that because a lot of people on the left, I think, actually agree with that. And I even think that there's merit to it because I've seen it so often in my own research career.Corporations do get state and federal governments to write rules that benefit them. And so that undermines the whole notion of a pro government propaganda campaign, right? Because maybe it's just that all of the leftists have very mixed feelings about it. And honestly, I think we should I don't want to say one of the things I hope you will get out of our book is that we're not saying that all corporations are bad or that the government is always good because neither of those positions are true. They're not.David RobertsOkay, well, I'd love to hear from the audience. Let me just say this is a subject about which I feel many people will be tempted to have more of a comment than a question. And I just want to get out ahead of that and say, if you have comments, save them for afterwards. You can talk to us afterwards. People came to hear Eric talk, so try to keep your questions concise. Yeah, just come on up to the podium if you have questions, or if not, I'm going to keep asking them.Audience MemberI have a process rather than content question. So I'm a retired oceanographer. I'm familiar with your co-authors work in the scientific field. So it's kind of a dual question of, you guys seem to be stepping out of your area of technical and scientific expertise into the economic world, and I'm curious about the process of how the two of you work together on this?Erik ConwayOkay, so we did the book because we wanted to follow up "Merchants of Doubt", in which, if you're not familiar, was really a history of four physicists and how they spent their retirement careers working to cast doubt about the truth of environmental problems. And what we concluded was that they were believers in market fundamentalism, the idea that only free markets could protect political freedom. In other words, basically a 1980s version of the Tripod of Freedom from 1935. And so in this book, we wanted to tell the history of market fundamentalism, so that's why we did it.Audience MemberCan you tell us who we is?Erik ConwayOh, sorry. Naomi Oreskes. She's the lead author in the book, and I'm Eric. Process, so I guess I'm the one who had spent a lot of time or a lot more time in economic history initially because I'm a historian in technology, and you really can't separate technology from business and economics to a lesser degree. So I guess to some degree, you can blame me for the initial ideas. And then once we had sort of gotten the book proposal sold, process was we separate the chapters, figure out who's doing what, whose expertise more aligned to one idea or the other.And then it's a whole lot of researching and writing and mailing chapter drafts, back and forth and so on. Kind of the early core of the book is built around material from the Hagley archives, which it's a business history library and archives on the Dupont family estate in Delaware. The Dupont family did History of the United States enormous favor, frankly, in turning over some of their original powder factory buildings to be a business history archive. And that's how I can tell you exactly what J. Howard Pew was doing and setting up these organizations, because he was proud of it.He wrote to people about it. He helped get a textbook by an economist by the name of Tarshis removed from university curriculum on grand claims to trustees and so forth, that the guy was a communist when actually he was just a Keynesian economist. And that prepared the way for Paul Samuelson's textbook to become the dominant textbook in American economic education for most of our lifetimes. But Samuelson, seeing what happened to Tarshis, revised it to make it satisfactory to the market fundamentalists who'd gone. After Tarshis and Samuelson told us that story. But we can know these things because archives exist.And sometimes even the people that we criticize are the people that made it possible for us to know that.David RobertsYeah, they don't come across in the book as any of them as particularly bashful or embarrassed about the fact that They're ...Erik ConwayThey're proud of it.David RobertsWaging massive propaganda campaigns.Erik ConwayNo, they're proud of it because they believe in what they're doing.David RobertsI have another question, which maybe is more philosophical, but this is something I've gone back and forth over the years too, which is at no point from the late 19th century forward, really, at no point ever are any of these business titans who are waging these propaganda campaigns acting consistently according to free market principles. All of them happily welcome subsidies. When subsidies are available, all of them will happily tax their competitors. None of them ever in history have turned down something that would benefit them on the basis of free market principle. So you could make the argument that what's going on here is about power.They have power and the microphones and the money. They don't even really believe the arguments. So in a sense, the only thing that can counteract that, insofar as you view it as a bad thing, is counterpower. And in a sense, arguing as though sincere ideas are in the driver's seat here is kind of like a bait and switch. I feel like they just laugh when we go off and write arguments and research things and care about facts like they're just playing us. They don't care about the facts. They're just exercising power. How central is the argument to all this?And how much of it is just a cover for corporate power that can only be sort of restrained by power?Erik ConwayWell, first off, self interest is fundamental to their depiction of free market capitalism, right? One thing they certainly internalize is that everyone acts in their own self interests, including themselves, and they happen to be in a position to use their power to maximize their self interest, even if it harms others. So you can argue that they are actually acting according to principle. It just isn't a very satisfactory answer, right?David RobertsWell, it's not a free market principle, right?Erik ConwayIt's not a free market ...David RobertsPrinciple of self interest.Erik ConwayYes, that's right. It's not really a free market principle. So you can see, for example, in the paper of J. Howard Pew, and he's writing to Rose Wilder Lane, the daughter of Laura Ingalls Wilder. He goes through some contortions at times to defend his own or what she perceives to be his own violations of principle because, whereas J. Howard Pew is willing to compromise to improve his standing, in a lot of ways, Lane wasn't, she really was an ideologue. Well, she kind of drives herself out of the movement, in a sense, because she's more extreme than they were and continue to be.So it gives you an example that there actually were people even inside, for a while, even inside this conservative movement, who were principled and would actually manage to drive themselves away because they wouldn't make those compromises. But they're not the ones that had power, or rather that retained power, as you say, because they were acting in the those that remained were acting more in the interests of power than in pursuit of the free market principles. So, again, I keep saying that there's no such thing as a free market. There's always a regulated market. And it's just how and by whom that we're talking about.David RobertsWell, to this day, I think there are like seven true libertarians somewhere in DC. Who are constantly pained by their betrayal by the Republican Party, which is coming up on 150 years now. You'd think they would see the next one coming, but still .. Hi.Audience MemberSo I'm a little bit outside of my element here because I've not read the book, but usually in a big myth, and I look forward to it that you and Naomi arrestes have written what were the little myths? What are the little myths, and can you articulate them that are backing up that big myths? I mean, we can come to our own conclusions, but can you articulate those?Erik ConwayOh, they're legion. Well, I kind of told you one. There's the Tripod of Freedom. That's a set of mythologies that the National Association of Manufacturers concoct in 1935. The idea that industrial freedom has anything to do with the Bill of Rights is laughable.It just doesn't exist there any more than the kind of maximalist interpretation of property rights. My character, Fifield, to give you another example of a myth, tries very, very hard in his campaigns to bring the clergy around to the idea that property rights are sacred, that they descend from God and not from the fifth Amendment to the Constitution, which makes them, if you ever bother to read it, modifiable by act of law, which we can't modify God by active law. So there's another myth. The individualist mythology is another one. And we don't explicitly criticize that in the book.It's already too big a book. But rugged individualism is another area of mythology that is built into this idea of the free market in the so there are a whole network of sub-myths that go into what they are. What we don't do is we don't make give you a typology, a chart of all the different sub-myths, and we just didn't think about the problem that way. We were trying to tell you partly a story and partly a well evidenced history and less rigorous philosophical analysis, I guess you can say.David RobertsYeah, well, one thing that comes across is you'd like to think there's a marketplace of ideas, speaking of myths, just a marketplace of ideas where ideas compete based on their rigor. But of course, these ideas were at every juncture, very well funded and pushed. And I always thought it's not hard to understand why rich, powerful people in society welcome a philosophy that characterizes success in a market as a matter of heroic overcoming individual effort. I mean, of course, the people who won want to believe that, right? In that sense, it's in a tradition of hundreds of years of mythologies that mainly serve to justify the place of the people in charge.Erik ConwayWell, so I guess there's two stories built into that question. In the marketplace of ideas, milton Friedman didn't rise to the top in a free market because the Chicago School of Economics program was built on the funding of a foundation, the Voelker Foundation, which was run by a gentleman, by named Harold Luhnow. And it's their money that got the Chicago School's free market program going and supported Friedrich Hayek there at the School of Social Thought ...David RobertsGot us into Readers Digest, which I thought was just excellent detail.Erik ConwayWell, yes, this is the power of money, right? Because not only could they afford to support faculty members for a decade or two to get the free market ideals built into academia, they could spread them through cartoons and so forth. Right. So none of us live in a free marketplace of ideas anyways, because money can boost the ideas that people with money want boosted. And Milton Friedman is a great example of how that came about. So marketplace of ideas? Well, it's a very rigged market, much like General Electrics, electricity markets,Much like all markets.Audience MemberYou brought up Milton Friedman. So shock therapy, right?Erik ConwayYeah.Audience MemberRight. All over the world, or especially South America. But I wanted to ask you, your historian, I mean, the more you read, you can become depressed. But one question to you about could potentially the reason why there is no thorough backlash or a fight against this propaganda is because a lot of the intellectual stuff that we learn about just they're so wrapped up in the hypocrisy of all the stuff that we've done as a society, including propaganda, capitalism, that they're just, like, useless, that they can't germinate, they can't forment this type of backlash that you're talking about.David RobertsWell, your colleague up here, what do you think about that?Erik ConwayI would say that they would have a hard time selling it here. I'll take back to the idea. Remember I told you this story briefly about Lorie Tarshis being having his textbook suppressed by a propaganda campaign and aimed at trustees of universities and so forth in the 1950s, and therefore Samuelson's textbook becoming dominant. That's an American story, and it largely didn't happen in the rest of the world. So economics programs in Europe are much more intellectually diverse than they are here because that kind of story didn't happen. Right. The rigged market here resulted in one outcome, a very similar thought throughout most of American academics, which is not really so much true in Europe.Now, the question was about the public. But ideas generally have to come from somewhere, right? And if all the economic departments in the United States basically think the same way then where do the ideas get started? In left wing think tanks. There's not very many of those, as we were discussing earlier. And they start out from a position of less credibility precisely because they're think tanks. Right. There's no independent work on that kind of going on.David RobertsNo liberal "Little House on the Prairie."Erik ConwayWell, there's not that either. So I would say to you that part of the problem is you start out with having fewer ideas that can be marketed and then you don't have the infrastructure for marketing them to get the change across that you might want. But again, that's beyond our subject. Other people have written about the think tank world than not us.Audience MemberI'm curious in your research for this book whether you came across any industries where deregulation and free market ideas actually made a more equitable or efficient outcome. You talked about how the electricity market is not a good market for free market principles but I'm curious whether you researched anything where it did improve it.Erik ConwayWell, so efficiency is a difficult term because efficiency is often well, the definition of efficiency matters, doesn't it? If you're talking about cost effectiveness, for example it's much more cost effective to buy property in poor neighborhoods or near poor neighborhoods and make them dumps. Right? So efficiency often leads to inequity. And so we don't often see efficiency and equity going hand in hand at least not in the United States. But to be honest, we weren't looking for that because our story was built around a propaganda campaign by people who weren't interested at all in equity. Not at all.In fact, they discuss and we have a little bit about this in the Christian capitalism chapter they openly discuss the idea that some people really are superior and should rise to the top and equity is simply not equity is not the American way. So following that thread we would never have found what you're asking about. So I hope it's true that at some level you can have relative efficiency and relative equity. But that's not what our actors were talking about.David RobertsYeah, they very explicitly say attempts to improve equity are ipso facto going to suppress economic growth. Like they don't they don't even allow the possibility that you can do both at once. They set them up as being diametrically opposed.Erik ConwayYeah, which I actually which I believe, anyways is a fundamental misunderstanding of Adam Smith's capitalism. His basic idea is that the circulation of capital improved everything. But what he meant, I think, was circulation top to bottom. Right. The money has to reach the people at the bottom because that's where most people are and improve their lives and that's what drives the system. If you have the concentration of wealth at the top then it becomes not only less equitable, it becomes a less efficient and less generative economy. But that's me. I think a great many economists don't think in terms of top to bottom circulation of wealth that's more circular in their minds or something, but I don't think that's what Smith meant.The concentration of wealth strikes me as being less effective long term and it's certainly less stable. I'm sure I've got more questions though.Audience MemberSo it's certainly easy to be cynical about corporations talking about ESG. But overall would you say that the increasing talk about and emphasis on ESG is a bit of a backlash to some of this capitalism and free market mythology? Or is it pure whitewashing?Erik ConwayOh, I wish I knew. But being a historian, even the present is blurry to me. It's easier to see the past in a lot of ways, but it seems to me at one level a welcome response to the shareholder value idea in which the company only has the interests of its shareholder at stake. And the EEC movement strikes me as being at least better than that, that there is some other set of interests and values at stake there. I hope it's not all whitewashing or greenwashing rather as the term goes. But like I said, I don't study the present particularly strongly.So people ask me questions like what are the best companies for environmental things? And I have no idea, none whatsoever.David RobertsIt's worth pointing out though that as we speak the usual suspects are mounting an enormous very well funded propaganda campaign against ESGs. Specifically like there's Republican states passing laws against it. So it's real enough to cause them to mobilize against, I guess so something.Audience MemberYeah. Comment question. Since 1968 I'm looking at the Gini coefficient from FRED database here. It's risen from 38.6 to 49, which is incredibly high measure of inequality. And since that time there's been six different agencies added to the federal government. And you just discussed heavily on we don't have a free market and we have a very strong governmental regulatory capture system.How do we overcome that? And probably the biggest beneficiary we see today is the world's richest man, Elon Musk. With SpaceX, with governmental money. We've got all kinds of carbon capture systems with these batteries and his new cars. All we doing, we're just handing him money. And isn't government the problem there? I mean you talk about this okay ...David RobertsI think we got it. What do you think, Eric?Erik ConwayAbsolutely. We have a less and less equitable society and we don't spend a lot of the book trying to figure out what's at fault there. Personally, I would blame capital gains tax more than just Elon Musk or the expansion of or the addition of federal agencies. Don't get me started on Musk because I have always seen him as being nothing really but a successful harvester of federal dollars and also a really good propagandist, until recently.David RobertsHe's really off his game lately.Erik ConwayYes, he used to be good at the whole fanboy thing, and maybe he still is and I'm just left the family, I don't know. But regulatory capture, real problem.David RobertsCan we throw in the Supreme Court removing all limits on campaign, on finance spending, and we throw that in there. If you don't like corporate capture, then.Erik ConwayThat's another again, we don't go there in the book. It's already too big a book. But yes, the equation of money and speech is a whole other level of corporate capture. Right. It doesn't just allow unlimited lobbying spending, but an unlimited political advertising spending. And that just reinforces the propaganda power of things. And I guess I would say back to the original question, I actually don't know how you break the cycle here. It's one of those things where historians can help you diagnose the way the world is, but not necessarily help you fix it. Because I don't know how to undo the equation of money and speech.I don't know how you build a government that can't be captured somehow.David RobertsBut I mean, there are governments out there in the world that are more competent, that are less wasteful, that are less captured, like there are better and worse administrative states. So at the very least, you can do better than we're doing.Erik ConwayYeah, that's right. And so one of the things we intended to do with the book and ultimately didn't because we decided other people were already writing about it is that the idea that there are varieties of capitalism and Europeans practice much different varieties by and large, than we do and that is wrapped up in the kinds of states they have built, right. And that just takes us back to the idea that there aren't actually any free markets. Markets are embedded in states, they're embedded in particular cultures, and those things can be changed. It's just a question of so what I posed to my audience is the question really is what kind of state versus-slash market do we want?Because we're the ones that have to choose and then have to figure out how to make the politicians do what we want. And that's a tough road to haul, particularly when we have this basic problem of the equation of money and speech and therefore the richest man in the world gets to decide who gets heard. And by unabout what.David RobertsI'll get to your question one second. But I also just wanted to throw in that some of these big states that have huge taxes and robust welfare programs actually have the freest markets, like Finland or whatever. They have fewer regulations on business. They have enormous taxes and enormous redistribution. But the business sector itself is relatively free compared to ours. So we're not even getting the free market we're promised, much less all the rest of it. Alright, final question.Audience MemberSo I'll get historical 60, 70 years back, the straw man of communism gets beaten to death for a couple of decades. And to what role did business, American big business, play in that particular bonfire? Or was there another path? Or was that whole anti-communism deal more of an invention of the wealthy?Erik ConwayWell, so the anti-communist crusade of the business community goes back well into the 19th century because they were terrified of the communist potential revolution of eliminating private business. So they were always leaders of the anti-communist charge, and they used that as a foil to oppose unionization.They would use it to oppose they did, in fact, use it to oppose child labor laws because it was taking children away from their families and making them wards of the state and so on. We tell all that story. So it's been that rhetoric, that anti-communist rhetoric has been a big business rhetoric for more than a century. They were fundamental to helping spread that set of ideas throughout the United States for longer than any of us have been around.David RobertsYeah, there's another thing I discovered through the book is how far back the knee-jerk response of socialism goes. They were using that from the jump. I didn't know how recent that was. It turns out that's been all the way through.Erik ConwayIt's been a universal curse. Now for conservatives for more than a century. It's lost, as far as I can see, any meaning or any relationship to what the socialists actually originally wanted or intended.David RobertsAlright, last question. Sneak one more.Audience MemberI mean, there's a lot of corporations that one would argue do a lot of good things. Like Boeing has been a corporation that's provided an immense amount of jobs and pensions, and it's a lot of our economy. And then you could argue that corporations just need regulation by government to be good to create wealth. But I guess my question is, as a historian, what countries in the world have done a better job than the United States on all these things we're talking about? I mean, it's good to criticize all this stuff, and it's definitely lots to criticize, but are there any countries that stand out as an example of what we should be more like?Erik ConwayWell, first I want to say again, I don't want to come across with the idea that all corporations are bad or that everything corporations do is bad because markets are tools, there are constructs, and they can be very powerful tools for positive things when they're well run. And the second thing I would say is that it's also a mistake to think that government can do everything. Boeing was run by engineers for about half a century and that Boeing did enormously positive things. By and large. I used to study aviation history, and they're still around because actually for a long time, they didn't have a lot of military contracts.They managed to survive on just commercial businesses, which almost nobody in aerospace did. And that's a positive thing. And as you were saying, help really build this city. Well, that's a whole other story. Well, Boeing bought Douglas or Douglas bought Boeing with Boeing's money or something. Yeah. Anyway, where I wanted to go with that was that I wish we could also talk about corporate culture changing because in what you see in Germany, for example, is the corporations, the corporate leaders don't fight particularly hard against their unions. They have a different, completely different, really set of social contracts there in which they still are very productive and yet they don't have the very hostile labor management relationships that we do.And that's fundamentally to me about the internal culture of corporations and also what business leaders are taught in business schools and economics departments and so forth. So again, I don't want to convince you that the government is always right or that the government is the only thing that can save us, but there are a lot of changes that that would need to be made, one of which is corporate culture. Another of course is would be a better culture of public service and in the government because a lot of the government either stopped doing its regulatory job like FERC and the California Energy Crisis in 2000, decided, well, it just wasn't going to regulate. And that's a failure of the idea of service, public service too, as well as corporate penetration of companies.David RobertsI mean that's a classic example of Enron out there propagandizing for markets and just rigging ...Erik ConwayUnregulated markets.David Roberts... up one side and down the other, like farthest thing from a free market participant you can imagine.The question was about what about employee-owned corporations.Erik ConwayWhat I'd say is a little bit of a dodge of the question because I don't know a lot about the longevity of such companies or what kinds of goods or bads that they do. But what I would say is that again, our study was really of propaganda and we have this idea of private free markets and yet we live in a very mixed economy, as you say. There are not just shareholder owned companies, there are worker owned companies, there are nonprofit companies all over the place. I actually work for one. So that's not the free market mantra we're talking about, is not the whole story of America.And sometimes we not just Naomi and I, but we all forget that there are other kinds of business and capitalism possible. And that's what I'd say, that there are other opportunities to build businesses that aren't shareholder valued returns to private shareholders.David RobertsAlright, thank you everyone. Thanks for coming. Thanks Eric for coming out. Thanks for the book.Erik ConwayThanks for coming.David RobertsThank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf. So that I can continue doing this work. Thank you so much. And I'll see you next time. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.volts.wtf/subscribe

Every year, the Business Council for Sustainable Energy partners with BloombergNEF to produce the Sustainable Energy in America Factbook, a compilation of charts, graphs, and statistics about the US clean-energy industry and where it's headed.The 2023 edition is out and it shows a record year for investment in clean energy and installations of renewables — alongside record demand for natural gas and record investment in gas infrastructure.To chat about some of the numbers, I contacted Lisa Jacobson, president of BCSE. We talked about the momentum behind clean energy, the enormous investments uncorked by the Inflation Reduction Act, the supply-chain difficulties that plagued the industry this year, the backlash to ESG investing, and the surge in energy storage. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.volts.wtf/subscribe

Under a new partnership, Heirloom Carbon Technologies captures carbon dioxide from the air, then passes it to CarbonCure Technologies, which permanently sequesters it in concrete. In this episode, CEOs Shashank Samala of Heirloom and Robert Niven of CarbonCure give the lowdown on this pioneering carbon removal project. (PDF transcript)(Active transcript)Text transcript:David RobertsLast month saw the announcement of a pioneering project: a company called Heirloom Carbon Technologies will capture carbon dioxide from the ambient air and then hand it off to a company called CarbonCure Technologies, which will inject the CO2 into concrete made by a company called Central Concrete. It will mark the first time ever that carbon from the air is permanently sequestered in concrete.Heirloom, with runs the US’s only operating direct air capture (DAC) facility, does not use the familiar capture technique that involves giant fans. Instead, it binds carbon to exposed rock and then cooks it out using electric kilns — and then binds more carbon to the rock, in a circular process. It claims the capture is cheaper and more efficient than previous methods.CarbonCure injects the CO2 into a concrete mixer, where it mineralizes, becoming permanently captured even if the building using the concrete is demolished. In the process, it strengthens the mix, requiring less cement and cutting costs.Direct air capture (DAC) has faced a great deal of skepticism, and concrete has the reputation as one of the worst carbon offenders, so this project — one of the first that can fairly be called carbon removal — could go a long way toward convincing investors that the former can help the latter change its ways, with a technology that is, at least some day, commercializable.I talked with Heirloom CEO Shashank Samala and CarbonCure CEO Robert Niven about their respective processes, how they work together, and what the project says about the future of carbon removal.All right, Shashank Samala, CEO of Heirloom Carbon Technologies, and Robert Niven, CEO of CarbonCure. Welcome to Volts. Thank you guys for coming.Robert NivenThanks very much for having us.David RobertsThis is really a nifty project you guys are working on together. It's two separate pieces that normally I would probably do a pod on each. So we're going to have to, or at least I'm going to have to be less wordy than normal to squeeze it all in in 1 hour. I want to talk about both halves of it. So let's start with Shashank. The first half of this process is Heirloom’s process of removing carbon from the air. Can you just explain quickly how that process works, what it looks like?Shashank SamalaSure. So, Heirloom, if you're not aware of who we are, our goal is to basically remove a billion tons of CO2 from the atmosphere annually by 2035. And our whole goal is to help reverse climate change. And the way we do that is through a process called limestone looping. Essentially what that means is we use a rock that is very abundant in nature, limestone, that has a natural propensity to pull carbon from the air. What we do is we basically give superpowers to limestone to pull a lot more carbon than it otherwise would naturally.So how it works is we start with limestone, we put that into a kiln, we heat it up, and we pull out the CO2 that's already sequestered in the limestone, which makes the leftover lime highly thirsty for CO2. So we take advantage of that natural property by laying it out on trays. Think about baking trays. I lay them out on trays, and then we vertically stack those trays, very tall, and the air brings in the CO2. And the the lime sitting on the tray acts as a sponge, pulls up the CO2 molecules. From there, it becomes limestone again after it pulls it up. And we do that in about three days.Naturally, it would take many months to pull carbon from the air. We did that in three days using our well treated algorithms and technology.David RobertsSo in three days means the lime is full, absorbed as much CO2 as it can.Shashank SamalaExactly. We don't go all the way up to 100%. We go up to about 85%, which is sort of the optimal point, we realized. And then, yeah, it becomes limestone again, which is great, because that's what you started with. So we can recycle limestone by putting it back into the kiln, pull out the CO2 we captured, and then store it underground or store it into concrete, which you're doing with Carbon here.David RobertsRight. So one of the questions I had is you crush up this lime and spread it out on, well, calcium carbonate is limestone. Calcium carbonate ...The chemical formula. Exactly right, the calcium carbonate.And then after you bake it, take CO2 out. Then what is the chemical remainder?Shashank SamalaCalcium oxide.David RobertsCalcium oxide. Right. So you have calcium oxide laid out on trays, becoming calcium carbonate. Then you take the calcium carbonate, cook it, get the CO2 out of it, and then do the whole thing over again.Shashank SamalaExactly. We just keep doing that. It's a super simple chemical process to pull carbon from the air.David RobertsYou have this calcium oxide, and it's absorbing CO2 from the air. That just sounds like an ambient chemical process. How can it be accelerated? What does it even mean to accelerate that?Shashank SamalaSo, technically, calcium oxide, we hydrate it, it becomes calcium hydroxide. Basically, there's a water molecule binding onto the calcium oxide. But essentially what we realized is that there's a specific parameter space where particle size, particle size distribution, thickness of the bed, humidity, temperature, airflow, there's all these different variables that dictate how fast calcium hydroxide likes to bind on to CO2 molecules. So it just so happens that in nature, there's a specific parameter space where this happens, and in nature, it doesn't see that parameter space as often. What we do is essentially make it see that all the time.And how we specifically do that is really the IP. But we've collected millions and millions of data points over the last few years, doing lots of small experiments, adjusting thickness, adjusting particle size, surface area, all of these things. And we found that parameter space. And as the weather changes throughout the day, we have to change that parameter space. So essentially, we babysit these trays. If you look at, essentially, what this technology looks like is you have these tall stacks of trays, and in the middle, you have a little robot that goes up and down, and every few hours, it's babysitting these trays so that they can be carbonating as fast as they possibly could.David RobertsSo is this all in a big climate controlled facility of some kind? I mean, presumably, you have to control the climate because you need specific conditions.Shashank SamalaYeah. So, fortunately, we were able to not have it be fully climate controlled. So if you actually if you come to Brisbane, our headquarters, where we have this pilot facility, this is actually sitting outside in ambient conditions. Yes. So this robot is actually creating a microclimate for each tray every few hours. So because what we're trying to do is try to symbiotically work with nature to pull carbon, right. And nature gives you humidity and temperature and airflow. Right. We don't want to put forced airflow, these large fans, pushing air through. We want to leverage wind. We want to leverage humidity.And then when it doesn't get enough from nature, we complement it. We accelerate it with a few things.David RobertsAnd so when you have this calcium carbonate that's absorbed all the CO2 and you put it in the kiln, what does that kiln look like? How's it powered? And how hot does it have to get?Shashank SamalaSo the kiln is actually super simple. It's like your toaster oven. Effectively, it's electric. It can be run by renewable energy. Essentially, it's a metal tube, and you have an electric heating element, and just like your toaster oven, that sort of surrounds it. And then you have insulation ceramic that keeps the heat inside. And then that's it. You essentially send calcium carbonate through that metal tube. It stays in there for the order of minutes.David RobertsAnd how hot is the inside?Shashank SamalaIt's about 850 to 900 degrees C.David RobertsOh, wow. Really hot.Shashank SamalaIt's hot. Electric kilns can actually go way higher than that. That's one of the questions we get. It's like, oh, you're using electricity. Why are you not? You would think that you would use natural gas or some other form of combustion to get that temperature. It's like no, the electric arc furnaces for steel actually go up to, like, 14,000, 15,000 degrees C. So, yeah, we need about 850, 900 C. And then, you know, it's only there for seconds to minutes.David RobertsOh, really? So the CO2 comes out pretty easily.Shashank SamalaYeah, exactly. So there's only two things that come out. It's CO2 and calcium oxide. The CO2, it's pure. We capture that gas and compress it. And then the calcium oxide, we reuse it again.David RobertsAnd what's the sort of energy balance here? It just strikes me that it must take a lot of you're saving energy by letting natural conditions do the air circulation and humidifying and all that, but you're using a lot of energy in the kiln. I'm just sort of curious how energy intensive this is per sort of captured ton of CO2. I guess there's not a big comparison base of other carbon capture technologies to compare it against, but well, the lens.Shashank SamalaWe when we first started looking for which approach to use to pull carbon from the air, two things were important to us. One was use abundant, abundant minerals, abundant processes.David RobertsDid you start with the idea of mineralization, or did you just come to this with just a blank sheet of paper and say, what's the best way to capture carbon?Shashank SamalaSo I actually came in from the mineralization perspective. So I was looking at rocks. I was talking to lots of scientists working on using rocks to pull carbon because it's just like an abundant mineral to start. And if you want to pull gigatons of CO2. You need to have abundant minerals that are also trillions of tons of rock in the Earth's crust. And then we realized, actually, just using rocks won't get you the economics and the land. We wanted to use as little land as possible. We want to use as little water and energy as possible.So we needed to engineer it a little bit to ensure that we use as little energy as possible.David RobertsIn terms of materials, how much is lost in the full cycle of sort of you're mining the limestone to begin with, I guess, right? There are limestone mines around already. Limestones abundant. So you're mining the limestone to begin with. Once the limestone goes through, one of these whole cycles gets cooked, replaced, absorbed, absorbed again, cooked again. How much material is lost in those cycles?Shashank SamalaSo, so far we found very small material losses. Essentially, that's one of our main metrics over the last couple of years as we were scaling it up to actually putting this outside. And one of the things we get, it's like, hey, if you put these rocks out there, doesn't the wind blow everything off? Essentially what happens is when this is hydrated, it actually turns into a crust. It's like a cake. So, yeah, we've seen very small material losses, and we will continue to tweak the entire process to reduce it even further.David RobertsBut your materials are pretty cheap. They're not the big cost center.Shashank SamalaIt's not. I mean, the material itself is like less than half a percent of the entire CapEx. Limestone is, You can buy it for $20 or $30 a ton. It's the second most mine material on the planet. You have way more than you need.David RobertsOne additional question I wanted to ask about the process is you make a big deal about modularity. And this is a subject close to the heart of Volts listeners. We just did a pod a few weeks ago about sort of what kinds of technologies get on learning curves and what kinds don't and sort of what features of a technology lend it to rapid learning. And one of those features is of course modularity is it have easily reproducible bits. So just say a little bit about how you sort of had that in mind as you designed the process.Shashank SamalaIt was absolutely number one for me. I come from a manufacturing background. Before this I had an electronics manufacturing company where we basically built lots of circuit boards in a factory. One of the things that humanity really understands and knows is how to build things in mass volumes with a very steep learning curve. Right? And we saw that with solar panels, lithiumion batteries, cars. Tell the team here it's like you're trying to build cars, not airports. Right? Airports are on site custom construction and the folks who are working on one airport are not going to the next airport.The learnings don't don't translate.David RobertsWhen people think about a big direct air capture facility. I think probably what comes to mind is something like an airport, a big bespoke one time thing, but you are trying to avoid that.Shashank SamalaYeah. So there's a difference between modularity and the plants, right? So the plants themselves need to have modules that are mass produceable or built in a factory so they can just be brought to the site, bolt them to the ground, ready to go, instead of having to build up from the ground up on the site. So essentially you're trying to minimize on site construction. So there's always like solar panels, right? They need to be bolted down to the ground. There is some concrete slabs involved and wiring and plumbing, et cetera. But you want to minimize that as much as possible and that's the fundamental idea behind Heirloom.Like our tray is basically the smallest module and we make lots and lots of trays.David RobertsOne doesn't think of trays as something that have a lot of room for innovation. Is there anything special about the trays?Shashank SamalaThere's a few things that are custom and it so happens that the world, we needed such large trays that we went to the vendor that makes the largest trays in the world and they just would not make the trays that we needed. So we actually make custom trays. Yeah, they're large, so we make the world's largest trays. They use traditional manufacturing processes, extrusion, thermal, formula, et. They're not complicated and that's one of the principles behind Heirloom too. We don't want to come up with a new manufacturing process. The world has immense just lots and lots of experience building all sorts of things and we just want to leverage them and scale them to the max because that's how you get 2 billion tons of CO2 remove it as fast as possible.David RobertsSo the trays a module, the trays stack.Shashank SamalaAre also and the next level of module.David RobertsIs a module. And presumably the kilns are pretty standard issue. They don't have to be tweaked or whatever for individual.Shashank SamalaYeah, traditionally, if you go to a cement factory, kilns are actually these massive onsite built kilns. But we use an electric kiln technology that we're actually going to be releasing a few weeks here that is modular. So you essentially stack a couple of cylinders on top of each other.David RobertsOh, interesting. So you did a little design work of kilns of your own?Shashank SamalaYeah, we did some here. We were working with a technology partner to do that too.David RobertsThis whole process, presumably, if you sat down to try to figure out what's the best process for capturing air carbon, you looked at the traditional. I think when most people think of direct air capture, if they think of it at all these days, the few people who think about it at all think about the big machines out in the desert with the fans sort of pulling air over a sorbent. Is your process more efficient than that in terms of sort of energy and material input versus CO2 output?Shashank SamalaYes. At the end of the day, what we're trying to do is use abundant materials that are incredibly cheap and use as little energy. That is thermodynamically possible. Really, all of our energy is in that back end where we are regenerating the sponge, which is common across all directory capture technologies. That's sort of second law of thermodynamics. You have to put in some energy to regenerate the sorbent. And for us, we want to essentially lower that regeneration energy as much as possible and then not use energy when we can leverage nature and other things.David RobertsIt strikes me then that the cost of energy is going to be one of your big top line items. How big is the cost of energy in your overall picture?Shashank SamalaAt scale, it's more than half. And that's exactly where you want to be, right? Because laws of physics tells us that you have to put in energy to do gas separation, especially gas separation that is as hard as 400 parts per million. So if you design a system and you look at the long term economics, you want to make sure that, you know, at long term, almost all of all of that is energy, because that's something you cannot beat. Like energy creates your cost floor.David RobertsRight.Shashank SamalaIf your CapEx ends up being a much bigger proportion, well, you haven't really designed or engineered it. Well, that's what I tell the team. It's like you want your cost floor to determine by physics and not engineering. So that's why we use very simple trays. We're just putting a bunch of rocks and a bunch of trays and using a metal tube, on the other hand, and putting some insulation around it. So you want to keep that as low as possible so that your your $100 a ton. That's really our cost target. You've probably heard of the cost target.$100 per ton. That's really the cost point where it's affordable for humanity to do this at a billion ton scale and actually make a meaningful impact.David RobertsAnd of course, it's like renewable electricity is galloping down the aforementioned cost curve. So insofar as you can hit your ride to it, it's going to tear you down the cost curve too.Shashank SamalaYeah, exactly. The nice thing about renewable energy for us is you can pull carbon from the air anywhere, right? It can be in the Gulf Coast. It can be New Zealand, it can be South Africa, India, Indonesia. Wherever you go, the concentration of CO2 in the air is exactly the same. And that's what our technology works with. So we will go to places where renewable energy supply is high, but the demand is low, so we don't take away the supply that could have been used for food production or putting our buildings.David RobertsSo ideally then, these facilities would be colocated with some big renewable energy just to minimize ...Exactly.Transmission costs and all that. Two final questions. One is, you mentioned the $100 cost per ton target. Can you give us a sense of where you are on the road to that? Is there a number?Shashank SamalaYeah, so we're in the sort of high hundreds of dollars per ton right now and essentially we are at the demonstration scale, right? We are building this by hand, engineers are building them. We built a couple of Formula One cars effectively, and we need to get to a stage where we can mass produce Toyotas off of the factory line. What is Formula One cars cost these days? Like millions of dollars versus $20,000 Toyota. So at the end of the day, the material inputs are so cheap, limestone and trays and metal tubes, that at scale, we should be able to hit that cost.And for us, it's all about how do you get there as fast as possible.David RobertsYeah. And if you're chosen super cheap material and renewable energy, which is super cheap, and if those are your only two inputs, logic says you're going to get cheap eventually as you approach the cost of the materials. So the final question is this. At the end of this process, you have CO2, which you can do anything with. Are you deliberately staying out of the business of doing something with it? I mean, is the model always to just hand off the CO2 to someone else who's going to do something with it?Shashank SamalaYeah, there's a lot of things you can do with CO2, but for us, there's only two things you can do so far. One we are looking at is concrete, working with folks like CarbonCure and putting it underground. And both are permanent. And an incredibly important principle is permanence because CO2 stays in the air for 1000 years. So you don't want to pull carbon from the air only for that gas to go back in the air ten years later, 100 years later, we're just pushing the buck into the future. So for us, it's incredibly important that we permanently sequester it into something so it doesn't come back out.And the only two things we've found so far with that type of over 1000 year durability is concrete, where essentially you're binding CO2 into a rock, it mineralizes and then putting it underground. And that is something that humanity has over five decades of experience putting CO2 underground. And it's permanent and we know it's safe.David RobertsBut are you planning at all to get into the permanent storage business? Or is the idea that you produce the carbon and some other entity is running the storage facility, how does that work?Shashank SamalaSome other entity is running the storage facility. We're going to be focused on really building an incredibly efficient, cost-effective capture system. And we will work with a whole set of partners to put a billion tons of CO2 stored somewhere permanently.David RobertsI've heard you say this in other interviews, too. But just to be clear, the vast bulk of it, especially once we get scaling up towards whatever, billions and billions of tons, the vast bulk of that is going to be stored in underground caverns. The amount that can be used in a way that permanently sequesters it is a relatively small fraction of the total amount that's going to be produced.Shashank SamalaYeah, I mean, as much as possible, every ton of concrete we can put CO2 into, we will do that. That is our first priority. Right? Because essentially you're creating a stronger building material. It's a value added product and it's permanent. You're checking all the boxes and that's better than putting the waste underground. So every ton of concrete, we can do that. We will absolutely want to do that. And when we can't, we will put that underground. And most likely at a gigaton scale, most of that will likely be underground, but it's hard to predict the future, right?David RobertsRight.Rob, let's talk to you then, because here is where we get to the part of the relay race where Shashank hands you the baton, or rather hands you a bunch of tanks of CO2. So describe for us then the CarbonCure process, which starts with a source of CO2. You get the CO2 from Heirloom and then what?Robert NivenSure, I'd be happy to jump into that just to help the audience understand, is we're both carbon removal companies, but coming at it from both ends of the process.Shashank on the capture ourselves on the relay race, receiving that CO2 and doing something with it. CarbonCure has been in business for about ten years. We're a Canadian company and we have about 700 plus customers worldwide that every day are using CO2 to mineralize it in concrete. To make a better, stronger concrete that provides some cost efficiencies by cement efficiency. By making stronger concrete, you need less cement which provides that economic incentive.And low carbon concrete is in great demand in the market, not only private sector, but we're seeing a lot of policy incentives as well.David RobertsSo you're in the business, you're sequestering carbon, you're doing it today, you're getting CO2 from someone and sequestering it in concrete. Do you have any what's the current scale so we can get our heads around kind of what's involved there?Robert NivenWe have everything connected through the cloud and you can actually pull up our our home page and you can see the numbers go up every second about how many metric tons and it's just about 250,000 metric tons to date. So the key difference here is that most of our CO2 to date is received from what's called post-industrial sources. So these are our large emitters and rather than diverting those emissions into the atmosphere, they're capturing it, compressing it. And companies that are industrial gas companies are taking that CO2 and selling it to a multitude of different industries.And we're a relatively new user of that CO2.David RobertsThe big one is beverages.Robert NivenFood and beverage is a big one. Yes, food and beverage. Also some CO2 is used in things like enhanced oil recovery which some other DAC companies are pursuing. So lots of different ways that you can use CO2. But the main point is there's a large existing commodity market for CO2. The key thing here and what's really special about our work with Heirloom is that this is direct air capture source of CO2, right? And by getting CO2 from the air it allows you to actually reverse the effects of climate change and pull down the parts per million of CO2 in the air rather than limiting and reducing the rate of emissions that go into the air, so there is a distinction.David RobertsAdditionality is the term of art here. This is 100% additional CO2.Robert NivenWell, I would still say that it's also additional if you're using postindustrial CO2. The key difference here is like this actually enables you to get into removal, a pure removal kind of category.David RobertsRight.Robert NivenFor ourselves, we've always seen this as we'll develop huge and a multitude thousands of storage centers, which is also called a concrete plant to most people. We'll run ahead as fast as we can and develop all of this demand for CO2. And then as DAC gets online is that we'll have the optionality to be able to use that CO2 when it's available.David RobertsWill there be degrees of greenness of concrete depending on the source of CO2? Have you thought about that? Sort of like different levels of concrete?Robert NivenI think so. We sell carbon credits as part of our business model and we definitely hear from our credit buyers is that they're willing to pay more if it's using atmospheric sources of CO2.David RobertsInteresting.Robert NivenSuch as DAC or biogenic source or whatever it is, whatever can get CO2 out of the air. There is a demand for that. The other group that really matters are the people that purchase the concrete. So these would be architects, engineers, building owners. They're also really excited and probably not as sophisticated on the CO2 sourcing question, but I wouldn't be surprised if that starts to become higher in their consideration. The other point that was brought up by Shashak earlier was permanence. That is very, very important for everybody is we don't want to be going through all of this trouble to put away CO2 for it to just bubble out again in 30 days, like what's the point? So that's very important.David RobertsSo when you say you inject CO2 into the concrete process, spell out a little bit what that means, what that looks like for people who are not that familiar.Robert NivenMost people, if they're familiar with CarbonCure are aware of our readymix technology. But CarbonCurever the last three years has expanded by creating technologies that use CO2 in the concrete value chain in different ways. But let's start off with the ready mix technology. So whenever concrete, if anyone's visited a concrete plant, there's about 125,000 of these locations worldwide, about 7000 of them in the US. They're basically all the same. They are mixing sites that take aggregates, rocks, cement, water and a few performance enhancing chemicals to mix those all up in a huge mixer. And then they pour that into a concrete truck, which you are all aware of and seen driving around the road.And then that's delivered to the construction site so that if we go back and look at that mixer is all those ingredients are being added. And just like Shashank is like if we're really going to meet scale is we want to have a modular system that in our case retrofits these existing concrete plants very, very cheaply and very very quickly without disrupting their production. In fact, it takes us a day, we don't charge any CapEx and the system starts to use that is enabled to start using that CO2 and becomes a carbon removal factory. It starts mineralizing CO2 the next day and it has all these value added benefits without creating a price premium on the product.David RobertsOh, interesting. So this is not some bespoke process that you have to build a concrete plant around. You're literally just going to an existing concrete plant, slapping something on that takes a day to add and then from the concrete plant owner's perspective, that's it. Nothing else changes. They don't have to do anything else operationally to accommodate this at all.Robert NivenWe automate everything. That's the key. And it's the same design principles that Shashank has brought into his company. Of course, he's done it fully, separately is you want to make this as simple as possible to scale because the concrete industry just does not have the discretionary budget to start. Spending a lot of risk capital in these kinds of solutions. So we've done all that for them.David RobertsAnd they're very small C conservative too, for obvious reasons.Robert NivenPerhaps it comes in all different flavors of concrete producers, but they all want to work on this, but they have a lot of limitations. So what we've tried to do is make it as simple as possible, but also do it in a way that they receive the most rewards and that can be in the form of cost efficiencies and production, being able to tap into this rapidly growing demand in the market for low, so they can sell more. We always recommend to keep the price at parity and also participate in carbon markets. So we create the incentive structure and make it really simple to adopt and quick so that producers can start to mineralize CO2 as quick as possible.So back to your question how the process looks like is we're actually adding CO2 into the mixer and please come to our website as well. We actually have footage and video of what's happening and then we also have some animation on what's happening at the chemical level. But essentially by adding CO2, it's a very similar type of reaction and thermodynamics as Heirloom. And that that CO2 is very quick to react in seconds with the concrete and it reforms a mineral, a calcium carbonate, if we go back to that again, but in a specific size called it's a nanomaterial, which provides all these performance benefits for concrete as it develops its strength, which then leads to some commercial benefits.And then we also use CO2 to treat the main wastewater from the plant and that's called our reclaimed water technology. So it's a second way that we can mineralize a lot more CO2 on the concrete plant, but at a different site of the concrete plant where all their wastewater is being collected is we can actually treat that water to have it upcycled so it can be reused instead of version cement and water. And then finally we can make CO2 into aggregates, but all three of those can be bundled together to be able to drive down the carbon footprint of concrete.David RobertsYeah, this was my question when I was looking at your website. If I'm a concrete plant owner, can I get all of those versions? Like, can I get CO2 in my wastewater and CO2 in my mixer and CO2 in my aggregate? And are they additive? Like, will that result in three times the carbon removal?Robert NivenYeah. And that's how we're building this business, is to create multiple ways to mineralize CO2 in the concrete value chain and then surround that by doing all the enabling work. So we make it a very easy decision for concrete producers to do that. I will caveat that we don't have the aggregate technology commercialized, but the other two we do. In fact, we had the first pilot with Heirloom that was at the Central Concrete Facility, which is a division of Vulcan Materials in San Jose, California. That plant is the first in the United States to have the reclaimed water and the ready mixed technology.So they're one of now two plants in the US. That are able to provide that combo, which is really exciting,David RobertsInteresting and do the strengthening benefits you're talking about, do you get double those too? When you do both the stages of adding carbon.Robert NivenThe ready mix technology gives you that strength benefit and then on the reclaimed water, jury is still out on redefining the strength benefit. But what it definitely does is it allows you it's a substitution effect, is that you're actually able to recover the cement in that wastewater and then use that instead of virgin cement. So at the end of the day, it's the same effect using less virgin cement to make concrete.David RobertsRight.Robert NivenBut you're achieving that by mineralization. What's cool about the reclaimed water technology is we actually won the Carbon Xprize for this technology, which was defined as the world's most scalable CO2 utilization technology.David RobertsInteresting. What happens to the water today? Is it just thrown out or what happens to the reclaimed water?Robert NivenMost of it just gets thrown out today. The traditional way of doing that is it would go into large settling ponds, they would scoop out the settled material, which by the way, is valuable cement and chemistry. That producer paid a lot of money for. And there was a lot of CO2 release to make that that would often just get landfilled and then the water would get sometimes treated for PH and then discharged. So we're able to turn all that process and eliminate it by reusing it in a circular manufacturing type of design.David RobertsInteresting, a question about the strength benefits, are the strength, by which we just mean the cement is a little stronger and so you have to use a little bit less cement in the concrete. So your savings that way, are those savings in terms of strength enough to pay for the thing? Or do you have to value the sequestration on some level to make this pencil out?Robert NivenWe are able to provide the low carbon concrete to the market in combination through our carbon credit sales and through these manufacturing efficiencies of using less cement, we're able to provide that concrete at no price premium by using a blend of both contributions. And that's very important. Like a year ago, if you go onto your podcast catalog, Rebecca Dell was on the show talking about how green premium is really, really important. We need to find ways to eliminate that to unlock adoption in building materials. And green premium is really anything can inhibit mass adoption. That's what's really important is that we don't apply that green premium.So that the market whether that be the government which is the largest buyer and we're seeing a lot of buy clean type legislation or private sector which have a lot of sustainability targets from corporate actors are able then to make these kinds of procurement decisions without compromising on price and certainly not compromising on quality, and working with the same suppliers that they've worked with for years prior.David RobertsMaybe this is a naive question, but if I'm a concrete manufacturer and I can have this done and installed in a day, it's not going to affect my operations. It's going to save me a little money on reducing cement, it's going to make me a little money on selling carbon credits. And otherwise I'm selling a more or less identical product at a more or less identical price. Why wouldn't I do that? What would stop someone from doing this?Robert NivenYeah, I would say just education. But we're already, like I would say I don't know for sure, but probably the fastest growing technology in the concrete sector. Concrete sector is not known to be rapidly adopting new technologies, but I would say we are growing at a very rapid rate. And certainly there are different kinds of concrete producers which normally adopt technology faster than other types of producers profiles. And we're seeing that happen. And the rate of adoption is happening far faster when we see those market signals like the procurement policies or even requiring environmental product declarations in the procurement process.So those kinds of things really accelerate this transition to the market. There's a reason why so much innovation is happening in San Francisco in the concrete sector, is because there's a lot of companies that operate there that are really walking the talk. And the concrete industry is enabled, empowered to bring their best forward. But if concrete producers are in markets where they're never hearing someone talk about decarbonisation, yeah, they have 20 other things that, that they can prioritize, that they need to work on.David RobertsRight? So you need some valuation of the carbon benefits to kind of push this up to the priority list.Robert NivenAnd it doesn't have to be a premium, right. When you say valuation, it just needs to be identified. Like an example would be of Microsoft. When they're building, they're asking all of their suppliers to say, I want to reduce our carbon target by X. And then they go around and they say, what can you do for me? What can you do for me? What can you do for me? When the concrete producer hears that loud and clear, and they may win that bid over a competitor if they have some ideas and they can bring something to the table.David RobertsI want to get a sense of scale before we move on from the process. Sort of if I'm producing concrete and I'm using your process to inject CO2, say I do both of the available options and I get CO2 injected into my wastewater and I get CO2 injected into my mixer, is the end product of that carbon negative or how close is it to carbon negative? Give a sense of scale, like how much of the carbon in the process is being offset by this?Robert NivenYeah, it's one piece of the pie. To get to carbon negative or neutral concrete is we're going to need some substantial changes on the cement side as well. And there are some fellow companies within our investors portfolio. A great example would be like a Brimstone who are working on the cement side. We're working with whatever cement is coming down the line and we're adding if you sort of combine the reclaimed water and ready mix, you're getting another 10% to 15%. But that's 10% to 15% off of a global commodity with a huge volume and we can do it today with very little CapEx and it's permanent.So if you think about a marginal abatement cost curve, it's like this is the furthest left on that curve. This is the thing that is easy to implement at scale. It has a significant percentage reduction, but off of a huge number, the volume of concrete is enormous. There's about 40 billion tons of concrete produced or 4.2 billion tons of cement.David RobertsAnd what's the number? I think it's 8% of global emissions, something like that.Robert NivenWe use the word the number 7% and most of that's cement. And the reason it's so big is because so much concrete is being used, it's second only to drinking water in production. Yeah.David RobertsSo you can take 10% to 15% of the CO2 basically out of the final product, but more than that is going to require deeper changes in the process.Robert NivenAnd that doesn't include our aggregate technology. So that will layer in a lot more. But we need to work together all the way along the value chain. The traditional cement sector are doing things like they're using supplementary cementitious materials instead of cement and that means using things like fly ash and slag. The problem is those materials are declining in availability, they're doing things like fuel switching, so using waste materials, energy efficiency, all those traditional things should be done. But then there's also some real deep tech stuff going on right now about fundamentally changing the cement process or chemistry.But that's going to take a lot of money and we still have a lot of time ahead of us. So we need to get going today on those immediately deployable solutions.David RobertsRight, so you've got a solution here you can just slap on existing concrete, plant boom, you get your ten to 15, maybe a little bit more CO2 out.Robert NivenAnd we've shown that this is not only applicable in the United States, but we're operating in many many emerging markets and really only about 2% of cement is being produced in the US. It's the emerging markets. That's where we really impact climate.David RobertsRight. And that's where it's growing.Robert NivenThat's where people is in concrete they haven't built out. There's a lot of population growth and we're already going into those markets now because we know that it takes a bit of incubation time and in some markets we're seeing that already entering into that scaling phase.David RobertsSo you need CO2 as an input to your process. Is there any supply issue? CO2 easy to get and I'm also curious how much you pay for Heirlooms CO2 versus more traditionally acquired CO2? Is there a big price differential?Robert NivenSo the first part of your question is, is there supply chain issues? Yes. Our industry, the concrete industry has been massively impacted over the last twelve months by cost and supply of cement and in our case cost and supply of CO2. Really? Believe it or not you can't buy CO2 in certain markets.David Robertsa shortage of CO2.Robert NivenAnd the price is skyrocketing because of it.David RobertsNo kidding.Robert NivenIt's a really perverse situation. So we need a lot more air loops and we need them to get them into market faster to start to diversify the supply of CO2 because some of the traditional emitters that you would have been collecting that CO2 are now changing their process so that that CO2 isn't becoming available anymore. Ethanol is the largest supplier of CO2 in the industrial gas market in the United States. So today if the price varies so much it's largely dependent on transportation. Very commonly we're paying well over $500 a ton for CO2. We haven't gotten to that stage with Heirloom where they have the volume, the capacity to have those discussions yet but we really encourage them to move along as fast as they can to get to that billion ton target because that gives us a lot more CO2 that we can work with.So we're exploring all different options for CO2 supply because just from a supply constraint or supply chain disruptions we're very encouraged to solve for that problem now.David RobertsIt's just something that sort of kind of confuses me. And maybe you both can take a swing at this answer, but I'm seeing a process here at your demonstration plant where we're digging a limestone up, doing a bunch of stuff that strips the CO2 out of it, and then injecting the CO2 back into the concrete process, where it then becomes limestone again. Why not just dig up the limestone and put it directly in the concrete? It seems like a lot of physical processes to sort of end up where you started. Maybe just sort of help me understand that kind of how is this not kind of running in place in sort of energetic and CO2 terms?I'm sorry if that was a very vague question.Shashank SamalaWhat we are trying to do is pull CO2 that is already in the air so you need a sponge to pull up that carbon and we find that calcium oxide which is derivative of calcium carbonate is highly alkaline. It's highly thirsty for that CO2 and then that's how you create the limestone and then you're essentially looping the limestone through the cycle.David RobertsThe limestone you're finding that you're mining has already absorbed CO2, right? That's what it's been doing. It's what it's been doing. So in a sense, it's already absorbed it. Why not just put it directly into the concrete, do you know what I mean?Robert NivenYeah, maybe my perspective solves that on that bit better. The way that I think about Heirloom is if you take a sponge and you put it into your kitchen sink and then you pick up collects water and then you squeeze it out, then you put it back in and squeeze it out. So it just happens to be calcium. But for our process, there may be some listeners who are from civil engineering and understand concrete a bit deeper, and they say, well, concrete already carbonates, right? So there is a natural process that's already happening, but that's limited to the exterior skin of concrete and it's not value added, it doesn't provide those performance benefits.So some way of looking at that is like, yeah, if you left concrete exposed to the air for 1000 years, which not too many buildings are around for a thousand years, is you might get that full carbonation extent. But even if you did that, you wouldn't get all the benefits, the performance enhancing benefits that come from carbonating actively in a certain way that create this nanomaterials, which provides the cement savings. And it's also done in a very short time frame within seconds. And so that's a key difference here is the time. And the other thing is, if you let carbonation happen passively, that's called weathering carbonation is it actually has the opposite effects on performance.David RobertsOh, really?Robert NivenYeah, it'll actually cause the PH to drop and then it will make the steel corrode, which makes said structure made with that concrete to have durability issues and may fail. So engineers like myself are trained to limit carbonation because you don't want that carbonation layer to get to the steel, because then that causes that concrete to fail. So you take many, many steps to stop that from happening. The way that we're doing it is different in that we're actually deliberately carbonating to a certain extent. So you get all these performance enhancing benefits and that's a really important nuance.David RobertsOne question is this sort of demonstration project of Heirloom on the one side, CarbonCure on the other side, pulling CO2 out of the air, putting it in concrete. I obviously see the benefits in terms of like educating the public, making carbon capture and sequestration more real and tangible to people, showing investors that things are happening here, all these effects. But looking down the roadways is the sort of direct capture to concrete pipeline. Is that going to be a real business? Is that going to scale up? Or is this mostly just for demonstration purposes?Robert NivenIf they can provide CO2 for less than $500, we've already shown it scalable. Right. So for us, that's the marker. And we're more than happy to work with Shashank and Heirloom because if they can provide us cheaper CO2 on a reliable supply and the market would prefer atmospheric CO2, I'll do that all day, every day. But we're already showing today that using CO2 and concrete is immediately scalable and used in emerging markets, developed economies, what have you.Shashank SamalaYeah, the awesome thing about concrete is it's the most abundant commodity, the industrial commodity that we produce. It's like 12 billion tons of concrete that we make. So that's the awesome thing, right? That's why this demonstration, I think, is so powerful. This is not just a small test, that it is a signal for what's to come. And I tell Rob every time I see him, tell me what is the price where we can put CO2 in every ton of concrete that they're at and plants that they're not yet at? Right. To reduce that cost per ton on the concrete plant side, where it is just economical, no brainer for a concrete plan to add Heirloom CO2 into the CarbonCure process.So, yeah, that's the thing that's exciting.David RobertsHas anyone done the math on the total sequestration potential of concrete globally? I mean, do we have a sense of scale here? The limits?Robert NivenWell, the theoretical limit is half the weight of cement could be carbonated.David RobertsOh, wow.Robert NivenBut I'm not saying you want to do that. I'm saying, theoretically, that Stoichiometry says that if there's 4.2 billion tons of cement, you could conceivably mineralize 2.1 billion tons. And that doesn't include all the aggregate. So you put all the aggregate on on top of that. And aggregate is the vast majority, about 85% 90% of the of the mass of of concrete. So you could really get to certainly hundreds of millions low billion tons of CO2 mineralization in the concrete value chain through carbonating, directly through concrete, like what we're doing, or by using CO2 to make aggregates.There's a few companies that are doing that as well. So it does become sizable. But I really want to emphasize it's, the value added nature and the immediate nature of this, like the time value of carbon is important in climate change discussions.David RobertsYeah.Robert NivenA lot of solutions are targeting to come online and start scaling in 2030-something. This is happening now, right? And we need to do as much that we can, especially if there's very little CapEx requirement and no price premium.David RobertsSo I've kept you long enough, I guess I'd ask the same question to each of you to conclude it's the nature of carbon removal that it's not producing a product that is valuable enough in and of itself to pay for itself. There's going to have to be a market created for removed CO2. We're going to have to sort of generate a market around this if it's going to pay for itself. So I guess I just asked both of you, by way of concluding shashank you first, what sorts of policies can help you or would most directly help you scale up?Shashank SamalaSo two types of policies. One is a compliance market that essentially requires corporations to effectively price carbon as an externality and have a cap for carbon emitted so that carbon that is not abated or reduced needs to be offset and removed. And there's a price for that.David RobertsAnd this is something a few companies are doing kind of voluntarily, right? Like the stripe constellation of companies are basically sort of modeling what that would look like. But that's got to be made law at some point, right? You're not going to get enough voluntary companies to ...Shashank SamalaNo, according to APCC. We need to be removing five to 10 billion tons of carbon from the air by 2050. And if you want to see that type of scale, if you want to see that type of it's a trillion dollar market at $100 a ton. That's a trillion dollars of revenue every year that we need to get to. So it's amazing and we're so fortunate to work with folks like Frontier Stripe, Shopify, Microsoft, who are all early buyers of this technology, but we need thousands more and policy and compliance markets is what gets us there.The second type of policy is what 45Q is doing today. You may have heard of it. It's a tax credit. It's a direct pay for direct recapture that is stored permanently. So, you know, we're fortunate and, and, you know, really we, we appreciate everyone who, who worked on the Inflation Reduction Act, having that passed last year, that is such an important element. It's at $180 per ton subsidy. It's it's stackable on top of what customers pay us that helps us bring down the cost of, of carbon removal so it is affordable to everyone. So, you know, that is something that, you know, not just the US.But, you know, every other count ry, europe and Asia should adopt something similar. So compliance markets and subsidies like 45Q really help us come down the cost curve.David RobertsIs there a country doing more than the US for this or they are their models to look to where they're going more sort of gangbusters on on DAC?Shashank SamalaCanada is actually pretty close. I don't think they've passed this yet, but there's a pretty large CapEx, I think it's called the Production Tax Credit that might be even more compelling than 45Q depending on how that's written. So, yeah, super fortunate that US and Canada, that is the type of competitive battle we want, right? This sort of geopolitical competition to see which country can help us decarbonize the planet. And in the past it was some countries in Europe that were sort of good hearted and have these policies like the subsidy for solar in the early 2000s.But now you're seeing countries compete against each other to bring clean tech and climate tech into their country. So I think it's warring from a good hearted nature to a competition, which is exactly what the planet wants. So that's what we should all be up to, optimistic and excited about.David RobertsAnd how about you, Rob? What's your policy wish list? What's on top?Robert NivenI would echo what Shashank said, certainly. And about we need many more credit buyers of some of the same names, like the Shopifys and Stripes. That really the Microsoft's and Patches that drove the world of demand for these credits. 45Q, for sure. For us, though, the most important policy are these low carbon, concrete, or buy-clean type procurement policies.David RobertsRight.Robert NivenNew Jersey just passed landmark policy just a couple of weeks ago. It was based upon similar work done in New York and Hawaii and California. We saw a lot of it in the Federal Infrastructure Act. That's what really drives us.David RobertsAre there federal procurement buy-clean elements in the Infrastructure Act?Robert NivenYes. If I recall, it's about $4 billion in incremental spend on low carbon material purchases. That is very important for our business, and that's what will drive the storage piece within concrete especially. And then that in turn will drive the DAC side or the carbon capture side. So that was really important. And they're designed in a way that also requires a strong reporting element using LCA documents like environmental product declarations, and you need those to compare the different options in a third party verified way. So that procurement policy is very important based upon the kind of models like we're seeing in New Jersey with its LECCLA Bill.David RobertsInteresting. Well, thank you guys for coming on and walking us through. It's really interesting. I think if nothing else takes a very abstract discussion, what can often be a very abstract discussion about carbon and carbon removal and all this and just makes it very tangible. One of the things I love about this is that on both sides, this is not PhD chemistry or whatever. It's trays of rocks and squirting CO2 into a mixer. I love the there's a ruggedness, I guess, to simple processes that I really like. So it's been really fun to talk through.Robert NivenYou're welcome. Although I will say we have a lot of PhDs working on our team as well, so I don't want to diminish the great work that they're doing to make it look this simple. You need to work extra hard.Shashank SamalaYeah, exactly. There's just a lot of engineering and science that goes into making things simple and scalable. So, yeah, you have lots of PhDs and great engineers on the team.David RobertsAll right, Shashank Samala and Rob Niven, thank you so much for coming on and talking us through. This is super fascinating.Shashank SamalaThank you so much for having us.David RobertsThank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf so that I can continue doing this work. Thank you so much, and I'll see you next time. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.volts.wtf/subscribe

Even if greenhouse gas emissions halted entirely right now, we would continue to feel climate change effects for decades due to existing carbon dioxide in the atmosphere — and warming could accelerate, as we reduce the aerosol pollution that happens to be acting as a partial shield. In this episode, Kelly Wanser of nonprofit SilverLining makes the pitch for solar radiation management, the practice of adding our own shielding particles to the atmosphere to buy us some time while we step up our greenhouse gas reductions.(PDF transcript)(Active transcript)Text transcript:David RobertsOne of the more uncomfortable truths about climate change is that temperatures are going to rise for the next 30 to 40 years no matter what we do, just based on carbon dioxide already in the atmosphere and the reduction of aerosol pollutants that are now shielding us from some of the worst of it. That's going to bring about potentially devastating changes that we do not yet well understand and are not prepared for.How can that short-term risk be mitigated? One proposal is to add particles to the atmosphere that would do on purpose what our aerosol pollution has been doing by accident: shield us from some of the rising heat. No one credible who advocates for solar radiation management (SRM) believes that it is a substitute for reducing greenhouse gas emissions. Instead, it would be a way to buy a little more time to reach zero carbon.My guest today, Kelly Wanser, is the head of a non-profit organization called SilverLining that advocates for research and policy around near-term climate risks and direct climate interventions like SRM that can address them.I've long been curious about — and wary of — solar radiation management, so I was eager to talk to Wanser about the case for SRM, what we know and don't know about it, and what we need to research.Okay then. Kelly Wanser of SilverLining, welcome to Volts. Thank you so much for coming.Kelly WanserThank you very much, David. I am a fan and it's a pleasure to be here.David RobertsAwesome. Well, I have wanted to do a pod on this subject forever. I'm going to try to be focused, but I sort of have questions that are all over the place, so let's just jump right in. The way I'm approaching this is, I think, to average people off the street, and maybe I even include myself in this. The idea of reaching up into the atmosphere and fiddling with it directly, thinking that we can dial in the temperature we want, strikes me as crazy. And I think that's probably a lot of people's intuitive response. Obviously, you have thought your way past that, going so far as to found an organization designed to advocate for this stuff.So maybe just tell us a little, to begin with, your personal background and how you came to advocacy for geoengineering, which is not a super crowded field.Kelly WanserI'll say first that you're actually not in the business of advocacy for geoengineering and it will give you some context for how I came to be doing what I do.David RobertsSure.Kelly WanserReally it was about — I was working in the technology sector in an area called IT infrastructure, and that's the sort of plumbing of data in the Internet and was looking at problems like how you keep networks operating. And I started to read about climate change, and I was very curious about the symptoms that we were starting to see in the climate system and where the risk really was. And I started to get to know various senior climate scientists in the Bay Area and other places, and I asked them the question like you might ask, how would you characterize the risk of runaway climate change in our lifetime? And this is maybe twelve years ago.And they said, "Well, it's in the single digits, but not the low single digits."David RobertsNot super comforting.Kelly WanserYeah, I mean, my original degree was economics, so I thought, well, if you had those odds of winning the lottery, you'd be out buying tickets. If you had those odds of cancer, you'd be getting treatment. So that seemed like a really high risk to be exposed to. And then they told me about another feature of what was happening in that carbon dioxide stays in the atmosphere for a long time, keeping things warm. Comes out very slowly. So even if you stop emissions completely and there are other dynamics going on, the system will continue to warm for a while.And so you've got another few decades of warming. So wherever you are and whatever you see, you've got some additional warming that's going to happen, which means that whatever risk point you're at, you reach a higher risk point over that period of time. And so I became very interested in that problem, because there's a mismatch between the increased risk profile of really serious and catastrophic climate events and impacts and the kinds of responses that we had to reduce the risk. So really my organization is focused on what we call "near-term climate risk," which is the 30 to 40 year time horizon where the things we need to do to ultimately fix the problem, all the ways we reduce greenhouse gases in the system, they don't work in that time horizon to meaningfully reduce the risk.And so that's how we find ourselves here. Because getting back to your original comment, in the absence of the kind of risk situation that we're in, these ideas would be really extreme and you wouldn't consider them. So we like to use the sort of metaphor of medicine because it has many similarities to medical treatments. And medical treatments require a lot of research and they're as useful as the context of where your condition is.David RobertsRight. So maybe the way to phrase this is you looked around, you saw climate change, you saw that our ways of mitigating climate change are sort of slow, if you will, slow acting and long term, which leaves this short-term risk gap.Kelly WanserRight.David RobertsSo there's going to be warming over the next 30 to 40 years, regardless almost of what we do. And you're focused on how to mitigate those risks.Kelly WanserYeah. So related to that, and again, you can go to the United Nations Climate Reports, and you can see what they think is happening and going to happen they have these charts that show these curves. And the curves go up all the pathways, all the different scenarios for climate change going up through 2050, some of them bend back down because we've done a good job. But in their reports where they describe that they're projecting what's happening to people and different parts of the world over those 30 years. And right now they've come out and said, well, under their projections, as many as 1 billion people get displaced.And you can go to websites that have simulations of what's going on and you can see places that get overwhelmed by water, that get overwhelmed by heat. And so you've got a lot of suffering, a lot of dramatic impact that's baked in. And so what we are saying is we need to do really rapid research to find out if we can do better than that. Because in the current projections, it's bad for everyone and it's terrible for quite a few people.David RobertsYes, two things spring to mind confronted with that situation. One is a lot of people looking at that would say, "Well, we need to go gangbusters on adaptation." Let's figure out how to make that suffering less by adapting to some of it. And the other thing that jumps to mind is methane, which, as Volts listeners know, is a greenhouse gas, but acts on a much shorter time horizon than CO2. And so I think that the thought in some quarters is if you could rapidly reduce methane, you could have a much more rapid effect on the climate than in reducing CO2.Why not either of those two routes?Kelly WanserSo, also those two routes. I think one of the things that struck me about coming into the climate space was it wasn't very well-equipped to think in terms of portfolios. So if you look at the risk profile, it's sort of like we're having these debates about should it be wind and solar, or nuclear? Should it be emissions reductions or these things? But if you look at the risk and uncertainty involved, there's a lot of uncertainty involved in all the different ways of responding to climate change. And there's a huge amount of risk, potentially existential risk.And so from a portfolio perspective, methane reduction is one of my absolute favorites. And there are some great things happening in that field. Adaptation is a harder problem, and it was made harder because people didn't want it in the portfolio 20 years ago. And they didn't want people to think it was adoptable. So they didn't want people looking at it. Well, it turns out when you look at it, you find out it's not easily adoptable, really. You can see, like, look at Pakistan. These big extreme events happen. They're pretty overwhelming. And even in the US, we're arguably one of the best equipped places in the world to manage these things, and Austin, Texas, had a third of the city with no power.David RobertsYeah, we managed to bungle it regularly, even with all our money.Kelly WanserBut really what it was about is saying, okay, we should have a rich portfolio here. If you thought of this as like, shares, or you thought of this as insurance policies, we'd have a portfolio of things so that when you brought that portfolio together and those things that are different profiles and there are different levels of uncertainty, we have a lot of coverage.David RobertsRight?Kelly WanserAnd the problem is that this part of the portfolio, if you needed to arrest climate change quickly, if you really needed to get in there and say, oh, the ice sheet is about to go. The wet bulb effects in India are happening and we can't take it. And you needed something that operated in a sub-decade time horizon, then that's the key part of the portfolio that's empty. And we don't want to do those things. But from a risk management point of view, in terms of what's at stake, even evaluating whether we have them, that's something on deck that we really should be doing.David RobertsAnd one more thing about the risk question, the short-term risk question, and I feel like maybe more climate types have grown cognizant of this recently, but it's really an under-discussed aspect of all this, is the aerosol effect. So maybe just tell us what it is and why that adds to these worries about short-term risk.Kelly WanserThat is a great question, because as I was digging into this and finding out the things I'm telling you, this came up effectively. There are forces in the atmosphere that trap heat and help keep us in this sort of temperate zone that we're in. And there are forces in the atmosphere that reflect energy away. And so the particles and clouds in the atmosphere, they're reflecting sunlight away from Earth, which is part of what keeps us in this Goldilocks zone. When you look at the Earth from space and you see that shiny blue dot, that's what that is.And these particles that come into the atmosphere, they create clouds, they live in the atmosphere. They're part of that whole system, and they come from nature, but they also live in pollution. And the particulates in pollution that come from coal plants, that come from ships over the ocean, they are mixing with clouds that are living in the atmosphere in ways that make the atmosphere slightly brighter. And it's this effect that scientists have reported is cooling the planet currently by reflecting sunlight back to space. And they don't know exactly by how much, but they think it's between a half a degree Celsius and 1.1 degrees Celsius.David RobertsThat's not small.Kelly WanserNo, it's not small. It could be offsetting half the warming that the gasses would otherwise be making.David RobertsYeah. Just to sum that up. So our particulate pollution to date has had the sort of perverse effect of reflecting away a bunch of solar radiation with the consequent problem that insofar as we clean up our pollution, which we are striving to do, we are going to lose that cooling effect and maybe get another one whole degree of warming which would double...Kelly WanserThat's right.David Roberts...our warming since preindustrial times. So that's a little wild.Kelly WanserI was just going to say it's right there in the climate reports. And it's been there consistently, but not prominently noted, not highlighted in the sort of climate discussion. And so it's surfacing more now recently, that this was there. And we're getting very good at cleaning up pollution. One of the features of this problem is that in climate reports, when they show these effects, they'll have bar charts that show the different effects on the climate system. And they have these lines that show how much uncertainty there is. This is the most uncertain thing about the climate system.And that uncertainty has been unchanged for 20 years. We have not been able to improve our understanding of that. And so when we in SilverLining are talking about our advocacy, we're saying we need to improve our information base, we need to quickly improve our ability to do that problem. That problem happens to be the same or very similar to the problem of what if I want to achieve this effect actively. So we think it's kind of a no brainer for society to say we need to go after that problem really hard, like the human genome, and understand what's going to happen when we take the pollution away.And is there a cleaner, more controlled version of this that might help?David RobertsRight, yeah, I'm going to get some of those questions in a minute. So the aerosol effect is you have these particles up there now which talk about geoengineering. We've been geoengineering the climate ever since industrialization by throwing all these particles up, which are shielding us. So, in effect, as we clean up our particulate pollution, we are pushing the target for climate change farther and farther away. In other words, we're making a longer and longer runway for ourselves. So in addition to advocating for research, which we'll get to in a minute, it looks like your organization has because the term geoengineering, I think, as people think of it now, brings to mind all sorts of various and sundry schemes in the ocean and crumbling rocks and there's all these different notions.But it seems like you all have settled more or less. Your main focus is on solar radiation management, SRM, which is just replacing the particles that we're taking out of the atmosphere with new particles to continue enjoying that cooling effect. Why focus in on that one rather than the others? Is there a reason to think it is the most out of all the geoengineering schemes? Why focus on this one?Kelly WanserWell, we, we don't use the term "geoengineering." We don't use the term "scheme." But I will answer your question.David RobertsI know, I noticed that you carefully say "climate interventions" rather than "geoengineering."Kelly WanserYeah, "climate intervention" was a term the National Academy of Sciences coined in their 2015 report. And it's useful because, like you said, "geoengineering" kind of evokes the most engineering-oriented stuff, engineers in space, and there's really not a lot of engineering involved. There's a lot of science involved, and it's directed at climate. And intervention is a really good term because it's so similar characteristics to a medical type intervention. Engineering has a lot of certainty. Like, if I can do the math, I can engineer a bridge. An intervention has a lot of uncertainty and a lot of trade-offs, depending on where the patient is.So this looks a little more like that. But to your question, we are a science-based, science-driven organization, so we follow what the scientists recommend. And so we didn't arrive at this conclusion ourselves. We took what the National Academy of Sciences and the Royal Society in the United Kingdom said. They'd done a couple of assessments where they gathered scientific experts together and asked the same question and if you wanted to reduce warming in the climate system quickly, what are the best candidates for research? And so they landed on this because there's a lot of precedent for this effect in the atmosphere.So in addition to what pollution is causing, they've seen this effect when large volcanoes go off and release material into the outer layer of the atmosphere, the stratosphere. And they've seen that cool the climate system globally. So when Mount Pinatubo erupted in 1991, they observed about a half a degree Celsius of cooling for about a year and a half. So when people talk about all these things are terrible. Well, most of us who are 25 or older experienced this already when Mount Pinatubo went off and we didn't notice the sky was different. So we've actually lived it a little bit already.David RobertsIn a sense, we know it works, or at least we know the physical effect is somewhat predictable.Kelly WanserAgain, I'm going to go back to the medical analogy because it's so similar. There are differences in efficacy and side effect profiles based on what we know today. And the reason we want to do research is to understand the efficacy and side effects better.David RobertsRight.Kelly WanserAnd so in the outer layer of the atmosphere, they feel like they know a lot more about the efficacy because the stratosphere is very uniform. They've seen it with volcanoes. And so you can get a pretty good grasp, although they're finding just as early research is going on, there are pretty big differences, maybe in how you do it as to what happens. And you certainly don't want to do it like volcanoes do.David RobertsWhy not, just out of curiosity?Kelly WanserLike all at once big bursts. So it turns out that doing it from — most volcanoes are around the equatorial regions, which for some of what they're finding is like the worst place to do it and that you wouldn't do it like in one giant burst all at once. And of course, volcanoes include a lot of stuff that you wouldn't put in there that is...David RobertsRight.Kelly WanserSo what we know, or have some handle on, is that in that kind of a burst where there's material in the stratosphere for a year or two and it gradually falls out. We kind of know a bit about what the side effect profile is of that a bit. And I should say we don't know that much about the chemistry effects and the ozone layer and things like that because our measurements aren't very good. But the thing we really need to think about is, okay, if you needed to do this for a couple of decades of 20, 30, 40 years, and it's got a side effect profile in different parts of the system, maybe it's heating up the stratosphere a little bit.And that gets to a point where you have big changes in circulation or other things. That's what they don't know.David RobertsIt occurs to me that we've gotten this far in without ever actually really saying what we're talking about. So just for listeners who might be confused, the idea here is to deliberately inject a bunch of these particles, sulfur particles, into the atmosphere to basically do on purpose what our pollution is doing by accident reflect light away. And there are a couple of different versions of this, even if you just focus in on this is called solar radiation management. I don't know if that's the term you all use.Kelly WanserYup.David RobertsThere's a couple of different versions even of that. So maybe just discuss like what are we concretely talking about doing? There's different layers of the atmosphere, there's different methods of throwing things up, maybe give us a sense of what it looks like in practice.Kelly WanserSo there's the idea that would sort of be lifting off from what they've seen with volcanoes, which is dispersing particles into the upper atmosphere, this stratosphere probably via aircraft and possibly with selected places that they're releasing the material based on what they're learning and models about what produces the best efficacy with the least side effects. And that this would probably happen in a continuous way with planes flying continuously, releasing stuff. And the net effect that they're trying to produce is about a 1% increase in the amount of sunlight the stratosphere reflects. So it's not something that you see from the ground.It's not something that would be noticeable except for maybe certain changes in light to certain types of plants, things like that. And that would be the idea.David RobertsOne question about that, the stratosphere you said is pretty uniform. Would interventions on that level have a uniform effect around the world or would they be localized?Kelly WanserIt's far more uniform. The particles get entrained in really high winds up there and disperse globally. And so you get a global effect. You might have some differentiation in how that plays out down below in weather patterns and things. And that's what people want to study. And because it's not simple, it's a really complicated system. And one of the concerns scientists have is that like reflecting sunlight up there, you're slightly heating the stratosphere and that can affect its interactions with the atmosphere below it. It can affect the way chemicals play out in the stratosphere in a way that affects the ozone layer.And so all of those things, again, if you're really good to think about medicine, it's like oh, how does it interact with that part of the body? There are medications. So there it's really about trying to project forward, trying to figure out what is the optimized way to do this, where you get the highest efficacy and the best safety.David RobertsAnd isn't there also a whole other genre of this that has to do with clouds putting the particles in lower clouds?Kelly WanserGreat question. Yes, there is. And the particles that they're talking about putting in the clouds are different, too.David RobertsDifferent than the stratospheric particles.Kelly WanserThat's right. So in the stratosphere, their starting point is sulfur dioxide, which is like worse than pollution. And they know the most about that because it's what volcanoes put up there. Aircraft pollution is starting to waft up there too. But they're also looking at other things in the stratosphere, like calcium carbonate, which is chalk, like chalk dust.David RobertsInteresting.Kelly WanserAnd even diamond dust. So those are the kind of the two other methods.David RobertsAnd the idea here is trying to maximize reflectivity while minimizing, presumably other...Kelly WanserThat's right.David RobertsEverything else.Kelly WanserAnd in this case, especially thinking about the ozone layer. And that's important, obviously. And in fact, in the international arena, in the UN, where they've done probably the most scientific evaluation of these things to date is in the part of the UN that looks after the ozone layer, the Montreal Protocol. So they're thinking forward about that. And that's the issues in the upper atmosphere, in the low cloud layer. So we have lots of particles going up into clouds all the time, especially over land. The less polluted clouds are over the ocean, although you can see and if anyone listening to the podcast, if you Google Ship track it'll pull up pictures of cloud decks over the ocean and you can see these streaks and the clouds that are made by the emissions of ships.And so that's like the ship particulates from the ship pollution brightening the clouds and you can see it visibly where it's really concentrated, but it's also spreading in ways that you don't see visually. So the idea here is, well, could we use a cleaner material and really optimize the effect? And it turns out one of the very best materials for doing this with is one of the materials that's part of making clouds over the ocean, which is sea salt. Sea salt spray from ocean water. And so what scientists proposed two British scientists back in the 90s was, well, maybe you could make a really optimized mist from sea spray spray it from ships in a continuous way and brighten the kinds of clouds that are really susceptible to this, and do it in more localized areas where you get a big bang for the buck.And so you still offset a couple of degrees of warming, but you're only dispersing over like something equivalent to three to 4% of the ocean surface.David RobertsInteresting. And this would also have a uniform global effect because it seems much tighter area, lower clouds. It just seems intuitively, like that ought to be more of a local effect. Does that also end up spreading?Kelly WanserYour intuition is correct. It is localized. And the side effects that you're most interested in is what does that do? Because you are creating concentrated areas of cooling in the system and these are all the mechanisms by which weather and atmosphere move around. So it's almost certainly likely to affect weather flows and patterns. And the thing you would be trying to learn then is are there ways for that to work in your favor and are there ways for that to be really bad? And so I'll give you two examples. And one of the reasons we're such strong advocates for research is because these kinds of questions really shine a light on where our climate models and our climate observations are weak.So to answer these questions, you've got to really improve doing that uncertainty problem and also getting better at weather circulation. But in the very early models which we helped fund to try to represent these things, one of the possibilities that arose is that when they simulate brightening clouds over the Southern Ocean, which is one of the places that you might do it. You get these cooling currents because it cools the water below in the air in the low layer that flow onto Antarctica. And so you got this improvement in kind of an outsized cooling of Antarctica, which is a useful thing potentially.But on the reverse side, in another targeted area of clouds, when they cooled that region, they affected weather patterns such that you got dryness in the Amazon forest region, which is a very bad thing to have.David RobertsYeah.Kelly WanserSo in the moral to this story is that these are just very early bottle based simulations that tell you you have these kinds of questions and that it's probably given the state of the risk that we have, and given that it's one of the top two candidates, and given that studying it will help us understand what the pollution problem is going to do. Really important to study, but really hard to say for sure whether or how you should use it.David RobertsSo these two versions of SRM, solar radiation management, the injecting particles in the stratosphere and then the cloud brightening, are those the sort of two main, most viable sort of targets for research. Like when people think about SRM, are those the kind of the two things that should come to mind?Kelly WanserThey are from scientific assessments and from senior scientists. There's a third one that's sort of like a tier below because it's even more uncertain than the low cloud brightening, but it is something that is already occurring. And this is in the high cloud layer. So between the stratosphere and the lower atmosphere. So the upper troposphere where you get to when you're cruising altitude on a long flight, 30,000 feet, depending on the circumstances, when you put pollution particles or similar into these high clouds, you can have the effect of either thickening them or thinning them, depending on the conditions.And those clouds are insulating clouds, so they keep heat trapped in. Infrared radiation trapped in. So if you put particles in them in the right circumstances, you could thin them.David RobertsLet more heat out.Kelly WanserLet more heat out. And this phenomenon is happening from air traffic, from airplanes, and we don't know enough about it.David RobertsWell, I have a bunch of questions about governance and moral hazard and all this, but first let's just briefly touch on the main subject of your latest report, which is just research, advocating for research. I come into this sort of like leery about doing things like this that we know so little about. But when I got into sort of reading about the kind of research we need, what's sort of remarkable is probably like two thirds of the research you're advocating is not even directly on doing these things. It's just understanding what's in the atmosphere right now, like what are the risks of short term rapid changes now?Just very basic climate science stuff that you would think we would already be researching. I think even sort of the most committed opponent of these schemes would agree that it's crazy how little we know about this whole area of study. So maybe just like talk about what when you advocate for research, just talk about sort of the basics of what you're advocating for here. I mean, I think people will be a little bit shocked that some of this stuff doesn't already exist.Kelly WanserWell, thank you for that. You're exactly right because I think we were shocked not coming from this field and just kind of looking at it as an information problem. And the problem you want to do is you want to be able to project and evaluate the risk of what the climate system is going to do. So I'd really like to know, be able to project with some confidence how the Earth system is going to respond to this warming over the next 30 years and then what it would look like if you change the things that are influencing it, either in the warming direction, the greenhouse gases, or in the cooling direction, what scientists call aerosols.These particles. So we're coming at it saying, "Okay, we just want to help set us up to do that problem and evaluate what it looks like if you are introducing aerosols in different ways and how does that improve or not, like the risk profile of what's happening." And so then we bump into these gaps and what the problems that we can't do in the models and a lot of them center right in the atmosphere, that the models don't represent all the phenomenon that are happening in the atmosphere very well and that we don't have the observations that we need to improve them.David RobertsIt's like insane. It's like five, six decades now. Of talk about climate change and talk about all this, but we still on some very basic levels are just not watching what's happening in the atmosphere.Kelly WanserI think people assume that it's like, hey, we've got this, right? And you hear there are these satellites and you hear the scientific studies coming out that are projecting what climate is going to do. We have satellites looking at everything. And then you sort of dig under the hood and that's where solar radiation management just has an analysis problem. Because what some of the scientists in our circles have said is people want a higher standard of evidence for this. So they're saying, well, you need to be able to tell us what will happen and what the impacts will be.And we shouldn't be having that standard of evidence for what greenhouse gas is doing and what these other aerosols are doing, but we haven't. And so we get in there and say, okay, if you really want to do this problem, here's what you need. So to give you example for the very top candidate for this is putting particles in the stratosphere. And so if you want to project what will happen, you first need a baseline of what's in the stratosphere. And it turns out we don't have that. We can't characterize what's in the stratosphere currently. So then it's very hard to do that problem.And so the first thing that we did when we started talking to members of congress and working with NOAA is just to say we have this problem of having a baseline of what's there, which is a really important problem to solve. If you want to know if somebody else is adding material to the stratosphere, if you want to know what it will do, and so that was our starting point. And it's similar kinds of things now, where even in the low cogler, we're working on a program to put instruments on ships like the current ships that travel, that would just be taking atmospheric readings of that low atmosphere so that you would have a baseline and you'd be able to help the models and even the satellites interpret what's going on.David RobertsRight. So just gathering more data about what's actually in the atmosphere. So we have a baseline, because one thing the report emphasizes over and over again is that it doesn't really make sense to talk about the risk of doing these things in isolation. It's always, what is the risk of this intervention versus the risk of not doing this intervention? What are the risks we're facing as a baseline against which we are measuring the risks of this intervention? And we just don't know. That's what's wild to me. We just don't know what the current risks are. So there's no way to make an informed risk judgment because you don't know the differential.Kelly WanserThat's right. And we haven't really invested in it, which is another quite eye-popping reality.David RobertsIt's wild.Kelly WanserLike, globally and in the United States, climate research investments have been relatively flat for decades.David RobertsThat is wild to me. I know. Every time I read that, I read that statistic periodically, and every time I run across it, I'm shocked all over again. Like, all this talk, all this international action, all this agita and angst, and we're not spending any more on climate research than we were two decades ago.Kelly WanserThis really baffled me. Coming into this, I didn't understand it, and I sort of learned there was quite a long period of time where there was an orientation that I'm kind of sympathetic to, which was, we know what we need to know. We need to reduce emissions. And so if you think about it as like two sides of an equation, and you look at the reduced emissions side of that equation, and you just focus everything on that, and you say, don't spend your energy on figuring out what's going to happen if it gets warmer, because we're not going to let it get warmer.And really, that combined with a lot of other pressures on climate science, climate science has been in lockdown mode. I can still remember, like ten or twelve years ago. It's brutal.David RobertsUnder siege, yes.Kelly WanserTerrifying. But now we're seeing these extremes, and we've had a flat level of investment. And inside that flat level of investment in climate research, in the part that looks directly at the atmospheric observation of atmospheric basic science has actually declined in real terms.David RobertsOh, my God, that is mind-boggling.Kelly WanserIt's heartbreaking. And that's the fulcrum for everything we need to know about what's happening and how we evaluate what we're going to do. So the good thing is it represents an opportunity if we can improve it. And I'll just finish by saying climate research investments in the United States are about three and a half billion a year, and that's everything on that side of the equation. And if you compare that to the 55 billion we spent on the three most recent storms.David RobertsYes.Kelly WanserAnd even the big money that's gone into these other programs, what we're saying is, hey, to invest an additional 60 or 70% in that bring it up to 5 and a half, 6 billion a year, that seems reasonable.David RobertsI really encourage listeners to go look at the report because the details of what kinds of research are needed are, like, I keep saying, sort of eye-popping because over and over again you're going to read something and be like, wait, we're not doing that already. We're not looking at that already. We're not measuring that already. That's not included in the models already. A lot of the research recommendations are just like stuff we should obviously be doing. Regardless of what you think about these direct interventions, only when we have a better understanding of these short-term climate effects can we even coherently compare what would happen if we did these interventions right.We have a baseline against which to compare, and the details of some of that research are really interesting. But just sort of to wrap up the research part, let's just talk about that price tag so we can get a sense of the of the scale. You want to double from 3.3 billion to 6.3 or something like that, but just, you know, like I hate to be a cliche, but like, compare this to how much we spend on defense research or like pharmaceutical research or like dog food research. It's it's, you know, concretely, what price tag are you asking for?And sort of like, where basically would that money go?Kelly WanserWell, so concretely, we're asking for an additional 2.6 billion a year on top of approximately 3.5 billion. So it's less than double. And it spread across kind of the modeling and analysis of scientific workforce side of it, across observational platforms, which are the most expensive piece. So you need the airplanes that fly through the atmosphere to take readings. You need stuff on the ocean at the surface. And shockingly, the satellites that actually can look at aerosol particles in the atmosphere. They're aging out and there are no plans to replace them. Yeah.David RobertsSo we're going to know less about aerosols.Kelly WanserWe're going to know less soon.David RobertsThat seems like the wrong direction,Kelly WanserSo the investment in those platforms. And here's the other hold your gut thing. The US supplies most of the world's data. So if we don't do it in the US, we can't count on it coming in. There are some European programs, but the US is the biggest provider of this information.David RobertsYikes. It just seems like how is it in the UN, all this sort of like, poorer and more vulnerable countries organize and they want money in the Green Fund and all this. How is it like they are the ones who are most directly at risk in this 30 to 40 year time horizon in some very direct and scary ways. Why aren't they advocating for research? Like, what's going on?Kelly WanserWell, they have a lot of fish to fry, huge amount of sympathy because they're getting pummeled by the impacts and they're not getting the money they were promised to deal with the impacts or the transition. And what's striking is many of them are still ahead of the developed countries in transitioning away from fossil fuels. You take a country like Honduras, they're over accomplishing against their commitment and they're like the second or third most impacted country by climate change. Like half the country is going to disappear in the period I'm talking about. And so a lot of these countries are really impressive in how they're trying to deal with this, but they don't have good visibility of these research problems because they don't have the assets to do this problem at all.David RobertsRight,Kelly WanserAnd so that gets into where you talk about the climate system is so big and so complicated that you need very high tech resources like massive supercomputers satellites, stratospheric capable aircraft that only a handful of countries actually have.David RobertsYeah, I guess one additional note about the research to emphasize is just and you have a whole piece about this in the report. It's just the people from these vulnerable countries who are now more or less locked out of this research by the high sort of capital costs of it need to be brought in, right. This cannot be another sort of white dudes around a conference table undertaking. Their interests are most directly involved and they need to be involved in the research. That's just to put a pin in that.Kelly WanserI'll say one more thing, and I'll give a plug to our partner at Amazon, because we care about that problem a lot and there are ways that technology can help. And so with regard to giving access quickly, getting the climate models and data sets onto the cloud, out of these big supercomputing, one off facilities and onto the cloud where people in different parts of the world can access them, has a huge potential to benefit. Takes a bit of technical work, it takes some money. But then they have supercomputing too. They have climate models, they have the data sets too.And so we're working on this very actively right now. It's like Netflix. It's like how do we bring it to the world? And if you want those people to be able to do these problems of what is climate change going to do in my part of the world? And then what would these interventions do? You need things like that and you need them pretty fast.David RobertsRight. Most research, yeah, you notice of the little there has been, has been focused mostly on developed countries because that's just where the researchers tend to be.Kelly WanserThat's right.David RobertsThere are huge justice implications to both these interventions. And just to emphasize again, to not doing these interventions, to not doing anything, both those have enormous justice implications which need to be centered. So yeah, if I could just sort of summarize the research bit. The part that struck me is just how much of this research seems like it ought to be happening anyway. It is uncontroversial. It's crazy that we're not doing it regardless of whether we decide or want to intervene directly or not. Understanding the short-term dynamics of the climate and the risk of tipping points and the dynamics of aerosols and all these things, we're just woefully underfunded and need more funding. That seems uncontroversial.So I want to get to the problems that everybody when I ask about this online, everybody sort of comes up with the same question, which is just this sort of nest of moral hazard problems. And so just for listeners who aren't familiar with the term, the idea of moral hazard is the worry here. One of the worries here is if this becomes a real possibility, it will serve as an excuse to do less mitigation basically to reduce emissions less. The idea is here we have an escape hatch. Like, I had a guest on talking about modeling a few weeks ago and she was sort of talking about how in climate models we just have CCS plugged in as kind of a carbon capture and Sequestration plugged in as kind of a gap filler because we don't know what else to fill that gap with.But it gives us sort of this false sense of security. Like, oh, we can get to the targets. Even though if you look at the models like, oh, here's a kajillion tons of a technology that does not really exist yet on any commercial scale. So it's giving us a false sense of security. And her worry is that solar radiation management is going to serve a similar role. ie. Kind of an escape hatch that you can just plug into models when you want to get the right output. That's one of the remoral hazard arguments is it'll lull us into a false sense of security and will reduce the urgency of mitigation.I'm sure you've discussed that issue a kajillion times. What's your kind of take on it?Kelly WanserYeah, we might need a whole 'nother podcast, but...David RobertsI know I wish we had more time for this.Kelly WanserI share the worry that it gets plugged in in a similar kind of way. I might differ in what I think that means about research because I've had this moral hazard issue come into our world in saying it's a reason not to do research, because the research itself creates this impression that you're going down this path and it opens up this option and digging into this coming from outside and looking starting to learn from people the history. Because these same arguments were made about adaptation research, and they were made about carbon dioxide removal research, and they were even made about research into reducing methane that it would distract from looking at CO2. And what kind of happens is they say, well, the research creates a moral hazard, so they sort of suppresses research.Adaptation research is a really good example because then you didn't have it. Well, the research might have given you a lot of really interesting information that compelled thinking about emissions reduction because of the kind of adaptation s**t show that...David RobertsI know, the more you know about adaptation, the more — it's not like you're going to be like, "Oh that's easy, that's easy."Kelly WanserLet's just do that on planet Earth would have been to have just tons of adaptation research. That really blew my mind, actually. And so when I think, I guess, or our premise is that information actually helps. And when you dig into these climate interventions, they're not magic. And I sat with conservatives and Republicans in Congress and said to them, look, what the science tells you is the least amount of additional things you put in the atmosphere, the safer it is.David RobertsYeah, which is just completely ...Kelly WanserIt's showing you where the thresholds are, and I can have that conversation. And so we say there's at least we need to look at the evidence that when we start to dig into this, there's also evidence could be highly motivating of pushing on emissions reductions and pushing on the things we can do, that's in addition to all ... the fact that we want to fill gaps and information that will help all these other parts of the climate problem, we're saying that we think society actually with more information, can do a better job and that information itself isn't bad.David RobertsWell, most people would agree with that up to a certain extent, I think, but then gathering information is one thing, but how do you at a certain point when you're talking about doing these things it's so complex, there's no way to predict or model completely in advance what's going to happen. So ultimately you have to do some of this stuff to find out what's going to happen. And I guess a lot of people just wonder sort of like how do you half do this? What does an experiment along these lines even look like? And ultimately, like how much can you learn without doing it on a big broad scale?And then once you've done it on a big broad scale it's sort of like the Pandora's box is open. It's one thing to understand the climate better, but how do you understand doing these things without doing them?Kelly WanserI think if you think about the steps of what you can learn, in what ways. So the thing that scientists are proposing doing are releases of plumes, like small batches of plumes, like the equivalent of what comes out of the smoke stack of a ship or of an aircraft. And that gives you a lot more information than you have now about how the particles behave when they hit the atmosphere and how they disperse. And that is information that right now, if you want to model this stuff, you're just taking a wild flaming guess, and then everything downstream of that is based on your wild flaming guess.And so if I want to know like what are the exactly right size of particles and those really teeny in earth terms experiments give you that first order information that you can plug into models and then your models of what happens at a bigger scale are a lot smarter. And so that level, like I think scientists have said they've recommended it already in scientific assessments, but people are confused because it's sort of conflated with, "Oh, previous folks in the space have said this is cheap and easy to do and we got a guy out there saying you can throw up balloons." It's like I've dug a tiny hole, but I'm building a skyscraper. What you would need to engineer the climate system is tens of billions of dollars of investment in something that would be able to influence the planet at a really big scale.And so you have this inflection point where there's a bunch of science you need to do to even advise countries or the world as to what would make sense as far as regards investment like that, if anything. So no one is going to be off doing this at the kind of scale that would really have a major impact without a really big investment.David RobertsWell, let's talk about this then, because it is sort of...Kelly WanserI let myself in for that one, didn't I?David RobertsThis kind of conventional wisdom, or at least often repeated in this space, that sulfur particles and squirting them up into the atmosphere is relatively cheap compared to other things such that like a single interested country or even a single interested billionaire could do a big chunk of it themselves. So before we discuss the kind of security and governance implications of that, just is that true?Kelly WanserWell, I think what's happened, as some research has started to happen there's the things that sort of physicists and modelers do with the information that they have and the numbers that they have and aren't taking into account a lot of the complexity, a lot of the uncertainty, or even a lot of the way the world really works. And so then you dig in and you say, oh, no, what it looks like is you need platforms capable of reaching the stratosphere if you're going to work up there. There's only a handful of countries that have that one species programs, and you would need to scale up very substantially, like any sort of capacity for that, which is not within the means of more than a handful of countries and really not in the means of any individual billionaire either. And also, by the way, none of them are stepping in to spend their whole net worth this way either.So I think that was kind of when you do it in the back of the envelope and you know very little, you can sort of be optimistic about that. But when you dig in, the reality is it's probably a subset of the world's developed countries or countries with a lot of assets who would be players in that. Now, in the low cloud layer, it's a little bit different because you've got these cloud seeding efforts that are coming up and springing up to try to address local impacts and there are ways that cloud brightening could be used that people are starting to look at. And so you could get regional things that could affect other people and things like that that are more widely available or potentially used.So these are questions that need to be thought about. And again, science and observation really helps you and it's not a good space to be flying blind in.David RobertsRight.Well, the broader question of governance, I guess, is one thing that really just vexes people about. This vexes me about it, too, which is just like whenever I read or listen to someone like you talk about it, I'm like just like cool heads.Reasonable people taking all the right precautions, building institutional capacity such that scientists are in the driver's seat of this thing and policymakers only doing what scientists sort of advise them. And there's international cooperation and there's knowledge sharing, et cetera, et cetera. It sounds delightful when sensible people discuss it as though sensible people will be in charge of it. But of course, a glance at recent world history reveals that quite frequently sensible people are not in charge. You said that the bar for getting seriously involved in this is higher than maybe people think. But it certainly seems like this is something that people could be doing sort of half ass experiments with in various ways.How do you I guess just what's your confidence that a sensible international knowledge transparent knowledge sharing system is going to be in place to manage doing this research and taking these experiments and trying this versus scientists losing control over it and insane capitalists or rogue nations or whatever taking it and running with it? Is there an answer to that question like what's the best we can do to try to keep this under the control of sensible people?Kelly WanserWell, that's a good question. And I think one of the reasons that SilverLining exists is really that question, which is if you think about the climate conditions getting potentially worse and worse and people being more inclined to take kind of radical actions how do you put yourself in a position to be smart, to be equitable, and to be as safe as you can in that context? So it definitely appears that when you have a sharing of information and you have cooperation around science and information, it calms everybody down. And there's a lot of when we have conversations with policymakers, whether it's in Congress or the UN.And we say, yeah, you know, we're here to talk about science anyd how we step forward on scientific work and cooperation and feel like, great, because we can do that as as policymakers and we can work across the aisle. We can work with people we don't agree with on other things. If we're in the science lane and that's been true in our experience in the US where we've worked across the aisle in Congress and we've gotten Republicans to increase basic climate, basic science budgets in a Republican Congress.David RobertsWell, that's something.Kelly WanserYeah. And so when you're talking about science and you're talking about ways of the technology can improve science and sharing information, same at the UN level. And then as we started to dig into how do different things work in the UN and where do they work well and where don't they work well and why? And we worked with a couple of experts, Dan Bodanski, who wrote the book on international climate law, and Sue Biniaz, who is the current Deputy Climate Advisor for the US to look at that question in the context of this subject and what emerged is like what we are interested in, SilverLining is what is most effective in terms of outcomes?What produces the best outcome in the environment, what produces the best outcome in safety for people? And the absolute best case of that is the Montreal Protocol for the Protection of the Ozone layer. And so we really have gone up close and personal to figure out why does that work? And yeah, people say, "Well, it's a narrow problem, but actually it's quite similar to this one. You've got a smaller number of actors, you've got a sort of focus thing they're emitting. You've got all the countries of the world not only agreeing to that, but they've agreed that changes in it, expansions of it, everybody makes their commitments."It's really interesting. And they have this feature that's different from the other UN fora the scientific and technical assessment panels that make the evaluation of what's going on and what needs to be done are fully independent of the nation states. Their reports are written completely independently. And if you look at the IPCC, where the UN does their climate work, they negotiate kind of the top line summary of what those reports say...David RobertsYeah.Kelly Wanser...with the countries. And so, again, we could do a whole podcast on this. But I would say that really looking at the Montreal Protocol, a. because it does apply to this particular thing as it would operate the stratosphere and b. because understanding how that works is really important because all the countries of the world are continuously meeting every year and we went to their meeting.It's calm, people are calm. It's incredible. So figuring that out and how we can translate that onto other things, I think it's a really good idea.David RobertsYeah. If only all international cooperation and agreements could be as calm and sensible as Montreal.Kelly WanserRight.David RobertsThis does seem like an area where really going overboard to keep the science independent seems super important because this is just this whole thicket of issues here is going to implicate countries in a lot of like sort of our interests versus global interests. There's going to be a lot of ulterior motives, I think involved. Everybody's going to be sort of thinking, on the one hand, how can we improve the world and the state of science? On the other hand is like, how can we make out best in a world where people are messing with solar radiation?So it does seem like independent science is more important even than normal.Kelly WanserAnd it's really important to your point from before, that other countries, especially the most impacted to developing countries, have the same level of access to information and can evaluate it for themselves.David RobertsIs there kind of a short-term goal of yours? Like, is there a particular development or institution you'd like to see funded or just like a first step, is there something kind of tangible people can look forward to and advocate for if they want to see more progress on this?Kelly WanserWell, certainly they can support SilverLining. We're like a medical foundation, so we fund research directly so that we can help advance some of the initial critical research, like getting the climate model supporting some of these problems, some of the lab work and things like that. And that feeds into our broader advocacy, which is trying to get the US government to invest in research aggressively. And like you said, some of these assets that we need to understand the atmosphere and climate system for people who are in a position to help influence attention on the fact that we have gaps in our understanding of what influences on the atmosphere due to the climate.And that's not acceptable. And we need to improve on that really fast.David RobertsRight. It's a little wild that we just spent we just passed a bill spending hundreds of billions of dollars on manufacturing and stuff, and literally like a rounding error on any of those sums would have been enough to double our research budget. It's a little wild.Kelly WanserYeah. So anything people can do to kind of be in there for the atmosphere. We're alone on the Hill right now lobbying for increases in budgets for atmospheric observations and research.David RobertsI guess I don't understand. Why are scientists themselves not more self interestedly, advocating for this? Like, why don't you have allies?Kelly WanserVery interesting. I talked to them about because, like, the astrophysics community, the telescope people, man, they get those big telescopes. They're really good at it. But part of it is that climate research is classified and has emerged as a basic science. It's very academic, and it hasn't involved big applied efforts. And technologies have come in relatively recently, so they've been pretty good at getting, like, super computing attached to national labs. But in general, it's very academic. There's been a lot of downward pressure on climate scientists in terms of sticking their necks up. And so it just hasn't had those same drivers, and it doesn't have a commercial community like bioscience or space.There's no money in it for anybody.David RobertsYou got to wonder once we understand these things a lot better and get a lot better at it if there might emerge commercial applications. Can you imagine that?Kelly WanserIt's changing quickly because there are obviously economic interest in being able to make better predictions. And as the climate system gets more volatile and there are more risks, that information becomes more valuable. So the landscape is changing, but that upstream part, which is, do we know what's specifically in the atmosphere? And can we model that from its tiny components down to what it's doing to the climate system? That piece is so basic and so general to everyone that nobody's there.David RobertsInteresting. Well, thank you for coming on and clarifying this. I feel like this is a subject where there's just lots of weird mythologies and hang ups and access to grind floating around and not a lot of sort of basic knowledge of what's actually happening and what needs to happen, so I appreciate your work on this. And thanks for coming on and sharing with us.Kelly WanserWell, I really appreciate your questions and the opportunity to talk about it. Love your show. Thanks for having me.David RobertsThank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid volts subscriber at volts.wtf. Yes, that's volts.wtf, so that I can continue doing this work. Thank you so much. And I'll see you next time. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.volts.wtf/subscribe

In this episode, Brian Deese, outgoing director of the National Economic Council and an influential advisor to President Biden, discusses the opportunities and challenges in Democrats’ new focus on industrial policy.(PDF transcript)(Active transcript)Text transcript:David RobertsBrian Deese has had a remarkable two years. As President Joe Biden’s top economic advisor and director the National Economic Council, he has played a key role in defining and implementing Biden's policy approach. In April of last year, he delivered some “remarks on a modern American industrial strategy” that laid out a vigorous approach to investing in economic sectors deemed important to national and economic security. And by all accounts Deese played a pivotal role in seeing the strategy into law, through the Infrastructure Investment and Jobs Act (IIJA), the CHIPS and Science Act, and the Inflation Reduction Act, which together amount to the greatest reinvestment in US infrastructure and manufacturing — and, specifically, clean energy industries — in generations. The pivot to unapologetic industrial policy is a big change for Democrats. Deese has moved in those circles for a long time — ten years ago he was a young wunderkind advisor to Obama, making The New Republic’s list of “Washington's most powerful, least famous people” — so as he prepares to depart the administration, I was eager to talk with him about what the shift to industrial policy means, why the US needs to onshore key supply chains, and the work ahead for Democrats in implementing their new laws.All right, then. Brian Deese, welcome to Volts. Thank you so much for coming.Brian DeeseOh, I'm really happy to be here.David RobertsI had, I'll say, a little banter, maybe a couple of jokes scheduled here for the front end of the pod. But then I looked at my list of questions for you, and we don't have time for any jokes, Brian. We don't have time for any banter.Brian DeeseVery serious, very quick.David RobertsWe got to get deadly serious right off the bat here. So let's start here in 2012. Ten years ago, you were the deputy director of the NEC under Obama. And in 2022, ten years later, you were the director of the NEC under Biden. And I'm just curious how things have changed, how America's sort of strategic economic outlook has changed in that ten years. And specifically, I'm curious whether the sort of vigorous investment in industrial policy that we're going to talk about here in a little bit, the kind of stuff that has been going on under Biden, whether you were recommending that to Obama at the time, or whether there's something importantly unique about this present moment.Brian DeeseWell, look, I think a lot of the world has changed since that period, both in policy and economic terms. If you think back to 2012, we were both right on the back end of a historic and transformational policy accomplishment in the enactment of the Affordable Care Acts, which changed the fabric of our economic and social safety net in important ways right on the front end of that implementation. And at the same time, in a period of very challenging and slow recovery from the Great Recession that was made worse by a failure of policy, a failure of the ability for Congress to overcome Republican opposition at the time, to invest more, to try to help to drive a stronger recovery. You look over those ten years, we live through a period that a number of people have characterized as secular stagnation where our output was constrained and that had a lot of impacts on quality, on labor markets.And then of course, we lived through this once in a century event of the global pandemic and in many ways historically unprecedented in modern human history. And I think that that helped to bring to the forefront a set of economic challenges that had persisted over that decade and much longer. But we're now really to the floor, particularly the vulnerability of supply chains and the weaknesses in our industrial capacity as a country. And so those things together helped to crystallize the economic strategy that Biden as a candidate put out in 2020 and really have been pursuing, that in some important ways have similarities to things we were promoting at the time.Significant investment in physical infrastructure is something that has been clearly necessary for a long time, but in some ways have important differences. I think we've got a different approach to clean energy and clean energy deployment at scale, which I'm sure we'll get into here, but also the prioritization of key geostrategic priorities like rebuilding semiconductor capacity here in the United States. So I think the landscape looks very different now economically both because of some of these significant economic changes but also policy changes as well.David RobertsWhat you're talking about and sort of what's come to the fore over the last ten years policy wise goes under the umbrella term of industrial policy. There's been a lot of kind of hype and talk lately about kind of the return of industrial policy. But I'm not totally sure that average listeners really have a sense of what that means. So maybe just let's just start by saying what do we mean by having versus not having an industrial policy? And where has industrial policy been for the last like two or three decades versus the last two or three years which has seen a really vertiginous sort of pivot around this subject.So maybe let's just start by defining what we're talking about.Brian DeeseYeah, sure. And look, I use the term industrial strategy, which is obviously very similar to industrial policy, but a bit broader in ways that I'll explain. And I think at its core, the idea behind an industrial strategy is that the private market on its own, private actors operating to maximize their own utility, will end up under investing in areas of the economy that have strategic and economic significance and that by using targeted public investment you can unlock greater economic opportunity and crowd in greater private investment in those areas. And so an example of this is in physical infrastructure that allows you to unlock productive capacity of the economy.And we have a great history of this in the United States, from the interstate highway system to the intercontinental railroad, where public investments in laying the foundation for private capital helped unlock greater productivity, greater innovation across the United States. I think what happened is that in the late 1970s, early 80s, there was a broader philosophical push around what now people talk about as trickle down economics that basically at its core had the view that any government or intervention was by definition going to pervert markets and crowd out private capital. And so the dominant paradigm became one of tax cuts, often skewed toward the highest income folks. Thus, the trickle down but also deregulation getting the government out of the way in all cases. And I think that that philosophy helped to feed a sense that if you were doing industrial policy, it was in fact a dirty word. You were, by definition, perverting a private market or picking winners, the government picking winners versus picking losers. And as a result, a lot of the policy conversations steered away from even mentioning the word. And so I think that obviously that has changed. And it's changed. Things have changed certainly earlier than the last couple of years. But I think in the last couple of years, particularly in the wake of the pandemic, there's been more of a recognition that some of these basic ideas of having active and energetic government investment to help crowd in and build more capacity in strategically important areas is not only not a dirty word, it's absolutely necessary to address the economic and national security priorities we face.David RobertsAnd I think one could fairly argue that there's no such thing as a giant industrialized wealthy democracy that does not have some sort of industrial strategy. It's just whether you're upfront and honest about it right. Or whether it's sort of buried in the tax code and you're sort of quasi-ashamed about it, but you can't, practically speaking, literally just let the market do whatever. It's not practical industrial strategy has always been there.Brian DeeseWell, that's right. And I would say that one of the interesting things about, I think, the evolution and the reinvigoration of this conversation, this public conversation, is that one of the hallmarks of effective industrial strategy is transparency.David RobertsExactly.Brian DeeseAnd so we back our way into potentially really self-defeating the industrial strategy approaches when we, as you say, we end up there. We don't admit it or we don't acknowledge or we don't actually identify what are our policy goals. Transparency is a key element of, I think, doing industrial strategy effectively, both for economic reasons and for political economy as well, so that people can understand why you're doing what you're doing and then can hold you accountable to whether the thing you were trying to get done actually happens.David RobertsRight. And this notion of picking winners, I guess I'm curious sort of how the US. learned to stop worrying and love picking winners. All the traditional sort of objections to this, government doesn't know what's going to be next, government makes bad bets, government distorts things. What do you make of those worries? I mean, are you worried about making some bad bets or getting some things wrong? How do you think about the dangers of picking winners, which are real dangers?Brian DeeseYeah, like any critique, there's a kernel of something really important in that catchphrase of the government shouldn't pick winners and losers. And I think that the caution, the important caution is the closer that the government gets to actually directly picking individual companies or individual counterparties in a way where there is a sort of a high stakes economic interest there. You do need to worry about waste, you need to worry about corruption. And we know that in different countries and different parts of our history, those things certainly are worthy of being paranoid about. But I think the core mistake that people extended from that critique for too long was to say that that was a concern that meant that you shouldn't engage in the enterprise altogether.And one of the things that I believe and I think that we have tried to build into our policy approach is wherever possible, the best way, I believe, to try to drive industrial strategy outcomes is to provide long term and technology neutral incentives to encourage investment where the government is not actually going in and identifying and picking a particular winner. Now, there are some cases where that is necessary. And we could talk about the semiconductor program that we're putting in place where because our capacity has eroded as a country and because of the scale necessary to build semiconductor fabrication capabilities, there are only a small handful of companies around the world who even have that capability. And so in that case, we needed to design a policy that was going to provide grants directly to companies on a competitive basis.But precisely because of that, we are putting an extraordinary amount of thought into the way to run that competitive process in a way that guards against some of the downside risk and captures some of the upside opportunities, but wherever possible. And a lot of what is in the Inflation Reduction Act around clean energy is actually trying to lay that foundation of signaling to private companies and the private market that there will be long term predictable incentives in place. But then not having the government say, we think that this particular technological application is going to be more successful than this.David RobertsRight. More like picking winning areas of investment than picking winning companies, right?Brian DeeseYeah. The way I like to think about this is look, if you want to know our American industrial strategy in a nutshell right now, we have identified three broad areas that we believe will have big returns in terms of productive capacity and our economic and national security. And those are infrastructure innovation with semiconductors at the center of it and clean energy. And so we are picking those. We're picking broadly that those are areas that for geostrategic reasons and for economic reasons and for what we know about, where you can get productivity enhancements in our economy. But then wherever possible within those, we're not trying to say the government is best positioned to figure out whether this particular technology for generating clean hydrogen in this particular application is going to be more effective than this other one.We're trying to say we need more clean energy capacity. Clean energy supply. We need it faster and cheaper than we have gotten it to date. That's an existential project. And if we do it in the United States, we'll build manufacturing industrial capacity here, we'll be able to capture greater export share of a very fast growing global market. And for all those reasons, that's the industrial strategy part of this.David RobertsThat segues nicely to my next question, which is that a big part of the thrust of the big three bills that were passed — the Infrastructure Act, CHIPS, and the Inflation Reduction Act — is onshoring, basically bringing more of the supply chain into the US. So let's just talk about that a little bit. The case for onshoring, if I put my sort of conventional economist hat on, it doesn't fit very well, it's too tight, it constrains blood flow in my brain.Brian DeeseBut I wish we were on video so I could see that hat.David RobertsYeah, you can imagine me grimacing while I'm wearing it. But the traditional economist take is why not just buy whether it's semiconductors or lithium-ion batteries or the materials for lithium ion batteries, why not just buy them wherever in the world they could be made for cheapest? Would it not benefit all global consumers if whoever can make those for the cheapest makes them and sells them to everybody else? This is sort of the basic Econ 101 justification for trade, right? For international trade is specialization. Some people can do things cheaper than others. Why do we need to make these things domestically?What is the threat exactly of international supply chains which are, it should be pointed out, ubiquitous. Like most of the stuff we get and use in the US. We don't make here. We don't dominate the supply chain. So why in these particular areas do we need to bring mining and processing and manufacturing the whole supply chain into the US.Brian DeeseSo I think there's two broad answers to that question. The first is the rise of China in the global economic system. And the second is the embedded risk that we have now seen made explicit around brittle and just in time supply chains. So let me take the two in order. The first is that that kind of stylized. Let's just try to find the lowest cost producer. Again, there is a lot that we shouldn't look through and we should harvest in that basic intuition. But one of the things that it misses is that over the course of the last 20 years, China's rise in the global economy has been achieved through non market economic means in many instances.And so the Chinese economic model, where you either steal or expropriate technology, use significant non-market subsidies and other tools to build capacity to then dominate particular industries, is a constructive challenge to that basic model. And there are some clear national security implications where there are technologies that we believe, for national security reasons, we need to deny in certain instances.David RobertsCan I press on that just a little bit? Because this is I find that a lot of people refer to the danger of China dominating, say, the lithium-ion battery supply chain in those terms, sort of vaguely like it's national security. It's a threat. And I find it all a little hand-wavy. So I just like to hear what concretely do we think China would or could do? Like, China selling us a bunch of stuff? That's a two way relationship. It hurts them also if they cut us off from buying the stuff they're making so tangibly, what do we worry China might do?Brian DeeseRight? So, look, and I think you're right that it's important that we be specific in these contexts and in our policy to avoid broad-brush characterizations. First, there are certain direct military applications for cutting edge technology that we have to be particularly aware of. And without going into the kind of detail that I shouldn't. If you look at, for example, the export control regime that we have put in place for leading-edge semiconductor technology, we are trying to be quite intentional about being specific and tailored and targeted in those purposes, but in controlling some leading-edge, the most sort of advanced chip technology because of its direct use application, in particular military applications.Okay, so that's one category. There's a second category about the fact that if part of the Chinese model is to employ slave labor or to violate basic rights and norms, that you don't want to be reliant on a dominant supplier where the basic technological capacity to produce key inputs is subject to those outcomes. And so the upstream solar supply chain is a good example of this. Right. Where over the course of the last decade plus, because of a variety of different means and tools, China dominates those markets and does so in ways that we can't rely.It creates instability because we can't rely on a producer, where if the production is only done as a function of unacceptable basic human behavior, then the technology and the capacity doesn't exist elsewhere to pivot. And you've created an acute supply chain vulnerability.David RobertsYeah, I guess another way of putting that is if there's only one producer, none of the buyers have any leverage over the producer, basically.Brian DeeseThat's right. And that's why I think that the second piece of where I think conceptually why we should care is this notion of supply chain resilience. And one of the things that we did when we first came into office, the first month it was February of 2021 was the president issues an executive order to identify the key supply chains and do a full forensic analysis of where the vulnerabilities and the chokes points were, where you had the dynamic you just described of one dominant technological owner or one dominant supplier, where you might create those types of vulnerabilities.Right? And the answer to those questions is not and should not always be that you just need to bring every one of those supply chains to the United States and have the production happening here.David RobertsI assuming you even could do that.Brian DeeseBecause it's neither feasible nor advisable to try to have all of it in the United States. But at the same time, there's clear lessons and clear outcomes where having homegrown industrial capacity and the technological and the innovation benefits that come from that is an absolute necessity. So there are areas like leading-edge semiconductor production where we in the United States do need to have that homegrown capacity to produce and the technological spillovers that come from that. That does not mean that the goal is that the United States is going to produce all or even most of the leading-edge semiconductors that are produced in the United States.But once you have that capacity and you have more diversification of players who are capable of doing it, you're reducing your vulnerability. And that's true of the upstream battery supply chain, of the solar supply chain as well.David RobertsSo it's mainly about resilience and national security.Brian DeeseYeah. And I think you are right, and it is right to push policymakers to be specific rather than vague about the applications in those contexts because there is a risk, as you say, of just sort of justifying any particular market intervention on those terms. But I think that because of the work in the analysis that we've done, at least in the areas where we have taken seriously and put into place industrial strategy policies, I think that we can demonstrate what does resilience mean? Right? What does it mean? What is the goal in terms of trying to get leading-edge semiconductor production here into the United States?And certainly as we go and we implement and execute, we should be held to account, to actually identifying those goals and then seeing if we are meeting them.David RobertsWhat about those cases? And it does seem like there could be cases where industrial strategy is in some tension with climate strategy. And so, as an example, let's take these EV credits in the IRA. They are the new version. The new generation of EV credits are tied to some pretty strict domestic content requirements and domestic manufacturing requirements, arguably so strict that no one meets them yet. So it seems like, intuitively, I can see how that's good for industrial strategy, maybe even good for the US economy and good for resilience to manufacture and do more of that stuff onshore.But it also seems like, intuitively, that's going to slow down the spread of EVs in the US. If we are putting a speed bump, basically between us and us adoption of EVs from a climate perspective, you just want to lower emissions as fast as possible, as much as possible, the cheapest, fastest way you can. And this is not the cheapest, fastest way. Right? Deliberately it's not. It's got an eye to resilience and redundancy. So how do you think through that tension?Brian DeeseI actually think that to have a durable, effective climate strategy that also operates with the urgency that the issue deserves, you have to factor in this concept of resilience or you're not going to succeed across longer periods of time. And I think the upstream solar supply chain example that we were just discussing illustrates that. If the idea into the current global market with the reality of how China and other actors operate, is that a narrow, fastest, cheapest without any factoring in anything else mentality results in China dominating key input components. To the degree that there is no other producer, then it's not a durable strategy to reduce emissions over the time period that we need to do this.Because even as we act with urgency, this is a project that is going to operate across the next two decades and longer. And so I think that you need to have strategies that are focused on driving down those costs as quickly as feasible, but factoring in that cost reductions into brittle and unreliable supply chains are not actually going to deliver those cost reductions in a reliable way over longer time frames. So the electric vehicle credit example that you raised, again, the legislative process is imperfect, and there's lots of ways in which the bills are imperfect.David RobertsThat's the kindest way I've ever heard it described.Brian DeeseWell, I had a but there, which is the status quo prior to the enactment of this law, was that the credits had a very different structure whereby many of the leading electric vehicle producers had grown themselves out of getting any credit.David RobertsYeah.Brian DeeseAnd so the status quo ante was not unmitigated credits everywhere. This approach sets a different bar. Not once you sell 200,000 vehicles, you no longer get a credit. And instead it sets the bar of saying, can you move more quickly to try to get to more resilient supply chains? And while I recognize that that does have some of the impacts that you're describing, I will also say, having talked to a number of the companies that operate in this space, a number have said to me, look, I'll be honest. When this bill was in its final drafting stages, we were incredibly concerned about all of this.And in the weeks and months afterward, it has totally changed our behavior. We are reorienting. We are investing in particular ways. Interesting things that we thought were hard or impossible may still be hard, but we're now making them possible. And so, look, we'll have to see. And as I said, I wouldn't claim that we've got that element or some other elements perfect, but it's a high bar to drive toward a different goal.David RobertsLooking back on this in ten years, say, do you think our move to onshore some of the supply chain will look faster and easier than we anticipated in advance?Brian DeeseLook, I think any strategy to address the climate crisis today needs to do at least two things. One, is have a credible way to massively drive down the cost curves of deployable technologies to decarbonize the power sector, the transportation sector, the built environment, et cetera. And two, to do so in a way that creates resilient supply chains for the input components for all of that building that we're going to need. And that the strategy that will succeed in really driving the mission direction we need. We'll have to have both of those components. And so I am hopeful that because of the action that we have taken over the last two years, we've given the United States now a historic set of tools to achieve both of those outcomes and to achieve both those outcomes at a scale and a speed that many would have thought was not possible even a couple of years ago.That doesn't guarantee success in the outcome, but it certainly puts us in a very different position than we were a couple of years ago.David RobertsLet's turn a bit and talk about one of our favorite subjects here on Volts, namely administrative capacity. I would say that serious industrial strategy needs administrative capacity, right? It's almost axiomatic. And so Rob Meyer had a piece in the New York Times recently, sort of making the case that the recent US ambitions, as expressed by these three bills, especially IRA, are somewhat exceeding our administrative capacity. In Germany, for instance, you have government departments that work very closely with certain industrial sectors, sort of hand in glove to do some planning and to adapt along the way to see what those sectors need.We don't really have that. And tax credits are kind of a blunt instrument, a blunt force tool, I guess. We have the Loan Programs Office in DOE, which is doing amazing things under Jigar. But our administrative capacity in the federal government in the US seems to have withered a little bit over the last several decades of this kind of neoliberal period we've been going through. Do you think we have the administrative capacity necessary to do something of this scale and speed?Brian DeeseWell, look, I appreciate the challenge, and Rob and I went back and forth on, I think what his thoughtful New York Times speaks to this effect. I think the answer is that we need to build that administrative capacity. But the one thing that we can't do is we can't wait for the chicken to produce the egg at the stylized utopia where the United States builds all the administrative capacity necessary for this kind of big national project and then and only then gets to passing the legislation is not only not how our political system works, but the intensity of the need for speed on clean energy and climate change doesn't really give us the luxury of doing that. But I would say do we need to build more administrative capacity across the board?Yes. Are we making big strides and innovating in new ways? Yes. You mentioned LPO and the work that Secretary Granholm and Jigar are doing. There are other great examples of that. We've stood up a joint program office between the Department of Transportation and the Department of Energy to do electric vehicle charging implementation across the country and showing how do you actually build the administrative capacity to get two different agencies to work together with 50 states to coordinate to actually do that. So yes, we are building that car while we charge it or whatever the right analogy is.But we're showing good results. A lot of people said you're never going to get all 50 states to even apply for this because some don't even have the capacity to do so. But through an iterative process of building capacity at the federal level, building capacity at the state level, we just yesterday, we're recording this on the 16th, yesterday released the Electric Vehicle guidance for how we're going to get interoperability standards. We worked with key companies, including Tesla around them, announcing for the first time to open up parts of their network. These things need to work together.But I think the right answer to that constructive challenge is how do we build this at the same speed and urgency that we need to address the issue. Last point, I'll say you made the point about tax credits. Tax credits are blunt, but they can be enormously effective in the American system. Right. We're going to do this in the American system in a way that is different than some of the European models and otherwise. And having long term technology neutral tax incentives is among the most powerful and efficient ways to give private capital providers the incentive to pull forward investment.And we know that that investment is among the most powerful ways to drive cost curves down and it also requires less administrative capacity to your point. So, I wouldn't discount that, even as I agree that there are a number of places where we need to build up that capability and we need to do it quickly.David RobertsYeah, but by no means do I want to bad mouth tax credits — they made the point many times. They are the quiet workhorses of the progress made thus far. They don't get as much attention and argument and sort of team sports as you get around other policies, but they've been in the background for decades now, just chugging away with demonstrable results. So, administrative capacity is one aspect of implementation, but implementation of course, is a broader subject, a big thorny subject. There's a common critique of sort of people on the left that they fight and fight and get a bill passed and then they go home and watch Netflix.And of course with something big like this, three big bills like this, all the devil is in the details in the implementation. So I'm sort of curious how you think about trying to avoid what Leah Stokes calls in her great book "The Fog of Implementation". Sort of just curious what are your worries implementation-wise? What are you worried could go wrong and how are you thinking about just following up and making sure this is done well?Brian DeeseYeah, well, I think one of the key elements is to maintain consistent leadership and urgency from the president, from the White House, from the key leaders across federal agencies, and to make sure that there is a consistent effort to try to connect the technical and the programmatic implementation with concrete outcomes that people can see in their lives and in their communities.And obviously that's important from a political perspective, but I actually think it's quite important in maintaining the kind of culture and dynamic to avoid that fog of implementation that there needs to be a kind of urgency to being able to say if we are undertaking a national project to eliminate lead pipes in 10 million homes and 400,000 schools, that everyone involved in that process, from the EPA administrator down to the regional EPA offices down to the state grantees and onward understand that there are targets and metrics and milestones and you want to go into communities and you want to be able to show and demonstrate when that is happening because that's going to keep people forward, leaning forward rather than leaning back. Other big things that will keep me up at night issues is we do need to reform and change the way that we do permitting.That's not just an issue of federal permitting, it's state and local. And the other thing is, I do think that there's a need to, at the grassroots and the community level, help connect and unlock the enthusiasm and the openness to recognize that a particular investment, again, be it in a wind farm or a small scale nuclear facility or in a rail corridor, is actually connected to this larger project. And there's not only an openness and acceptance, but an enthusiasm around trying to move more quickly rather than putting up roadblocks.David RobertsWhat about workforce? I hear from all over these days like, we don't have enough electricians, we don't have enough plumbers, we don't have enough sort of trade. We're moving into this period where there's going to be a frenzy of building and construction work and just the need for trade labor and we seem short on it. How much do you worry about that and what sort of things are the Feds doing to kind of help with that?Brian DeeseIt's an enormous priority. And for this year 2023 and next year 2024, connecting more people with these new job and career opportunities has got to be a top priority of implementation, I would say. While I recognize and I hear often the concern, I also think a lot of people are missing how much opportunity there is there because for the first time, and this is to go back to our very early conversation about sort of secular stagnation dynamics of having output below potential, we have a dynamic now where incentives are really aligned. Private companies are prepared to invest in job training and invest in paying workers and showing them that there are career paths and opportunities.And so a lot of the opportunity is making sure that we are connecting those employers with the training providers that we know work effectively and efficiently, community colleges, union registered apprenticeship programs, et cetera, and then going and being proactive about reaching out to workers and communities that may have been overlooked. Right. So we are looking to try to get a million more women working in the trades and in construction than we've had in this country. And there's extraordinary job opportunities, extraordinary career opportunities. And I think one of the reasons why you see such a gender split is that employers and trainers in that space have either explicitly or implicitly built these things in ways that they haven't reached out to those communities.And so we're going to have to be creative about doing things like that. But I think this also creates a lot of opportunity to bring more people into these trades and to do so in a way where you're giving them more upward mobility as well.David RobertsAnother big subject that I know you probably had to address a bunch, but I would like to just grapple with a little bit are the sort of foreign policy / trade implications of all this. It looks to me like these three bills represent a pretty explicit pivot away from the sort of free trade consensus that has reigned in US politics in both parties really for decades now. And you see sort of trade partners in South Korea and Europe kind of freaking out about this a little bit. They're calling the stuff in the IRA "protectionism". They're sort of threatening protectionist policies of their own.Are you worried that this sort of dramatic disruption of the free trade status quo is going to run afoul of some longtime trade relationships? Do you worry about this sort of global trade regime holding together amidst this?Brian DeeseI don't. And here's why: The first is that the Inflation Reduction Act itself is going to be enormously beneficial to our trading partners and allies. And I think that we are making real progress with our European partners and others in helping them see and understand that that's the case. And that's because at core, the Inflation Reduction Act reflects two things. One, the United States meeting and stepping up to its obligation to actually meet its clean energy and climate commitments in a credible way, which is a priority that many of our allies, including our European partners but also others, have been urging the United States to do for years.And also a commitment to use US taxpayer dollars to dramatically accelerate cost reductions in key next generation clean energy technologies that the world needs in these countries need as well. Now, we also all share the need to have more secure and resilient supply chains to the conversation we're having earlier. And the other, I think key and important part is that we are operating into a sector, we're talking about clean energy in this context where the world is way short supply. So we need dramatically more deployed clean energy technologies and capabilities in the United States. We need that in Europe, we need that in Canada, we need that in Australia, we need that across Asia, we need that everywhere.So the United States stepping up and showing a viable scalable model to do so, in a way that will help drive down global costs, and in a way that puts the United States in a credible position to meet our commitments actually creates much more opportunity than constraint. And what it requires is harmonization and effective economic diplomacy and making sure that there is transparency and making sure that we are not doing things that would create unproductive or inefficient subsidy races. But at the core, the United States stepping up and investing in our own industrial capacity in these spaces is first and foremost the right thing to do for our country, the right thing to do for our workers and communities. But it also will have these global benefits as well. And I think that we will, over the course of this year, have a lot of opportunity to actually build partnerships against this.David RobertsSo you're not worried about sort of like if we put domestic requirements and we put, say, a border adjustment or something like that, and then another nation will do it, and then we'll ramp ours up and they'll ramp theirs up and you will end up in trade wars. That will slow the sort of act as a slowing force on the spread of these technologies. You just don't think that's going to manifest?Brian DeeseLook, I think you're identifying a risk. But I would say from where I sit, both on the substance and the economic diplomacy of this, there is more opportunity than risk in that area. So it's always a risk. It's always a risk that you should take seriously. But if we were having this conversation several years ago, the dominant conversation would be whether, how and in what context could you ever envision building a durable political coalition in the United States to pass any meaningful legislation that would increase clean energy and energy security and do so in a way that would put the United States in a position where it could actually sit at a table with the Europeans and talk credibly about them how to increase global ambition. And that would be the conversation, right? We are in a different conversation that certainly it has risks, but it's a higher class conversation if the goal is how to deploy clean energy globally at scale.David RobertsGood problems to have. Another sort of aspect of that similar family of worries is that if the US follows China's lead and starts sort of lavishly subsidizing its own industry and the EU follows, the US. Starts lavishly subsidizing its own industries, these developed nations sort of look inward. There's a worry sort of floating around that developing nations will end up sort of getting screwed, not getting the investment they need. So how do you sort of balance the need, which you've laid out here, for the US. To invest in itself, for a bunch of reasons, with the parallel need for developed nations to invest in helping developing nations build capacity themselves and lower their own emissions?Do you think those are in tension at all?Brian DeeseI don't think they need to be, and in fact, I think that they can operate together. But you're right to absolutely raise the issue. Look, I think it is incredibly important for the credibility of global climate progress for the United States to be able to credibly meet its own commitments. And that's important for developing as well as developed countries, number one. Number two, the United States being a place where we are investing taxpayer money to drive down technologies that will be particularly important in deployed applications in developing economies means that developing economies can also benefit from driving down those cost curves as well.But I think it also goes to the need for the United States and other countries together to continue to increase our game in building partnerships with key developing countries to demonstrate that we can together bring climate finance at very significant scale into their economies to help drive this transition.David RobertsBecause that has not been happening, right?Brian DeeseWell, look, I would say there is a model that we need to build on the JETP initiative that we have launched, which stands for Just Energy Transition Partnership with South Africa and Indonesia, the partnership we launched with Egypt at the COP this year. These are models to demonstrate the potential of US investment, lower cost clean energy technologies, policy reforms to create more stable investment environments in these countries, and then the ability to actually bring private capital at scale into big, important projects. That's what it's going to take, but we're going to have to do that at a scale that we have not done yet. But I think the action that we're taking in the United States creates significantly more opportunity for that than constraint.Again, it's sort of a similar, I guess I would say a similar story. Much work yet to be done, but we're definitely better positioned having taken the action that we have in the United States than if we hadn't.David RobertsRight. Let's talk then about the US being slow. This has been an increasing subject of conversation in liberal circles recently. I'm sure you've heard and seen this idea that US is entering this period where we badly need to rebuild ourselves, our industries, our infrastructure, not just because of climate, just because a lot of it is falling apart. We just have been under investing for a long time. But when we do invest, it's very slow and this manifests in a bunch of different areas. But I'm just curious how you untangle all those factors that are going into making the US building in the US slow and expensive.How do you increase the pace without running roughshod over vulnerable communities? The fight over permitting reform did not auger well for this debate. It did not seem to suggest that it was going to be easy to resolve this debate. So just on the big picture level, how do you think about the US. Being slow and expensive and what can the federal level, what can you do to shake that loose?Brian DeeseYeah, I think it may be the biggest and most significant challenge that we face. And to go to your question about what we at the federal level we can do, we can commit to and then execute on doing business differently. Right. So we need to have the kind of accountability and transparency around project timelines that we have not always had in the past. We need to deploy efficiencies and creativity and innovation that we know is out there, but deploy it at a much broader scale. Some things that sound very simple, like we have a program called Dig Once, right, where we are coordinating between road projects and broadband projects and transmission projects.So that if we're going to have a right of way, we should be trying to operate all of the digging projects that we're going to do as much as we possibly can in the same right of way at the same time. Now that sounds simple, but actually it's an innovation that if deployed, can have a geometric impact on speed. But then there's also more sophisticated design, technological approaches that we can use and we can borrow from other countries and we can do things like you had mentioned, labor. One of the things on these big complicated projects that project sponsors are finding is having a project labor agreement working up front to actually demonstrate how you're going to make sure that you've got the right people on the right time to do the work that is needed in a quality way.Helps to reduce bottlenecks, helps to reduce cost overruns and time overruns. And so those are all things that we at the federal government can do, we've got to do in a more systematic way and at scale. Having legislation that would give some key reforms to the permitting process would help on that score. But there is also a lot that we can keep doing and working. And you made a really important point. We have to demonstrate that we can do all of this in a way that also builds more fairly than we have in the past. And so there's nothing simple about that project.But we do have I often hear these conversations about permitting that move immediately to a certain sense of defeatism. Well, the United States just moves slowly and things cost a lot and therefore this is all going to go sideways. And I think we can point to practical examples of success and then we need to build on those.David RobertsOne of the big bottlenecks in terms of building, in terms of things going slowly is transmission and energy, long distance transmission famously holding back the rest of the clean energy economy and it's just very difficult to build. There's landowner NIMBYs, there's state NIMBYs county NIMBYs, there's baroque bureaucracy on and on. There was some stuff in the Infrastructure Act, I believe, that did some good on transmission, a little bit in IRA. The permitting reform didn't end up going through. So that was the biggest thing. So I'm curious now that sort of the period of legislating is probably over what tools are left in the Biden administration's toolbox that can shake loose transmission and get that moving.Do you guys have ideas on that score?Brian DeeseWe do. It's a great question. It's a super important policy. We've been working hard at this. I don't want to get too far ahead of where we will be,and our agencies will be shortly. But I think I could say that I think you'll see from us shortly that there are tools within our existing authority, under existing statutes that will allow us to very significantly prioritize and streamline the process at the federal level in terms of agency approvals and also use our federal authorities in ways that create stronger and more significant incentives for not only project sponsors, but also states and localities, municipalities to operate in line as well.And one of the things that to go back to the culture point that I was making earlier, one of the things that we have now, ever since the infrastructure bill passed, is Secretary Granholm. She's got it, she's trying to make it famous, this map where she's got the transmission lines that need to get built right and they need to get built and they need to get built at scale. And to the point about success, we can already identify that there are a handful on that map that have moved from yellow to green and are moving forward in a way that was not true a year ago or even six months ago. But these additional authorities, I think you'll see us moving out on in the course of the next couple of months will give us more to work with and I think make 2023 a year where we can really accelerate on that front.David RobertsSweet. One other follow up on the slowness question another big area of congestion is housing. This is also a hot topic lately. I think it feels like it's become more and more clear to more and more people that constraints on housing in high economic opportunity areas is not just a local issue. It is in the aggregate having serious macroeconomic effects on the US. It is a serious in other words, it is a serious nationwide problem, not just sort of quirk of coastal states. What, if anything, can the feds do? Because so much of that is local or state.Are there levers available at the federal level that can shake that mess loose a little bit?Brian DeeseI'm so glad you raised this question. It's a hugely important issue and we have a housing supply crisis in the United States, which is a crisis that has developed over the course of years, basically going back to the Great Financial Crisis. And if we don't build more supply of affordable and dense housing, then we get exactly the dynamics that you just described and it's harder for people to move to opportunity and find affordable places to live.We have been dogged on this issue and there's a couple of things that we can do. The first is that we can build into some of our existing federal grant programs and new federal grant programs in the investments in infrastructure and otherwise incentives that says that if localities actually have more coherent land use and zoning policies that encourage this type of building, then that's going to be a plus up for them in receiving federal grants for something like, for example, public transportation, which makes a lot of sense if you think about it, which is we shouldn't be spending federal dollars on public transportation into an environment where they're not going to build coherent housing.Secretary Buttigieg has done this in a couple of ways, but we've never done before and we're now franchising that to other grant programs. The second is we could pass legislation. The Low Income Housing Tax Credit and something called the Neighborhood Homes Tax Credit. Bipartisan support for these pieces of legislation that provide incentives for people to build dense rental, multifamily and single family housing, again in areas where they have local land use policies that encourage this type of building. And there's bipartisan support for that type of legislation. I know that there have been conversations across time of trying to advance this.Both of those steps are things that we could do. You are right that the decisions operate in many cases at the state or the local level, but we can provide a powerful incentive to encourage and invest in those communities that are doing the right thing.David RobertsCould have done a whole pod on politics but I mostly left that out. But I'm just curious. Looking back now, it seems striking that Democrats went into this latest session heads full of extremely ambitious dreams. The original Build Back Better Bill was robust. Let's say it had a little bit of everything in it over time. We just saw that get stripped down and stripped down and stripped down but somehow the climate piece, the clean energy piece, survived more or less intact through that entire sausage making process. What are we to make of that? Does it all just come down to sort of like whether Joe Manchin woke up on the right side of the bed or are there larger political lessons to be learned from the sort of resilience of this one piece of the Democratic agenda?Brian DeeseOne of the takeaways that I have is that it has been important for us to change the policy and the political approaches to trying to radically and dramatically build clean energy capacity in the United States. And that one of the important parts of how President Biden has approached this. And frankly, Democrats in Congress — and a lot of Republicans too — is to focus on this as about building our capacity, our manufacturing capacity and our energy security by dint of having more homegrown, affordable, reliable energy and to do that and to build a strategy that can achieve very significant climate ambition. But it is based fundamentally on that investment opportunity.And that has, I hope and expect, will be an important takeaway over the last couple of years is that even as this process has been challenging and winding across time, if you look across the infrastructure bill as well as the CHIPS bill, but also, obviously, the Inflation Reduction Act. What you see is that these types of investment approaches have a lot of salience. And they have a lot of salience because they're focused on places and people and giving people economic opportunity and helping to drive significant emissions reductions across the country. But based on that core opportunity, I think that is very different from the political conversation that we had in 2009 and 2010 on this issue.It's different than the conversations we've even had over the course of the decade since and I'm hopeful that it will lead to a more durable political environment for us to drive forward these policy pieces that are going to be hugely important for our economy and our country and our planet in the future.David RobertsYou are credited alongside Chuck Schumer with bringing Manchin around. I don't suppose you want to give us any secret insight on what was the magic key, the magic phrase, what sort of sorcery achieved that?Brian DeeseNo. Look, Joe Manchin is an independent thinker, independent minded guy. And he has spent an enormous amount of time thinking about these issues. And he has always, throughout this process, prioritized the importance of energy security and moving on the climate goals and the climate priorities that we needed to move with a focus on American capacity and energy security. And I think that he always brought a ton of insight into what was necessary. And a lot of this was about listening and understanding and understanding places where we had principal disagreements, but at the end of the day, trying to get at those core issues where the policies themselves were less at odds.And so Senator Manchin always has and always will operate independently based on his own principles. But I was fortunate enough to be part of this process, part of a team to ultimately get us to the finish line. It was a long process, that's for sure, but better for the country that we're on the other side of it.David RobertsJust in terms of being placed kind of at the center of history and seeing things unfold. It's been quite a two years you've lived through there at the center of everything, so I hope you're able to catch up on some sleep.Brian DeeseWell, thank you for that. And I hope that we can continue to have these conversations about what I think are a set of incredibly important climate and clean energy challenges, but also a really high class set of challenges compared to where we were a couple of years ago. And so that's what leaves me pretty fundamentally optimistic about all this.David RobertsThank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please. Consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf, so that I can continue doing this work. Thank you so much, and I'll see you next time. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.volts.wtf/subscribe