The make-or-break moment for America’s energy transition

On The Carbon Copy podcast this week:

America enters 2023 faced with two opposing realities: Greenhouse gas emissions are going up, but the opportunity to slash those emissions has never been greater.

Emissions of heat-trapping gases in the U.S. rose again last year, according to the Rhodium Group. Even though renewables outpaced coal on the grid, emissions climbed in the sectors of buildings, heavy industry and transportation.

Last year’s passage of the Inflation Reduction Act could reverse that trend over the next decade. The law, which was the result of years of political pressure and behind-the-scenes dealmaking, devotes nearly $370 billion to domestic clean energy deployment. It could cut emissions by 40% by 2030.

But now the real work begins.

“Sometimes you’re in charge of putting together a trip…and then you realize the trip is actually to scale a mountain,” explains Jigar Shah, director of the Loan Programs Office at the U.S. Department of Energy. ​“So that’s how I feel. It was like a lot of logistical work to get everyone to the base of the mountain, and now we gotta go climb it.”

On this week’s episode, Jigar Shah and Katherine Hamilton join host Stephen Lacey to talk about the new era for climate-solutions deployment in America. The three former podcast co-hosts reunite for some real talk about the stakes ahead for implementing the Inflation Reduction Act.

“One of the big differences is that [the IRA] really does put a lot of benefits in the hands of consumers. And that means we have to design the programs correctly,” says Katherine Hamilton, chair of consulting firm 38 North Solutions. ​“Making everybody who deploys a project have to think about it very intentionally…and making sure that the results go to the communities in the ways in which it was intended.”

That means marshaling the departments of energy, treasury, interior and agriculture as well as the Environmental Protection Agency to properly staff and implement programs — all while coordinating with states to deploy local funding.

“There’s a lot to get done. But certainly, we have a pathway to get it done,” says Katherine.

“This is what a World War II mobilization looks like,” says Jigar, whose office now has $100 billion in loan authority for decarbonization through the IRA. ​“Now we gotta shift to the ​‘how.’”

This week, we shift from the ​“what” to the ​“how.” How will America meet this historic moment? See a complete transcript of the conversation below. 

The Carbon Copy is supported by FischTank PR, a public relations, strategic messaging and social media agency dedicated to elevating the work of climate and clean energy companies. Learn more about FischTank’s approach to cleantech and their services: fischtankpr.com.

The Carbon Copy is supported by Scale Microgrids, the distributed energy company dedicated to transforming the way modern energy infrastructure is designed, constructed, and financed. Distributed generation can be complex. Scale makes it easy. Learn more: scalemicrogrids.com.

Episode transcript

Stephen Lacey 00:07

Well, I knew it’d be coming at some point, I just didn’t know exactly when. Gas stoves were one of the biggest stories in Washington politics and on cable news last week.

TV Host 00:16

The Consumer Product Safety Commission is deciding on whether to ban gas stoves totally because of safety, safety. We’ve had the stove forever honored years, it’s totally fine to give fentanyl to addicts but a gas stove is a threat to your life. Right. So naturally, they decided gas powered stoves racist and have to go.

Stephen Lacey 00:39

This story blew up after the head of the US Consumer Product Safety Commission said a federal ban on gas stoves is on the table. He made the comments to Bloomberg in response to new peer reviewed research, which builds on many studies from the last few years showing that gas stoves are terrible for your health, and they directly contribute to 12% of childhood asthma cases. Now, the comments were walked back, Biden said he didn’t support a federal ban. But the story dominated the news cycle anyway. It was all over TV, I saw lots of grumpy posts from boomers in my orbit on my Facebook feed. Republicans even introduced a bill that would ban a ban. Twitter was filled with videos of people just running their gas stoves. You know how this goes. This whole gas appliances thing is a nuanced episode for another day, and we will surely cover it. But I bring this up because once again, the hottest story in Washington is a distraction. It’s a sideshow. And meanwhile, there’s a lot of real work about to unfold, thanks to the $370 billion coming down the pipeline for the clean energy transition from last year’s Inflation Reduction Act. And this week, we’re going to assess the volume and difficulty of that work. And to do that I lined up two people at the front lines to people who many of you might be familiar with. Oh my gosh, this feels so familiar, yet, yet new again.

Katherine Hamilton 02:00

We’ve all aged like 40 years. 

Stephen Lacey 02:01

Yeah, everything old is new again, right? Do we need to introduce ourselves? 

Jigar Shah 02:07

Jigar Shah, the director of the loan programs office here at the Department of Energy

Katherine Hamilton 02:12

I’m Katherine Hamilton, chair of 38 North.

Stephen Lacey 02:19

I hosted a podcast with these two for six years before Jigar put his clean energy dealmaking talents to work in government. And Katherine put everything she had into passing a historic climate bill. And now they’re both tasked with implementing it in different ways. Combined, they have well over a half century of grinding work at the edge of the energy transition, creating companies, closing deals, making policy and running programs. And you’d think they view the passage of the inflation reduction act as a crowning achievement. But instead, they see it as a starting point. 

Jigar Shah 02:48

You know, it’s one of those things where sometimes you’re in charge of putting together a trip, and you got to get everyone to come and you got to get all their plane tickets to line up and their hotel and everything else. And then you realize the trip is actually to scale a mountain. So you did all this work to get everyone to the base of the mountain. And then you’re like crap, no, you gotta go climb a mountain.

Katherine Hamilton 03:13

Every night, that’s my nightmare. I’m either in an exam, or chasing a bus.

Jigar Shah 03:18

So that’s how I feel. It was like a lot of logistical work to get everyone to the base of the mountain. And now we gotta go climb it.

Stephen Lacey 03:26

Katherine, you for so long have been focused on the ​“what,” of getting policy passed. I mean, you’ve worked on the implementation of programs throughout your career. But so much of what you’ve done is about getting policy actually passed. And now we have this monumental piece that does put us as close to a wartime footing as anything we’ve had before. What does the ​“how” mean to you now? 

Katherine Hamilton 03:45

So one of the big differences in what this bill did, and what the statute will do, than others that we had, which were far more punitive and regulatory in construct, is that it really does put a lot of benefits in the hands of consumers. So there are a lot of decisions in the hands of consumers. There are also a lot of ways in which low or middle income customers, communities that have been historically disadvantaged, can all take advantage of this. And that means we have to design the programs correctly. So the bill promises billions of dollars of savings for consumers on their bills, and helps millions and millions of Americans achieve electrification that would not have normally had it. And really bringing everybody forward transitioning communities that heretofore were never going to be transitioned. And in fact, the Department of Energy in every single grant that they’re doing, even with the infrastructure bill, is requiring 20% of every grant to be ​“How are you involving the community? How are you dealing with the workforce?” So really making everybody who deploys a project have to think about it very intentionally. And I think that’s what we’re going to have to do as we implement it. And that’s what I spend a lot of my time doing now, connecting the dots of what was intended by what we tried to get through Congress to what the actual language says, and making sure that the results go to the communities in the ways in which it was intended. 

Jigar Shah 05:12

And I would say that this is what a World War II mobilization looks like. This is what it looks like. And I feel like people still haven’t made the shift. They’re still in the position of the ​“what.” They’re like, ​“We need this, we need this, we need this.” And I’m like, ​“You have it now!” Now we got to shift to the how: how do you get 19,500 communities around the country to mobilize? How do you get all of these coal plants that have already announced that they’re going to retire? How do you make sure that these workers get a just transition? Now we have to move to the ​“how,” and frankly, I would say a lot of people haven’t yet been able to change their mindset, from the what to the how.

Stephen Lacey 05:54

The Inflation Reduction Act puts America closer to a wartime climate footing than ever. But do we have the infantry and the strategy to execute and win? 

Jigar Shah 06:04

For the last 10 years, people have been saying, ​“Where’s America?” And now with the IRA, we really want to be on point at scaling up hydrogen, scaling up carbon management, scaling up nuclear power. We’re going to scale up electric vehicles, heat pumps, and all of these solutions around the world. And now America is saying, ​“Give me the ball.” 

Katherine Hamilton 06:29

Yeah, there’s a lot to get done. But certainly, we have some pathways to get it done.

Stephen Lacey 06:36

This is The Carbon Copy. I’m Stephen Lacey. The IRA was the result of years of internal and external political pressure that forced Democratic leaders in Congress to take up climate legislation when they thought it might fail. It almost did multiple times, Biden didn’t get the half trillion dollars, he asked for in his initial plan build back better, but the $370 billion from the IRA is a huge deal. And it’s a huge deal because of the way it targets local communities, environmental justice aims, domestic manufacturing and worker retraining all together. And it started with the tone that was set during the negotiations, where both leaders of communities and leaders of clean energy companies had a strong presence. This week, from the ​“what” to the ​“how.” This year will be a critical and complex moment for implementing the IRA. And it will hopefully put the US on a path to steeper emissions cuts. I’ve got some old friends back to explain the nuances of how to get this moment right.

Katherine Hamilton 07:46

During all of this climate negotiation, one of my kids was quite sick. And my husband and I were alternating nights in the hospital. And I had just awakened from my night in the hospital wearing some pretty skeevy hospital attire. And I realized I had a meeting with the White House and I wasn’t going to be one of 300 people, I was going to be one of about eight people. So I couldn’t be on like page four of Zoom, I had to look okay. So I called my husband and I said, ​“I need a cardigan, mascara and pearl earrings.” And he brought those to me, and I faced the camera away from the hospital bed, muted because of all the beeping unless I was speaking, and was able to participate. And what that said to me was a couple of things. One is I never would have been able to do it if we hadn’t had a virtual format. And as we went through this process, the virtual format, as tragic as COVID was, being forced to do everything virtually did a few things: one, is it enabled you to have multiple conversations with people so that you weren’t just having one meeting where you said, ​“alright, here’s what’s going to happen.” But you would have 10 or 15 meetings to hash out what the low income adder credit was going to be, you know, in the tax bill. So you could really talk about the substance, you could be really efficient, you can meet with tons of people. And what I think one of the most important things was that is that it really democratized the process. And it allowed a lot more people to be involved. So people who couldn’t afford to fly into DC, people who weren’t normally roaming the halls of Congress, people who are deploying projects out in the field, and understood how things work, were able to be part of this climate bill. And what that’s done is it’s made it better. It gave us a better outcome. Of course, the real outcomes are going to be, you know, as we really begin to implement it, but what it also means is that a lot more people have a stake in its success. And I think that was really crucial. And me just trying to cover up my Notorious RBG t-shirt. Kind of was the first time I realized, I think a lot more people are going to be able to be part of this climate movement than we think

Jigar Shah 09:52

Katherine’s absolutely right. We are able to be so inclusive in a way that we frankly, were just never able to be here. You know, my story is probably a little different. You know, I took on this challenge of, you know, serving in the government, which is a really new experience for me. And I remember there was one day, which was emblematic of this. I got four phone calls from CEOs in the climate tech space who said, ​“Hey, Jigar, I don’t know what I’m doing. I’d like to serve in your office.” And I was like, ​“Well, you know, I can’t get you a Schedule C or anything. The only thing I can get you is to be a contractor here at the loan programs office.” They’re like, ​“That’s fine. Like, I just want to be a part of this.” And it was on that day that I sensed that things were gonna be okay. And it was on that day that we started putting together all the plans. And we were able to call 500 CEOs across the climate tech space and say, ​“What do you need? What do you need to actually do what you’ve said you’re going to do?” And it was the first time that these CEOs had ever interacted in policy directly. And the first time that these people who were writing policy had ever actually talked to the capital allocators and said, ​“If we do this this way, would this actually change your investment?” It had just never been facilitated for them at such a grand scale.

Stephen Lacey 11:26

So before we get deeper into this, let’s acknowledge a tough reality. Heat-trapping gases are still on the rise in America. They rose 1.3% in 2022, according to the Rhodium Group. Even though renewables have surpassed coal in the generation mix, leading to a 1% decrease of carbon emissions in the power sector, emissions from buildings and transportation are on the rise. We need to cut emissions at least 5% a year over the next decade to hit our Paris Climate commitments. The IRA, according to the Rhodium Group, has the potential to cut greenhouse gas emissions by around 40% by 2030. Now, that’s short of our 50% target, but a huge leap forward from the status quo. And getting there all depends on how effectively the programs across the Departments of Energy, Interior Treasury, Agriculture, the EPA, and the states actually deploy funding. So it’s not guaranteed. Passing a bill doesn’t mean you implement it correctly. So what is the best case scenario? I mean, there are so many agencies involved in implementation. What is the best case scenario for doing this properly?

Jigar Shah 12:34

The base case is that the government gives the money and puts it out the door and tries to minimize unintended consequences, fraud, whatever, whatever. Right? I mean, this is sort of the framework that the ARRA stimulus bill went under, and Vice President Biden at the time was in charge of making sure everything happened exactly as it was. That’s the base case. And that base case is the likely case, because the vast majority of people who were implementing were around for ARRA stimulus, and they know how to do that, right? That will absolutely be a failure. If that’s all we do, you don’t get to the best case. All you get is dollars out the door, and whatever dollars succeed, like you don’t actually catalyze gigaton scale climate reduction. Because no matter how much money we put out, the door from the federal government is not even going to be close to the … pick a number… $10 trillion that we need to hit the climate reduction goals. And so it has to inspire a new way of doing things, a new way of thinking about things, a new way of implementing. And that is the higher bar, that is the thing that you want to achieve, but it’s not guaranteed. 

Katherine Hamilton 13:44

But luckily that’s what we’re doing right now, is of course, you have the people who are legacy experts from the Obama administration, who carried forward this stimulus that know how to run programs. But there’s also much much more engagement from stakeholders. So Treasury IRS has taken a zillion comments from people on very, very tiny details, like what is a microinverter? You know, when you when you have a tax credit includes microinverter manufacturing, what exactly does that mean, who can participate? What is the definition for that, because that wasn’t in the statute. So Treasury IRS has to come up with that definition. And certainly, they can look to DOE for some of that. But they’re also looking to industry and what is really out there and what is possible. So a lot of people are engaged, a lot of people are meeting directly. That’s what I spend a lot of my time doing. And it’s really about educating all of those people who have to design the programs who have to deploy the funding, who have to set up all of the tax schemes, who have to figure out what the forms are going to say that you fill out to get the tax credits. And I think that makes for a much better potential outcome, making sure that all of these folks are engaged in really giving true-life experience. So I bring in not the lobbyist for a company but the person who is building the backup system, the microgrid to say, ​“Alright, how does this actually work? What is a microgrid controller? What does that entail? And how do I subject that to domestically sourced products,” for example. There are so many little details that we have to think of. But luckily, everybody is thinking about them in the industry, because everybody wants this so badly to succeed. Because of course, as Jigar says, this creates climate wealth. So they all know it’s out there, they’ve got to figure out how to make it work for them, how to make it work for everybody, so that the market really is open.

Jigar Shah 15:29

And that’s the critical role that we’re playing, or the Loan Programs Office. Because we have 125 applications that have been submitted across all of the sectors etc, that when Treasury and IRS get all these comments, and they say, ​“Hey, Jigar, we’re hearing this, is this true?” We can say, ​“Yeah, we have three applications that say exactly the same thing.” And this is exactly how they’re looking at it. And so we can actually provide that level of comfort to them, where they’re not just taking the industry’s word for it. They’re also getting validation from us, and then the labs and you know, other folks. So the ecosystem is working well together to make sure that this implementation happens as fast as possible, but also in a way that really will lead to better outcomes.

Stephen Lacey 16:19

We’re going to take a very short break here, when we come back, we’ll look at what it’ll take to activate hundreds of billions of dollars in new grants and government loan authority for companies and communities. And what are the barriers that could make it tough? How does this new loan authority, 100 billion dollars, change or accelerate what you’re doing at the loan programs office Jigar? There’s also another program called the energy infrastructure reinvestment program that will deploy money to people who are utilizing or repurposing existing energy infrastructure to clean it up. Tell me about what this does to change or accelerate what you’re doing.

Jigar Shah 17:05

My mindset coming in was like, why are people not using this program? Clearly, commercial debt is hard to get right. That’s why, you know, generally capital was in business, other folks were in business before I took this job. And there were lots of reasons, the trust was gone. People were dragged in front of Capitol Hill during the Solyndra stuff, et cetera, et cetera. There were lots of reasons why people weren’t using the program. So we had to get people to use the program again. And part of that is changing all the rules in the program and making it more easy to access and all the things that we’ve already accomplished. And also putting in all the risk management layers and that kind of thing to make sure that people trust us. And we’ve got great relationships now with OMB and Treasury. And that matters, right? Because ultimately, if you’re an applicant, you’re like, am I going to be treated well, in this program, or should I not spend the 2000 hours of time that I’ll take to get through this program? So we started there. So that was phase one. And we got a lot of people who are interested. We had about 77 applications that came in seeking roughly $77 billion of cash. Now $77 billion of cash was against $40 billion worth of loan authority that we had. So now we were oversubscribed. So then the IRA passed. So now we have more money, which is good. So we’re no longer oversubscribed. So that’s a good thing, it means the next person is going to put in the 2000 hours, because why would you put it in if you’re like ​“you’re going to run out of money.” So that’s good. But the other challenge with this is the trust is still not there. So I have trust with this group. Let’s say we had sustainable aviation fuels come in hard. We had some transmission lines come in. We had some hydrogen projects, carbon management projects, etc. But in some of the other areas, like the oil and gas industry still has not embraced us fully, even though their CFOs are rejecting projects left and right Their CFOs are saying these don’t meet our return requirements, because we have 100% equity finance them. If you had debt then we would do them. And they do have debt, they have access to the loan program’s office, but if they don’t actually apply, well, then that project doesn’t move forward. And that CFO rejects the deal. So we’re having those conversations. Same with the electric utility industry. So the electric utility industry says we want to do undergrounding of cables. We want to reconduct our transmission lines to be able to 3x amount of capacity. But we don’t want to use the loan programs office. We don’t want to use any government funding. We don’t want to do this and that. So then we have to go to their stock analysts and say, Is this something that’s good for their stock for them not to use us? We have to go to their regulators and say, Is this good for ratepayers for them not to use our program? And then suddenly, the utility CEOs are saying, ​“You know what, Jigar, I was thinking we might use a loan programs office for some of these big initiatives that we didn’t have the capital or the money for it” And so we’re trying to figure out exactly how to get all of these different sectors: critical minerals, or the mining industry has lots of trust issues with different parts of the government. Getting them to use us because raising equity is really hard for mining projects. The geothermal industry. And so each and every industry has had these challenges. And I think that this is the ​“what” versus the ​“how.” For the ​“what” side of things, they were like, hey, Jigar, you’re getting a lot of traction, we’re gonna give you a lot more loan authority. The ​“how” still hasn’t been fixed. Building all those trust relationships so that people want to spend the time and effort. And Katherine knows this firsthand. It is a grueling process. And I’m nice! But it’s still hard, right? And all of these people have hopes and dreams. They’ve raised $200 million of equity, they made all these grandiose promises about how their new green cement or green steel or whatever it is that they’re doing is going to reduce carbon emissions. But guess what? That first commercial facility is a billion dollars. You tell me you’re gonna go out and raise a billion dollars of equity and then build that plant? No, you are not, you’re gonna have to use the loan programs office. But they’re scared. They’re like, ​“You know, I’m capable of selling an equity story. I’m able to sell hopes and dreams. But Lord Almighty, I don’t want to subject myself to all the tough questions that Jigar is going to ask me.”

Katherine Hamilton 21:19

There’s also the issue of free money. So there’s a lot of grant funding out there through the infrastructure bill, that people are kind of waiting to see where that lands, because it’s billions of dollars. It’s not debt, it’s just pure funding. And so I think part of the issue is also people wanting to wait and see how things shake out. And how am I going to be able to get this funding? And if not, then I’ll go to the loan programs, but obviously, the issue is the loan programs office, you all have tried to make it very easy, but it is a process, you have to go through it. It’s diligence, and you can’t decide at the last minute you want to do it. You need to start it kind of soon. So you can get your foot in the door. But I think that part of the issue is people trying to figure out where everything’s gonna land and where they fit.

Stephen Lacey 22:06

Katherine, where do you have clarity? And where do you have confusion?

Katherine Hamilton 22:09

So some of the things that did not make it into the IRA were an investment tax credit for transmission, which was pulled at the last minute. And that was huge, because we desperately need more transmission. And that would have bought down 30% of the capex for it for a lot of these projects, especially merchant projects. That was really tough to take. The other thing was that a credit for existing hydropower to make those dams more efficient, have a higher ability to produce power, also was not included. And hydropower is a resource that we should be able to use to the maximum extent possible, where it works, where there’s already infrastructure, and we don’t want to lose it the same as with nuclear power plants that you’re trying to keep going safely. I mean, hydropower is something you don’t want to lose. And then the other thing I think about a lot is, there’s a lot for electrification and whether it’s electric vehicles or heat pumps, and it’s for all kinds of homeowners or not homeowners and people of all income levels. But people don’t necessarily know about it, know how to access it. So there’s a tremendous amount of education that has to be done, tools that have to be created, to make sure that people have access to all of these credits and have access to these programs that need them. And these are all things that the government has to be working on all at the same time. Right? So my, my big encouragement to everybody is go work for the government, leave us some of the people that need to work with the government, but go work for the government! It’s really important to do that. I totally agree with you. I totally agree with you. But I’d say that where we’re really breaking down on these things is: the federal government can do a lot but — I can’t name names — but there are states that you think should be competent that aren’t. They are not applying for the money that we have. And we will literally say to them, ​“Here is the 14-step process you should follow to use this because you only have $200 million that you’ve allocated from your budget, we can match it with 4 billion.” But you gotta go through these 14 steps. Three months goes by — crickets. We talked to them again, ​“Hey, you’ve got $200 million dollars. We can give you 4 billion. You have to meet these 14 steps.” They finished one step and then crickets for three months. This has been going on for 19 months for me. 

Jigar Shah 24:35

And then you go to the cities. How many cities have banned new natural gas hookups? But then the actual implementation of figuring out how to help LMI customers with loans has fallen flat and so LMI customers are paying an average of 30% interest when they want to buy these things, right? And I’m just ​“we can put all the tools out the door but what responsibility do you have to actually meet us halfway on implementing these programs?” I mean, there’s a huge responsibility there. And I get it, there’s a lot of capacity shortfalls. And, you know, a lot of folks don’t have 50 people in their city government, etc. But you know, you’ve got a lot of environmental nonprofits, as well as foundations who are happy to fund some of those things. But I have to say that that last-mile implementation is what scares me the most,

Stephen Lacey 25:27

I suspect there’s a lot of work that needs to be done out in the field as well. I mean, I just went through a process of evaluating new heat pumps with multiple contractors, and none of them knew about the federal tax credits. I mean, almost nobody knew that it was even happening. And these are people who’ve been in business for a long time and know the state tax credit process very well, or the rebate process. And it was, it was surprising to me that almost nobody was paying attention.

Katherine Hamilton 25:51

Yeah, it’s incredible. And there are those who don’t know about it. And then there are those who jack up the prices, thinking that, ​“Oh, there’s going to be a big benefit. So I’m just going to jack up the price for everybody,” which is really not the intention of the legislation at all.

Jigar Shah 26:04

But the right way to solve that problem is not by regulating the contractors. The right way to solve that problem is to get an additional million people trained. And again, we have so much money for that. We have given all this money already, to the community colleges and vocational schools around the country. Now this money is not for training people for climate, it’s for any training program at all. But then somebody has to go to them and say, here’s the curriculum I want to use. By the way, we’ve already funded that too. And like, here are all the people that we want to get trained. And oh, by the way, we’ve got to make it acceptable for people to go from high school to a vocation, making six figures a year instead of browbeating people to say that you’re worthless unless you go to college. But in our country, the broad thing that we tell parents is that your kids got to go to college. And not everyone does have to go to college. A lot of people can make six figures pretty easily by becoming an electrician or a plumber or whatever. And we need more of those people, because then that contractor can’t overcharge you because there’s more competition. And there’s more people. Right now we’re short contractors, right? Even if you want to do a heat pump, you might have to wait five months to put it in.

Stephen Lacey 27:11

These are some really important points. We just published an episode on the lack of electrical contractors, the lack of vocational opportunities, educational opportunities, as a barrier to electrification. And there are a ton of other implementation challenges in front of us. We obviously are still dealing with some supply chain problems that have caused short-term price increases in renewables and in batteries. You talked about hiring. There are just a ton of jobs open in government. We need to bring a lot of very talented people into government, particularly as a lot of these programs start to expand. I mean, we already have a shortage of people for jobs and the government now to start working on these programs. And as they expand, we need even more people. Jigar, you talked about grid constraints. I mean, it’s so hard to site transmission in this country. We have long interconnection queues, we have really problematic issues related to getting existing projects connected to the grid or building out transmission to theoretically connect some of those new projects. There’s a lot of local opposition emerging in communities around the country. Some of it is astroturfing. Some of it is coming from conspiratorial social media groups, some of it is very real. And it’s starting to delay projects. And then of course, you just have this question about whether these programs are going to be managed properly. Out of that long list do any of those things jump out to you as really worrisome, problematic, important to address.

Jigar Shah 28:51

No, I’ve been in government now for almost two years and I would say that the actual solutions to these problems, in my opinion, are pretty straightforward. Like on the transmission side, yes, we’re not going to build whatever it is, 30,000 miles of newly cited transmission lines, obviously. But you can reconductor all of the existing lines and get all of the existing, all the new transmission capacity that you need. We have reports out of Lawrence Berkeley Laboratory that say that we have private sector, NGO reports, etc, that say that so I don’t actually think we have a problem with the solutions. We have a problem with cost allocation. And even there, we don’t have a real problem. We’ve just got to get the renewable energy industry to pay for it because the other ones have 1.2 terawatts of solar wind projects waiting in our connection queues. And I would say the same thing is true for figuring out how to build a lot more distributed generation or the same thing is true for figuring out how to put in battery storage. We should not allow any electric vehicle charging stations to be installed without co-locating batteries at that location. It literally makes no sense because that use case needs batteries to be co-located to minimize grid impacts, everyone knows this. But getting mandates in place and regulations in place to do that is super hard. So this is just about everyone recognizing that there’s enough to go around. If we’re going to deploy $10 trillion worth of solutions to decarbonize our country, there’s a lot of high-quality jobs, there’s a lot of profit to be made, there’s a lot of wealth creation to be made. But we just got to implement best practices in all of these areas. I just feel like in general, people are not playing the long game, particularly in the private sector. A lot of them are playing the short game. And they’ve got to learn how to play the long game, because this is something where we have to build trust every day, with justice communities, with local mayors, and county commissioners, etc. And I get that you care a lot about your project. But burning down trust all around you to get your project done hurts everybody and hurts your own business in the long term. So we just got to keep building trust across the entire country. on why this is better.

Katherine Hamilton 31:05

Going back to what you said earlier, Jigar. I’ve heard multiple people say and seen reports that world leaders are jealous of the package that America put together, they’re even upset. I know Emmanuel Macron even called the package super aggressive and worried about too much advantage for American companies. So America is in the game in a way that it hasn’t been historically. So as we work through this stuff over the next year and coming years, what are your wildcards? What are the things that you’re paying attention to that will get a boost that maybe weren’t on your radar a year or two ago or weren’t getting as much attention out in the market? Katherine? There’s another big piece of the inflation Reduction Act that we haven’t touched on yet, but that I think will help in filling some of these gaps. And that is the Greenhouse Gas Reduction Fund that I’ve been working on for years. It’s basically the National Green Bank. It’s $20 billion that would go to a nonprofit, or some set of nonprofits out of EPA. And that nonprofit would be able to then take the 20 billion and borrow another 20 billion, and then do direct and indirect investing. And that investing could be very targeted. It can go to organizations and states, whether or not they’re states where the State Energy Office is going to have its arms open to spending money or not. It’ll go to the community organizations that can deploy. And I think having that tool in the toolbox that’s going to complement everything that DOE and what Jigar’s program is doing is going to be really helpful too. And getting that set up correctly through EPA is going to be crucial to just giving us another set of investment potentials and different tools to connect these dots and really get programs down on the ground. Yeah, the whole issue about Europe is really ironic, of course, because they complain about us forever. And then all of a sudden, we do something and they’re like, ​“Wait a minute, what are you doing?” Yeah, guess what, we ceded our manufacturing to you all, and now we kind of want some of it back. I think it’s our right to do that. So it’s really funny to see them coming up with programs that are going to compete. In Canada is going, ​“Oh, what else can we do? Can we set up some tax programs, too?” because a lot of companies are going ​“well, maybe we shouldn’t move to Canada, maybe we should stay in the US.” So what I think is so interesting about this is that that’s like all good, that’s healthy. That means all of the rest of the world is going to be in this mode of trying to boost what they’re doing, too. Even though, right now, there’s a lot of complaining about it, I actually think it helps us be a better neighbor and a better global leader on all of this. And I think our manufacturing sector is going to really undertake some major changes in the next decade. And I think that’s all to the good, I think it it helps us become a better leader.

Jigar Shah 33:54

We want the ball. ​“Give me the ball coach!” I know that climate change is a very difficult problem, and we are seeing manifestations of it everywhere, from the droughts in the west, to wildfires, to the war in Ukraine, and all of the other resource-related conflicts that are intensifying around the world. And it causes a level of uncertainty, which is not well suited for tight supply chains. And so you’re starting to see people reshoring and onshoring their supply chains into their continents. You’re starting to see more diversity. The thing that worries me the most is that people are not adopting a World War II footing. I think people are saying, ​“Thank goodness, we passed this policy, now things are going to be better.” And I need everyone to grow a war garden. That’s what I need. I need you to get on the calculator and figure out how to electrify your home. I need you to figure out what electric vehicle works for you and your family. I need you to figure out how to go to your city council and your school board meeting and say, ​“What the hell? Why do you not have electric school buses? And why did you not apply for electric school buses at EPA?” We don’t need 20% of the entire American population in the streets like we had for the first Earth Day. But we knew do need like, a couple million.

Katherine Hamilton 35:42

Yeah, the incumbents are not going to stop incumbenting. I mean, like, we totally need everybody to stay alert and awake and keep fighting.

Jigar Shah 35:50

We have got to achieve the best outcomes with this money. You’re not going to get another Ira pass next year. You have got to take this money and achieve best outcomes. And if you’re not thinking about that every day, as part of this movement, then you’re not doing your job.

Stephen Lacey 36:08

This has been quite cathartic. So good to see both of you.

Jigar Shah 36:13

You’re gonna get me in trouble! Back to old habits!

Katherine Hamilton 36:17

That’s where the edit machine comes in.

Stephen Lacey 36:21

Jigar Shah, director of the loan programs office at the U.S. Department of Energy. Thanks, Jigar. It was a real delight.

Jigar Shah 36:28

Oh my gosh, I missed this.

Stephen Lacey 36:29

Katherine is the chair of 38 North Solutions. Katherine, this was so much fun. Oh, thanks so much. It’s great to see both y’all. That’s gonna do it for the show. Thanks so much to Katherine and Jigar for coming back. And if you want to read a transcript of this conversation, you can find it at canarymedia.com. You can also subscribe to their newsletter and our newsletter where we push out episodes. And there’s tons of other great clean energy journalism at Canary Media, and The Carbon Copy is a co-production of Post Script Media and Canary Media. This episode was produced by Alexandria Herr and me. Sean Marquand is our engineer. He composed our theme song. Original music came from Echo Finch and Blue Dot Sessions. Post Script Media is supported by Prelude Ventures, a venture capital firm that partners with entrepreneurs to address climate across a range of sectors, including advanced energy, food and ag, transportation, logistics, advanced materials, manufacturing and advanced computing. Go check out their portfolio and go on over and give us a rating and review at Apple or Spotify, and send your thoughts about what Katherine and Jigar said and some of our other episodes on social media. We’d love to hear from you. And if you have a friend or colleague who would benefit from this show, send them a link. I’m Stephen Lacey. This is The Carbon Copy. Thanks for being here.