Plain English with Derek Thompson - How the Democrats' New Climate Bill Could Change the World

Episode Date: August 1, 2022

“Every few years, American politics astonishes you.” That’s how The Atlantic journalist Robinson Meyer began his report on the Democrats' new climate deal, which would invest record-breaking sums in clean energy infrastructure. Yes, this is still just a bill. It could be revised. But in a summer of climate doom—record breaking heat, droughts, fires in Europe—we are looking at an extraordinary leap forward. So what’s in the deal? What would it actually do? And how could it realistically transform the world? Today’s guest is Robinson Meyer, and in this mini episode we break down the bill and explain why it is, to quote the president, a big f*&%ing deal. If you have questions, observations, or ideas for future episodes, email us at [e-mail]. You can find us on TikTok at www.tiktok.com/@plainenglish_ Host: Derek Thompson Guest: Robinson Meyer Producer: Devon Manze Learn more about your ad choices. Visit podcastchoices.com/adchoices

What's up, everybody? Are you tuning in to the Challenge USA on CBS? Well, tune in to me, Tyson Apostle, as I break down each and every episode with my co-host, Amelia Weddemeier. I'm also a contestant on the show, which gives you all the insider scoop. Amelia, how stoked are you to do this? Tyson, I'm freaking excited. I cannot wait to sit my butt down every single week to watch the show, then come here and recap it with you on The Ringer Reality TV podcast. Today, I want to begin with a quote. Every few years, American politics astonishes you.

Yesterday was one of those days. End quote. That's how the Atlantic journalist Robinson Meyer began his report on the climate deal compromise between Senator Joe Manchin and Majority Leader Chuck Schumer. Last week, in a move that seemed to shock literally everybody, not just journalists who following the story closely, but fellow senators as well, the two men unveiled a bill that would reduce the deficit, lower health care costs, and most importantly, for our purposes today, invest record-breaking sums in clean energy infrastructure. And when I say record-breaking sums,

what I mean is this. This is the biggest green energy investment bill in American history. It would be the single biggest one-off green energy investment in European history. Now, it's still just a bill. It's not a law. It's not a policy. It could be revised. It could be changed. It could be scuttled.

So I don't want to get entirely over our skis here. But in a summer of climate doom, with record-breaking heat and droughts, fires throughout Europe, we are looking at a possible extraordinary leap forward. So what's in the bill? What would it actually do to the economy? How could it realistically transform the world? Today's guest is Atlantic journalist Rob Meyer. This mini episode is our breakdown of the bill, but more than a cold explanation,

I want to provide context. The history of American environmentalism is so often a history of disappointment and doom and failure, but it is marked by significant successes. And we have to cherish and celebrate and point to them without leaning into hyperbole or Pollyannish thinking.

So if you're looking for a real glimmer of hope on the climate horizon, I would encourage you to keep listening. I'm Derek Thompson. This is Plain English. Robinson Meyer, welcome to the podcast. Thank you for having me. Happy to be here.

Excellent. Before we get in the details, I want to just set up the context here. Joe Manchin has been Bet Noir of liberal environmentalists for many, many years. America in general has been a laggard in national clean energy policy for many, many years. So for Joe Manchin to be the linchpan

of a major national clean energy legislation is pretty shocking to a lot of people. I know that one of those people is you. You were up until about 4 a.m. last night pouring over this thing to absorb all the details. So before we get into the details, just tell me to start, like to quote our big president, how much of a big effing deal is this?

It is quite a big effing deal. I mean, I think it is the bill, if it passes, and we have to attach that, if only because climate people, you know, we've been dragged, we've been, we've been tricked so many times. You know, you have to protect that core part of yourself and say, if it passes, if it passes, it would be an absolute landmark. It would be the largest investment that the United States has ever made. made in fighting climate change. It would be the largest investment that any European, that any Western country has ever made in fighting climate change. And arguably, the largest investment

ever from any country in fighting climate change, but it's a little hard to say with how China and India do their accounting. However, it is a big, big effing deal. I mean, it's the kind of thing where yesterday, you know, even before it came out, I got a call or right after it came up, but when we didn't have any details yet, I got a call from Sam Ricketts. who used to advise Governor Jay Inslee of Washington, who ran an entire climate-focused presidential campaign on climate change. This was Inslee's Climate Advisor. And he picked up the phone and just starts talking and is like,

this is it. We did it. This is the real victory. He said, I struggle to find enough superlatives to describe this deal. It is the kind of, if it passes, again, if it passes, it would be, it's the kind of victory that people just call you up on the phone. want to immediately start being effusive over. All right.

Well, now I have to imagine that a lot of people's appetites have been wedded to figure out exactly what is in this deal that is making all these environmentalists salivate. Let's go through three major components. Number one, incentives for utilities and developers. What is in the bill?

What does it look like? And tell me why it's so important. Yeah, absolutely. So I would say the centerpiece of this bill from a climate perspective is the set of tax credits that go to utilities, developers, states and cities, anyone who produces electricity and sells it to Americans on the grid.

And what those tax credits do is they encourage the production, they encourage investment in and the production of zero carbon electricity. And I think what's quite, there's two things that would really call out of these tax credits that are important. The first is that, you know, I think listeners will recognize we've had tax credits like this for some time. You know, they've heard about maybe a solar tax credit or a wind tax credit. If they're really wonky, an advanced nuclear tax credit, that goes back to the Bush administration. But what all those tax credits had in common was that they called out specific technologies. The new set of policy, which is in this bill, applies to any zero-carbon electricity

generation or production technology. You know, wind, solar, geothermal, advanced nuclear, carbon capture, burning, I don't know, something renewable that we haven't even thought of yet. It applies to any of those, and it says basically, whatever is the most cost-efficient way to produce electricity in your area, we are going to either help you invest in it or help or actually subsidize the production of that electricity, whatever is the most efficient way for you. The other thing that's really important about these tax credits compared to previous policies

is that every previous subsidy we've had like this has phased out in five years or six years or two years and Congress has to get back together and extend them and it's a whole process. These tax credits extend to at least 2032 or in the United. until when the electricity sector is 75% decarbonized compared to its all-time peak. So these are permanent technology neutral tax credits that are meant to drive the carbon out of the power sector. Wow. So the second big component that I want to talk about is this set of policies that seem

like they have a shot at revitalizing manufacturing in the U.S. within the space of clean energy. So tell me a little bit about this second component. Yeah, absolutely. I think people at this point are used to hearing that Congress is trying to bring back manufacturing. This is something that lots of presidents have tried, right? This bill actually contains the level of investment necessary to do that. And it directs that investment toward industries that the U.S. doesn't need to regain footing in like steel or autos,

but industries that are just getting built now where we can develop a competitive advantage that kind of will extend out into the future. So that's clean hydrogen, that's carbon capture technology, that's advanced nuclear, and that's also developing a domestic solar industry. I think what people don't understand is that the U.S. hasn't failed often, especially on things like solar, because our labor is more expensive than China's in comparison to China. It's because the Chinese government subsidizes domestic supply chains

and makes it very easy for big manufacturers to get loans. that's the kind of policy that the U.S. is now finally doing in these bills. And number three, let's talk about the subsidies for consumers. So like if I, Derek, and interested in like greening my lifestyle, if that's a verb that is ever used by people, I want to make my lifestyle less carbon-intensity. Maybe now. Maybe now it will be. There we go, popularizing made-up verbs. I want to decarbonize my lifestyle, but I'm waiting on the federal government to give

me money to do the right thing by the planet. what are the goodies that I get if this bill passes? There's really two sets of goodies here that the bill's going to dole out. The first is in transportation. It's going to have potentially very large subsidies for EV purchases. They go up to $7,500, depending on how the EV is made and income level for a new car truck. And there's also, for the first time ever, going to be a used EV subsidy. So you could get up to $4,000 to buy a used EV.

there's never been a policy like that in the U.S. That's quite a big deal, especially when you think about how many people buy used cars as their main car, including me. The second set of consumer subsidies here are for everything in people's houses that touch the fossil fuel system so that heaters, gas stoves,

even potentially inefficient air conditioners. There's a set of policies in this bill that are meant to help people, move to say using heat pumps, which are all electric instead of heaters which run on oil or gas, to using induction stoves, which are all electric rather than gas stoves. Those are subsidies that consumers will feel when they go in to make these purchases, and they're meant to encourage someone to say if they're replacing the HVAC system in their house to go buy a heat pump next time or a very efficient air conditioner rather than a gas-powered heater.

What's the most important thing in this bill that could potentially affect some of the further out clean tech technologies like carbon capture, carbon removal? These are things like, I mean, maybe next generation nuclear. There's like a set of technologies that are mildly futuristic, right? You can't immediately deploy them right now the same way that I can just like put a solar panel on my roof tomorrow. Does this bill do anything in terms of laying the groundwork for those? further out tech. It does. So, you know, the bipartisan infrastructure bill that passed last year

contained a lot of money to help exactly those kinds of industries do kind of first-time one-off demonstration projects, big, expensive investments that really, really need the government to help you do the first time. What there wasn't in the infrastructure bill was support to help those companies move past those first big demonstration projects to becoming fully scaled, you know, large industries. That's the kind of support that exists in this bill. And what I think is most important in the Mansion Schumer bill on that front is what's being called a clean tech accelerator, but is actually kind of a big bank in the government. And what it could let the government do is intervene with companies at almost any stage and say, hey, how do you need help to keep growing at this stage?

You know, you work in an industry that we think is important for the economy or for national security. maybe it's very hard for you to get customers. Maybe it's very hard for you to get a very cheap loan. This is actually a kind of support that Tesla got early in its growth from the Rescue Act during the Obama administration, but that has kind of phased out after that act died. This will now bring it back at a higher level and let kind of more companies achieve that Tesla level scale with similar help.

So if I'm trying to summarize a bill like this or the environmental part of the Inflation Reduction Act, it seems like these policies make it more cost-attractive for companies to invest in clean energy and more cost-attractive for consumers to go clean as well, whether it's through EVs or induction stove-tops. There's kind of another theory of environmentalism, which is that rather than incentivize people and companies

to move toward cleaner tech. We should focus on punishing the dirty stuff, right? That's what a carbon tax does. That's what cap and trade to a certain extent does. That's what ramping up regulations for coal would do. Is this really a bill of all carrots and no sticks in clean tech? Yeah, I think there's, first I just have to call out something quite interesting about this bill, which is look how far it's gotten by being so largely constituted of carrots.

And when we talk about, you know, previous, the BTU tax, which was kind of an early proto-carbon tax during the Clinton administration or cap and trade during Obama, the last time that, you know, a Democratic Congress and a Democratic president have tried to fix climate change, they've been much more stick-heavy policies, and they haven't gotten through, right? Joe Manchin didn't support them. Turns out grandma's old thing, you can catch more flies with honey than vinegar. It turned out to be extremely predictive for 21st century environmentalist policy developments. Exactly. So I think I would just call that out as in this long-running debate about environmental policy, what's more effective carrots and sticks?

Well, we're farther along with this mostly, you know, this 90% carrot bill than we've ever been with a climate bill before. And it hasn't passed yet, but it's still worth noting. You're absolutely right, though, that this bill is mostly carrots. There's two things, there's two sticks, though, that are worth mentioning. The first is that it contains what's called a methane reduction fee and is really just a methane tax on oil and gas companies that release methane from their drilling wells, from their pipelines, from any of their infrastructure. As listeners may know, methane is not CO2, but it is a very potent greenhouse gas.

And while it doesn't last as long in the atmosphere as CO2 does, it's extremely more powerful while it is there. And actually, a lot of the climate change we're feeling right now is caused by methane. So this bill charges polluters actually, this bill charges oil companies hundreds of dollars if they release methane into the atmosphere by accident. That's quite a big stick. And it will drive some real innovation in the industry, I think. There's another part of this bill that I think is almost a ghost stick that hasn't been talked about as much,

which is at the same time the Biden administration is trying to regulate climate change through Congress and push along this bill, it is also working on these rules in the Environmental Protection Agency in the EPA to regulate carbon pollution from power plants and cars. Every EPA rule has to pass a cost-benefit analysis. It has to show that its benefits exceed its cost to the economy. It's just one of the requirements that any piece of regulation has to meet in the U.S. But the way that analysis comes together, basically any spending that Congress does, any of these tax incentives or subsidies that we're talking about, are like free money.

They're like the government putting its finger, it's really, it's like whole arm on the benefit side of the equation. And the EPA just gets to count all that for free. And what that means in practice is that the EPA is going to be able to adopt much, much more aggressive environmental regulations on both carbon and also on conventional air pollution than it would otherwise. And it's a big stick. Just a tiny question about the second ghost stick that has to do with the EPA. Does the recent Supreme Court decision have any bearing on the EPA's ability to go forward with this kind of regulation? I don't want to do a whole thing

on the intersection of jurisprudence and the administrative state. Like that's another 17 episodes. But like, is there a bump there? You know, listeners should know, we've been for this conversation to last 10 minutes, and here we are. The short answer about the recent Supreme Court decision is it does curtail some of what the EPA was going to do on climate. But in some ways it curtails kind of the Biden administration's larger executive powers more than it really limits the EPA's actions on climate. And that's because the Supreme Court case was actually about this Obama era. clean power rule that never went into effect. And one of the reasons that never went into effect was that it was very, very complicated. And that's part of what the court was cracking down on in the

ruling. I think regulators already, you know, climate people already learned from that defeat in a way, even before the court said anything. And we're planning much, much more simple, straightforward and frankly more costly rules, less efficient rules this time around than they tried in the Obama administration. For that reason, I think the EPA ruling from the Supreme Court is in some ways, like, worse for kind of the rest of Biden's agenda than it actually is for climate stuff alone. That's interesting. So I want to end sort of looking at this from the Longview, what the legacy of this bill might look like in 2030, 2035. And it's interesting because this is a season of both tragedy and hope in the environmentalist space. You have Europe, like, literally on fire, like southern Europe,

like literally burning while all of Northern Europe hits temperatures not reached in recorded history. You have an energy crisis in Europe with the Russian war in Ukraine. You have high energy prices in the U.S. and people really, really piss at the administration. But you also have potentially, you know, asterisk, asterisk, potentially, this extraordinary bill, which is the largest investment in clean energy

in the history of this country and maybe any other country on the planet. Optimistically, looking back from 2035, how might we look at the legacy of a bill like this? It's entirely possible

we could look back at this bill in 2030 or 2035 and say, oh my gosh, look at how much of the economy really came into its own and was affected by this bill. and how many industries that would not have existed in the United States are now thriving here. Just as you can look at Tesla's success and say, you know, it's very hard to imagine Tesla being what it is today without the Recovery Act of 2009.

You're going to be able to look at a lot of companies around the country and say, wow, we wouldn't have this advanced nuclear company. We wouldn't have this solar company. We wouldn't have this hydrogen company or this revitalized steelmaking company if it wasn't for this bill. I think the U.S. could install mostly U.S. made solar panels and solar panels and wind turbines where the whole supply chain came, happened in the U.S. You know, it's possibly go to the beach lookout at the ocean and see wind turbines generating clean energy that makes your. car, your electric cargo, right? I mean, that's the, that's the world that is actually much, much, much more imaginable now. It's possible now in a way that it was not possible before this bill. Well, look, man, you're a really discerning analyst of environmentalism and green policy,

and I hope this is not just your sleep deprivation causing a kind of, you know, wild and unrealistic optimism, but I love it. Sounds like abundance to me. We'll revisit this in 15 years. Rob Meyer, thank you very much, man. Thank you so much for having me. I'm Derek Thompson. That was Plain English. Thanks very much to our producer, Devin Manzi.

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