Podcast: Biden's climate bill sets US up to lead on clean energy, says Sec. Jennifer Granholm

TRANSCRIPT: Biden's climate bill sets US up to lead on clean energy, says Sec. Jennifer Granholm

Jennifer Granholm:

There's only so long that people can stay under a weeks long, months long heat dome that is killing people before people rise up.

Ian Bremmer:

Hello and welcome to the GZERO World Podcast. This is where you'll find extended versions of my interviews on public television. I'm Ian Bremmer, and on this episode, how new legislation in the United States has changed the global climate fight. The passage of the misnamed Inflation Reduction Act has revived a sputtering Biden administration and represents the single largest climate spending package in US history. Talk about how this new law could help America and the world respond to climate change, I'm joined by US Energy Secretary, Jennifer Granholm. Let's get to it.

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In a world upended by disruptive international events, how can we rebuild? On season two of Global Reboot, a foreign policy podcast in partnership with the Doha Forum, FP editor-in-chief, Ravi Agrawal, engages with world leaders and policy experts to look at old problems in new ways and identify solutions to our world's greatest challenges. Listen to season two of Global Reboot, wherever you get your podcasts.

Ian Bremmer:

Secretary Granholm, thanks so much for joining me on GZERO World.

Jennifer Granholm:

You bet. Glad to be on.

Ian Bremmer:

Let me start by asking you about this headline piece of legislation. Not a lot of people were optimistic it was going to get done. The Inflation Reduction Act, doesn't really tell you what the act is about. It's firmly in your domain. I know you're a huge advocate and understandably so. Spend two minutes just kind of giving the thumbnail for our audience here on what it's going to accomplish.

Jennifer Granholm:

Yeah. I mean, I think there's several pieces of this that are very important, several underlying goals. Number one is to reduce costs for people. So this is part of the idea of lessening inflation to reduce the cost of people for their energy usage, as well as prescription drugs, et cetera. But in my realm, it's really giving people the opportunity, for example, to retrofit their homes to reduce their monthly energy bills, significant incentives to be able to install heat pumps or electric appliances, or if people are eager to try out solar panels, there'll be a 30% tax credit on that. So there's the reduction of energy prices at home. Similarly, the reduction of fuel prices for vehicles by incentivizing the purchase of electric vehicles, and for the first time incentivizing the purchase of used electric vehicles, a $4,000 credit in that instance at the dealership.

But Ian, I think what is really exciting about this from the medium to long-term strategy is that it incentivizes the manufacturing of this energy sector in the United States. I say this as the former governor of Michigan, watching all of these manufacturing jobs go overseas as we bow to the altar of free trade, and now we're saying, this president has said enough is enough. We want to partner with business to create a manufacturing sector and the supply chain for that sector in the United States for these clean energy products, whether they're solar panels, or wind turbines, or electric vehicles, or the guts to that electric vehicle, which is the battery, which includes the critical minerals as well as the anode, cathode, all of the materials that are now being manufactured elsewhere.

So this is, to me, from an industrial strategy, this ability to incentivize the reshoring of manufacturing is a huge piece of the bill. So lowering costs, incentivizing the manufacturer, and then incentivizing the deployment of clean energy across the country to be able to address climate change. Significant incentives for renewable, significant incentives for nuclear, for advanced nuclear, for geothermal, for hydroelectric power, all kinds of energy that helped to address the climate crisis, all three of those very important goals.

Ian Bremmer:

Yeah. I mean, I remember when Brian Deese, the White House said that the United States needed an industrial policy. It was a big speech that came out at the beginning of the Biden administration. That's what I'm hearing from you. This is not a free trade piece of legislation. This is an American industrial policy piece of legislation meant to focus on onshoring, meant to show focus on US competitiveness. I mean, are you comfortable characterizing it as such?

Jennifer Granholm:

I am. Certainly, I know you and ... Actually, I have written a book that involved this because it came from my experience as governor of Michigan, where we did see all these jobs go away and how we were coming to this issue of manufacturing. We brought a knife to a gunfight. Other countries have a very strategic strategy. And of course we don't do it the way other countries do. We don't have state-owned enterprises, but we do partner with the private sector. And this is what this is doing, is saying we want to incentivize the building of solar panels in the United States instead of allowing other countries like China with a very strategic effort to bigfoot all of the manufacture of solar panels. We're saying no more, we're going to do that in the United States. We understand these companies have to be globally competitive, which is why we're going to put a 30% tax credit on it, and we're going to incentivize the manufacturing inside the United States.

So an industrial strategy, I'll say, is really important, especially in this clean energy space where there's a $23 trillion global market for these products. Every country wants to do it by 2030. Huge opportunity for us to create jobs in America in this sector.

Ian Bremmer:

I mean, it's so different. Two, three months ago, President Biden's primary approach to the CEOs of energy companies seemed to be naming and shaming. It was beating them up. The private sector wasn't happy about that at all. Now we're talking very much about hundreds of billions of dollars that are meant to incentivize many of those same CEOs to start investing much more in sustainable transition. Do you think it's fair to say that that former strategy was less successful than it should have been and there's going to be more attention on the latter?

Jennifer Granholm:

The Inflation Reduction Act is really a strategy about providing carrots to incentivize the manufacturer of clean energy in the United States. The pointing at, for example, the fossil industry, the oil and gas companies, was about the price, right? The price of gas at the time and the fact that they were engaging rather than reinvesting in production. They were doing a lot of shareholder buyback and the president was exhorting them to invest in production. So this act, it doesn't incentivize fossil fuels in that same way, but it does incentivize clean energy. And those same CEOs, to your point, can diversify and to become broader energy companies and take advantage of building, for example, offshore wind platforms. If you're already doing oil platforms in the Gulf, or doing geothermals, since oil and gas industry have great expertise in the subsurface. So being able to pull heat from below our feet rather than or in addition to oil.

The president has called upon them to increase production right now because of the invasion of Ukraine has pulled Russian barrels off the market and we have had to replace those. The oil and gas industry will be at record levels in the United States next year. But the bottom line is this act is about incentivizing the build out of clean energy, and that's very exciting.

Ian Bremmer:

Now, you've mentioned bringing a knife to a gunfight. When I think about climate change and I think about investment in renewables, in batteries, in supply chain for rare earth minerals, I think about China, which has been doing this for decades, and in many of these areas are dramatically ahead of US entrepreneurs, of US multinationals. How big is that gap? Where is the gap most concerning to you and how much is that gap honestly likely to be addressed by this piece of legislation?

Jennifer Granholm:

Oh, I definitely think the gap is going to be addressed by this piece of legislation. I mean, one of the biggest areas of challenge, of course, is in the critical mineral space. So one of the things that this piece of legislation does is incentivize the processing of critical minerals and note that the credits for being able to buy an electric vehicle with the content of critical minerals coming from North America. So we've got allies obviously with Canada and Mexico, who are also doing extraction and processing.

So there's a notion that we can do responsible extraction and responsible processing and incentivize that in the medium term, because it does take a little bit of time to get those endeavors going. But we can also partner with our allies to be able to get North American critical minerals like lithium, like cobalt, like graphite, the other pieces that make up the battery for the electric vehicle. But I will say the one other exciting part about this is that it also incentivizes next generation technology, especially in battery storage for utilities, say. So incentivizing the iron flow battery and incentivizing battery production that use much more available materials is also part of the strategy in this. So there's a long term look, there's a medium term look, there's an immediate look about how we can reshore and do it in a thoughtful way to do the whole supply chains.

Ian Bremmer:

So we see $50 million in this legislation for this new miracle energy source nuclear fusion. We've heard about nuclear fusion for a long time. I mean, so far it feels aspirational. How much are you talking about it, thinking about it? Is it realizable?

Jennifer Granholm:

Yeah. Well, the president has made a commitment. He has a vision in a decade to actually see commercial steps toward fusion. Fusion is really hard, and this is why it's been so difficult to achieve. However, our Lawrence Livermore National Laboratory, we have a national ignition facility that is focused on fusion with lasers, made a big milestone in the past few months to be able to achieve that. There was a great milestone that was made in Great Britain as well. We're seeing movement in this direction. We're also seeing a lot of private sector companies who see this as a huge opportunity. And just for listeners who don't know fusion from fission, et cetera, fusion has got all the benefits of nuclear power, meaning zero-carbon emission, but it doesn't have any of the waste. That is why this is seen as kind of a holy grail to be able to achieve fusion. And hopefully there's a big investment in France to be able to do a facility there. So we're hopeful that we'll be able to see some of these milestones.

Ian Bremmer:

Well, there's a lot of private sector funding too, and it's like we've heard about artificial intelligence for decades and it kind of slowed down and then all of a sudden it's exploding, and sometimes in dystopian ways, but we're seeing productivity gains from it. I just thought the headlines around fusion were pretty interesting when we saw them. So with the fracking revolution, in many ways, you could say the United States once again became a fossil fuel superpower. China today, you would argue, is a sustainable energy, a nuclear superpower, is a battery technology superpower. How long before we will be able to characterize, classify the United States as a sustainable energy superpower, in your view?

Jennifer Granholm:

Well, I will say this is the biggest investment, and especially when you consider that all of the funding will require public-private partnerships. So there'll be private sector investment in addition to the public investment. $370 billion worth of investment in clean technologies has never been done before. It is massive, and it is likely to be double that if you consider what the private sector will be doing. And when you combine the bipartisan infrastructure law, which incentivized the advanced technologies like clean hydrogen, like carbon capture and sequestration, like long duration energy storage, battery storage, that funding and another $62 billion combined with the CHIPS Act. So there's the Bipartisan Infrastructure Law, sort of the backbone of next generation technologies, including advanced nuclear. The CHIPS Act is like the brain, because obviously you're funding the semiconductor industry in the United States. Again, an effort to reshore that capability.

Then the lungs of it is really this in Inflation Reduction Act, which provides incentive for the private sector to really help to deploy this next generation technology. All three steps are such a boost to the United States and puts us in a leadership position. So while we're ... You know, it's going to take some time to build up those supply chains, obviously, but the incentives in there, particularly in the vehicle side for the automakers to bring that manufacturing capability into the United States are very quick. The turnarounds there, I mean, we'll see if they're able to keep up with the timelines, but it is really, I think people's hair is on fire to be able to meet the deadlines that are specified in the act.

Ian Bremmer:

How much of a difference do you think this makes for the upcoming COP27 Summit in Sharm el-Sheikh? I mean, certainly it felt like this was a summit that wasn't going to advance much in terms of commitments around the world. There's not been a lot of leadership. There's been a great deal of concern, of course, because of energy inflation, because of challenges on the supply chain side. This feels a bit like a lost year. Do you think that the United States is now in a position to make something more of COP27, or are we really looking for the next year, for the year after that on the global stage?

Jennifer Granholm:

Yeah, I mean, it's a great question. I do think that COP gives us an ability to have some moral authority to say we are putting our money where our mouth is on this, and therefore we are going to be still pressing our allies. But honestly, our allies are there too, because of what has happened, when you look at the NATO allies, for example, our European allies who understand how vulnerable we are by relying upon fossil fuels or any technologies from countries whose values we don't share. So the ability to be able to band together to find solutions on the technology side to make sure that countries are energy secure because they don't want to have to rely upon Russia, for example.

So Europeans obviously are moving with alacrity in this direction. Germany I think saw in the first half of this year, a 22% increase in solar. They need it. It's an existential question obviously, because they have had such a great reliance upon Russian fuel. Great Britain, they just completely decided they were going to not use any Russian-

Ian Bremmer:

No more Russian energy as of this week.

Jennifer Granholm:

No more Russian, yes.

Ian Bremmer:

None.

Jennifer Granholm:

Exactly. What does that tell you? They've got to move swiftly as well. So for people, it's not just a moral question. It is an issue of "can we get enough reliable energy for our people right now?" And of course, because we're talking about the climate, and every one of their citizens is experiencing these extreme weather events, there is you want to move. You don't want to do two transitions. You want to transition and transition to clean. So that's the rush that's happening right now. So it has been a horrible year in terms of the war and in terms of eyes open about how vulnerable we all are when we don't create our own homegrown energy sources. But that is an accelerant as well toward the ultimate goal of getting to 100% clean electricity or net zero by 2050.

Ian Bremmer:

Now, of course, when we talk about the Russian invasion of Ukraine this year, the Europeans are just doing everything they can to diversify away from Russian energy. And if that means more solar, so be it. If that means hydrogen, so be it. But I just saw that the Germans have a new fleet of hydrogen passenger trains that they've just rolled out, but there's also a lot more coal coming in and being burned by the Europeans too. The French are not where they need to be. They've got a lot of nuclear plants that are shuttered right now. How much is the United States doing? How much more can the United States do? Because when the Russians shut down all of the energy that's going to Europe because they're losing that leverage, we're looking at a severe recession for the Europeans this winter.

Jennifer Granholm:

Yeah, there is no doubt. I mean, the US obviously, we are at record levels of liquified natural gas exports, obviously very important for the Europeans. The president made a commitment on that. We are working with them on technology advancements. But you're right, in this year in terms of fuel switching, they have got to do what they've got to do to be able to keep the lights on. Totally understand that, but it does mean that their plans to move toward clean energy, 100% carbon free electricity, are moving fast too. So obviously Germany, if they're going to reconsider keeping nuclear plants on France, quickly moving to make sure the maintenance issues, et cetera, are in their plants, and everybody looking toward the next generation of nuclear. So we've been talking, for example, with the Eastern Europeans, Poland, very interested in small modular reactors, Romania as well. There's a lot of excitement about that next generation nuclear that we are working with these other countries on as well.

Ian Bremmer:

So to an extent, the Russian War, I mean, as devastating as it is and will continue to be, is a kick in the pants not only to get the Europeans diversified, but also to move them faster away from fossil fuels. Chinese competition, and the extraordinary capacity to build is a kick in the pants the United States to do the CHIPS act, to do the IRA, to do the infrastructure act that you're talking about. How much are you engaged at all with Chinese leadership on the energy side right now to talk about what both countries are actually doing? Have we lost those contacts, especially since Taiwan? I know they're not traveling with the pandemic. How problematic is that?

Jennifer Granholm:

Yeah. I mean, we need to reengage those conversations. There was a chill with what was happening with the kerfuffle around Taiwan, but I am confident that this area can be an oasis of diplomacy since the world needs these solutions. So we are hopeful that we can reengage with the Chinese on the discussions regarding next generation. For example, clean hydrogen, super important. All of my counterparts across the world, the energy ministers in all of these countries are looking for the solutions to bring down the price of electrolyser based hydrogen, hydrogen that is derived from renewable sources. We want to be able to be in those discussions. We want to be able to, all of us, find the solution to making sure we have long duration energy storage for renewables so that we can rely upon clean base load power. So we want to be able to engage, I think, with the Chinese once ... On this, I think it's good to have diplomacy in areas where you know we all need to move in a direction, and I'm hopeful that we can reengage with them on this.

Ian Bremmer:

I didn't see you as being on any of the lists of conversations that were specifically suspended on the back of the Pelosi trip and the backlash, the kerfuffle, as you called it, it's a pretty good word for it. Have you or your colleagues at DOE reached out to the Chinese at all on the back of that? I mean, in the last few weeks, I mean, it seems like things have calmed down, at least most recently.

Jennifer Granholm:

They have. We are reaching out, especially, we're actually reaching out to all energy ministers to make sure that they can come to our global Clean Energy Action Forum in Pittsburgh.

Ian Bremmer:

In Pittsburgh, yes.

Jennifer Granholm:

Which is sort of a precursor to what COP will be. I'm hopeful that we will see representation from all countries there. We really want to see a whole slew of them. China has been a part of these in the past, and we're hopeful that they'll be a part of them going forward.

Ian Bremmer:

Let me also just ask you at least a little bit about the Middle East, since we haven't touched on it yet. Of course, there was also a kerfuffle about whether or not President Biden was going to make a trip to Saudi Arabia. The Saudis have a lot of convening power right now. Folks from all over the world want to go and see them, especially with energy prices as they are. How successful do you find that that trip actually was? The Saudis, I mean, they increased production, a nominal amount in the most recent meetings. There is some belief that Mohammed bin Salman is trying to diversify his economy over time. Certainly we're seeing that in the UAE next door. Do you think that from an energy perspective these relations are becoming more constructive long-term or not really?

Jennifer Granholm:

No, I think they are. They want to be leaders in hydrogen, in clean hydrogen. Now, they may derive their hydrogen. I mean, they could so easily derive their hydrogen from solar, solar powering the hydrogen process, and that would make them enormously popular, I'll say, among folks who want to be able to use hydrogen as a clean source. They also could create hydrogen from natural gas. That's a little more problematic in terms of the CO2 emissions and the methane potential leakage, so they'd have to address that, but they have professed us repeatedly that they want to be a leader in clean hydrogen. They also want to obviously do solar, they've enormous resources there. If you could turn that solar and the excess solar, if they don't need all that solar into hydrogen, that would be an amazing economic opportunity for them. So we want to see that happen. We've been in discussions with them, and we will continue to be.

Ian Bremmer:

So finally, before we close, I want to go back just to climate for a moment and ask. I mean, do you think that Americans, on a bipartisan basis, understand the need for global leadership as we fight a climate that is increasingly becoming very dangerous for all of us around the world?

Jennifer Granholm:

Yeah, I do think people understand it. I mean, they know it is global climate change. It is not just climate change in the United States and that we've got to do our part by leading by example. We have to do our part by working in partnership with countries who would love to partner on technology roadmaps to get to their goals of getting to net zero by 2050. I think people, obviously, are mostly focused on the country they live in, and that's true in the United States too. But I think they know how critical it is that China, for example, reduces its CO2 pollution, and we need to continue to press on countries that are big emitters. We are as well, but the fact that we've been able to take this action and can reduce, can say by all accounts that we'll be reducing our CO2 emissions by at least 40%, the goal is to get to 50% by 2030. We want to challenge other countries to meet those same kind of numbers, and obviously it's not just us, it is the globe.

Ian Bremmer:

I mean, China's per capita carbon emissions right now are higher than Europe's, and you think about how poor China is as a country. This is just an enormous challenge. It's not going to go away. India's, of course, are expanding massively, will exceed the United States in relatively short order. I mean, there's only so much the Americans can do, and it's certainly good that the US is abdicating less, but I do think when I see the three pieces of legislation you're talking about, and they're big pieces of legislation, but the United States isn't really competing with China effectively on things like Belt and Road. Frankly, China's a bigger creditor right now around the world to a lot of developing countries, and I think that is a challenge, particularly in an environment where most Americans are asking, no, what are you doing for me?

Jennifer Granholm:

Yeah, yeah. No, I get that.

Ian Bremmer:

What are you doing for me here in the US?

Jennifer Granholm:

Yeah, I mean, but the president has set forth. First of all, the president has set forth to something called Net Zero World, which is an ability to reach out to countries that we can partner with to meet their technology roadmaps. We've got 17 national labs that are jewels that can help on technology roadmaps, et cetera, and to help finance. We have the EXIM Bank. We've got other financing arms of the United States to be able to help. You're right, China has had a strategic plan to be able to have Belt and Road initiative that is financing all kinds of large projects. But I will say that in my experience, in most of these countries, they see the United States as a partner they would prefer to move with.

So we want to be able to do that, and we want to be able to show them the way. I will say this, I do think that in China and in India, in all of these countries, but I mean, you see the heat waves that are happening. It is not going to be acceptable for leaders in any country to ignore that. And people around the world understand what is causing these extreme weather events, and they are going to demand action. There's only so long that people can stay under a weeks long, months long heat dome that is killing people before people rise up, and so every country has to do their part, including [inaudible 00:26:23].

Ian Bremmer:

Will they demand action from their countries or will they demand action from the countries that historically have done most of the emitting?

Jennifer Granholm:

Well, I think they'll demand action from both, especially if their country is a big emitter. I mean, this is why it's so important that the technology part of this, where we reduce costs through technology and we take it to scale, is so important. Solar is now the cheapest form of energy in most places. So expanding that to countries where they can get the benefit of the reduced costs is very important. So it's not just solar, it's wind, and we want to make sure that the ... This is why the battery technology is so very important, so that we can really create dispatchable, baseload affordable power across the world to be able to get to these climate goals.

Ian Bremmer:

Secretary of Energy Jennifer Granholm, thank you so much for joining us today.

Jennifer Granholm:

Thanks so much.

Ian Bremmer:

That's it for today's edition of the GZERO World Podcast. Like what you've heard? Come check us out at gzeromedia.com and sign up for our newsletter, Signal.

Announcer:

The GZERO World Podcast is brought to you by our founding sponsor, First Republic. First Republic, a private bank and wealth management company, places clients' needs first by providing responsive, relevant, and customized solutions. Visit firstrepublic.com to learn more.

In a world upended by disruptive international events, how can we rebuild? On season two of Global Reboot, a foreign policy podcast in partnership with the Doha Forum, FP editor-in-chief, Ravi Agrawal, engages with world leaders and policy experts to look at old problems in new ways and identify solutions to our world's greatest challenges. Listen to season two of Global Reboot wherever you get your podcasts.

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