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    Volts

    Volts is a podcast about leaving fossil fuels behind. I’ve been reporting on and explaining clean-energy topics for almost 20 years, and I love talking to politicians, analysts, innovators, and activists about the latest progress in the world’s most important fight. (Volts is entirely subscriber-supported. Sign up!)

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    Copyright: © David Roberts

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    Latest Episodes:
    The depthless stupidity of Republicans' anti-ESG campaign Jul 12, 2023
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    In this episode, Kelly Mitchell of journalistic watchdog group Documented discusses Republicans’ furious pushback against ESG funds due to their ostensible greenness, and the ridiculousness of said vehemence since ESG ratings are actually a poor reflection of companies’ true environmental impact.(PDF transcript)(Active transcript)Text transcript:David RobertsFor the last few years, the fastest growing segment of the global financial services industry has been ESG (environmental, social, and governance) funds.Here’s how it works: one of several ratings firms uses its own proprietary formula to rate how well a company is responding to environmental, social, and governance risks. An environmental risk might be: will the county where you’re locating your data centers have sufficient water supply in coming years? A governance risk might be: have you filed all the proper disclosures?Fund managers like BlackRock then gather highly rated companies into ESG funds, which are sold to investors as socially responsible. Hundreds of billions of dollars flow into ESG funds every year.Note that there’s a bit of a shell game at the heart of the enterprise. What customers and investors generally think is that a company gets high ESG ratings because it goes above and beyond in those areas, that it is trying to “do well by doing good.” But in reality, high ESG ratings simply mean that a company is responding to material risks — maximizing its profits, as public companies are bound by law to do. So Tesla gets no ESG credit for accelerating the electric vehicle market, but it can pull a low ESG rating (and fall out of ESG funds) over vulnerability to lawsuits over working conditions. (This is why Elon calls ESG “the devil incarnate.”) McDonald’s loses no ESG points for the enormous carbon impact of its supply chain, but it gains points for reducing plastic in its packaging, because regulations against plastic packaging are imminent in Europe. So investors get to feel like do-gooders and big companies are rewarded for carrying out their legal obligation to assess risks to their business. There’s not much social benefit to the whole thing, but everyone feels good and green and happy.Except now there’s a problem: Republicans bought it. The whole sales pitch — they believe it. They believe that companies in ESG funds are going out of their way to do social and environmental good … and they’re furious about it. Over the past year or two, an enormous, billionaire-funded backlash against ESG has consumed the GOP, leading to multiple congressional hearings, hundreds of proposed state bills, and red-state treasurers vowing never to do business with woke lefty activist funds like [checks notes] BlackRock. It is stupid almost beyond reckoning. And I’m just brushing the surface. To dig into the deep layers of dumb and where it all might go, I called Kelly Mitchell. She’s a senior analyst at the journalistic watchdog group Documented, which uncovered emails and other communications between the architects of the anti-ESG campaign that led to a New York Times exposé.All right then, let's do this. With us, we have Kelly Mitchell from Documented. Kelly, welcome. Thank you so much for coming to Volts.Kelly MitchellThank you, David.David RobertsKelly, when I first decided to do this episode, I started looking into it, thinking, you know what, this all seems kind of stupid. But what happened is as I dug in and explored it into the nooks and crannies, some of the background, some of the work you've done, some of the work Documented has done, what I discovered is that it is actually so much stupider than I ever could have imagined. The depth of stupidity here is remarkable. So I just want to thank you. I feel like you should get hazard pay for what you do. And I just want to thank you for immersing yourself in this. It must be wearying.Kelly MitchellIt is. It's like the Thunderdome of stupidity. But I'm glad we can talk about it.David RobertsYes, let's talk about the levels. Okay, so let's bracket for the moment what ESG actually is in reality. We'll get to that later. Bracket for the moment the merits of the criticisms that conservatives have of ESG and let's just talk about what's happening. So I think probably normal news consumers are aware that sort of ESG, or the sort of boogeyman of ESG, has come up sort of out of nowhere and is everywhere now. So maybe just tell us a little bit about what has happened here, who's doing what and what are the bills? And tell us the phenomenon we're discussing.Kelly MitchellWell, the current iteration of this phenomenon really kicked into high gear probably in about 2021. And there's been a long history of folks who have opposed corporate social responsibility, who have opposed any restriction on investment in things like coal or natural gas. But a lot of gasoline was thrown on the fire in 2021, probably for two major reasons. So first is that Larry Fink, the CEO of BlackRock, published two back-to-back letters to his clients, to corporate CEOs, basically saying that BlackRock, the largest investment firm in the world, was now going to consider climate risk as a fundamental investment risk and wanted CEOs to do the same.And the second is that in May of 2021, an activist investor company called Engine 21 or Engine No. 1 rather, bought a small slice of ExxonMobil and used that slice to wage a battle to get new board seats on Exxon's board that would take into account climate risk and against a 100 million dollar campaign by Exxon. They succeeded. And they succeeded with the help of large institutional investors like BlackRock. And I think those two moments sort of broke a lot of people's brains. Wall Street is not supposed to be against the fossil fuel industry, it's not supposed to be against the right-wing apparatus.And it provided this galvanizing moment for a lot of dark money groups to look for ways to mobilize state agencies and state legislatures against ESG.David RobertsBrains then broken, what do they start doing?Kelly MitchellThere's two fronts that open up. So first you see a big infusion of resources by groups like the Heritage Foundation by Leonard Leo's, Consumers' Research into weaponizing state treasurers to attack, quote, unquote, woke investing or ESG. And it's a smart play because state treasurers are people that nobody pays any attention to.David RobertsWhat are they? Maybe just take a minute and tell us. Like, I know that such a thing exists, but I couldn't tell you in a million years what they do.Kelly MitchellYeah. So basically they're in charge of managing large pools of money that the state uses to pay its bills for the long time, to receive tax money, to give tax money to folks who need it. And in that role they get to decide who manages that money, how that money is invested —David RobertsPension funds and the like.Kelly MitchellExactly. And so there was this big opportunity to kind of utilize these folks to start pulling money away from asset managers that they believed were in some way boycotting fossil fuels or in other ways, looking down on disfavored industries.David RobertsBeing woke.Kelly MitchellBeing too woke, not wanting to put their money into investments that were going to lose them lots of money. The worst woke sin of all.David RobertsYeah, we'll get to that later. So then the right-wing activists get to the red state treasurers and what then? What happens?Kelly MitchellSo they start to do a number of things. They begin to organize these treasurers onto big sign-on letters to do things like block appointments to the Fed, to chastise members of the Biden administration for speaking out against oil and gas. But then they start to take more direct action. You see states like West Virginia and Louisiana start to send letters to financial institutions basically saying they're no longer going to do business with them. West Virginia stops doing business with JPMorgan Chase, they stop doing business with BlackRock because they believe that these companies have been unfairly targeting and blacklisting fossil fuel investments.They also transform a lot of these treasurers into big mouthpieces for the movement. You see treasurers going on Fox News, writing letters in the Wall Street Journal, and they have this kind of air of authority because they manage money. They're going out and really criticizing woke investing from that role as a state elected official.David RobertsYeah, and as I read about this, I think traditionally, based on our rapidly crumbling norms in this nation, state treasurers were quite nonpartisan. They were quite distanced from the whole politics fight. They were supposed to be sort of technocrats. But the young generation of conservatives, they're all creatures of Fox, they're all activists. And so now they're getting in those positions as well.Kelly MitchellAbsolutely. And that's basically the deal that these treasurers were offered. If you look at the State Financial Officers Foundation, it's sort of a trade association of Republican elected state treasurers and auditors. They basically said, "Look, we're contracting with communications firms. We have access to this whole web of right-wing organizations, you're a nobody state treasurer who anyone's ever heard of. But if you join this anti-ESG effort, we're going to get you on the news. We're going to boost your op-ed, we're going to provide you communications training," and suddenly people who no one would have ever heard of are becoming household names because they've dove into this culture war issue around ESG.David RobertsYes, this is, I think, for young conservatives why you get into politics in the first place, right? It's to get on Fox News. That is the, you know, the sort of middle stage where you actually do policy and affect people's lives has just kind of fallen out of it. Now they're all just like, "What can I say? This outrageous that will get me on Fox News." What about legislation?Kelly MitchellYeah, so we saw the first round of anti-ESG legislation launch in 2021. A think tank called the Texas Public Policy Foundation basically drafted a bill. It was basically governed contracts in the state. So it said that state governments, municipal governments, can't contract with organizations that boycott the fossil fuel industry. That went into effect in September 2021, and it kind of became this great natural experiment for what the impact of these bills are. And I know we might talk about it later, but —David RobertsYeah, we're going to get to that in a second.Kelly MitchellWe see this first bill come out in 2021. In 2022, we see another 16 states kind of dabble with these anti-ESG bills. But where it really took off was this year where there were about 157 bills introduced in 36 states. So a huge amount of legislation.David RobertsIs that every red state?Kelly MitchellJust about, yeah.David RobertsI think that's almost all of them.Kelly MitchellAnd plus yeah. So they absolutely flooded the legislative market with bills this year, sometimes introducing multiple bills within a single state to discover what approach might have the best chance of success.David RobertsPeople familiar with the operation of the right wing these days will not be surprised to hear that. ALEC, The American Legislative — what is it?Kelly MitchellExchange Council.David RobertsThank you. The American Legislative Exchange Council is known, I think, at this point, for having these sort of template bills where you just fill in the name of your state. They have those bills for this, right? I mean, that's how they proliferate so quickly.Kelly MitchellThat's right. And this year, there are about five different buckets of template bills, model bills that were introduced throughout the country. Some, yeah, came through ALEC, the American Legislative Exchange Council. Others came from the Heritage Foundation. Others came from the Foundation for Government Accountability. It's been a really instrumental bill on rolling back abortion access and voting rights in this country. So bills were everything from the style that the Texas bill introduced, which was restricting contracting within the state. We saw a number of bills that specifically went after pension funds, either putting restrictions on what asset managers pension funds could work with or even more insidious, introducing language — this is what we saw in Florida, for example, this year — that said that pension managers can only consider what they call pecuniary issues, sort of fiduciary, financial-return-focused issues when making decisions. And the best case scenario, the bill is effectively worthless because pension managers are already required by law to only look out for the best financial interest of the state's pensioners.David RobertsIndeed.Kelly MitchellBut what it actually did was sort of redefine what it means to hold that pecuniary interest in heart and said that if you're looking at systemic risks that violates pecuniary interests, if you look at risks with some margin, of uncertainty that violates pecuniary interests. And if you look at just a broad suite of kind of environmental or social criteria that potentially could violate your pecuniary interest. So it's basically rewriting the rules of what risks an asset manager can evaluate or not. And that's the stuff that really, I think, scared a lot of folks in the state because hamstringing investors like that could have some really big consequences down the line.David RobertsThis, I think, gets to a key feature of all this, which is that the sort of rhetoric is like you need to just be focusing on money but in reality it's saying you cannot consider certain risks.Kelly MitchellAbsolutely.David RobertsLike there are certain threats to the money that you're not allowed to listen to, which is very different, the sort of contradiction there. So this is very much something that was sort of born and germinated in big money, right-wing circles. Right. It sort of starts with these big money groups which then sort of they just push out into the states.They have this machine basically if all the big money people get worried about X, they just push it out and suddenly it's like in every state government it's on Fox all the time. But this is clearly a sort of big money originated thing, right? There's no popular outcry here.Kelly MitchellAbsolutely. This is not a grassroots movement. I mean, I think if you polled any person on the street they would have no idea what ESG even was, let alone have an opinion about it. Yeah, this has absolutely come from you have Texas Public Policy Foundation which has been a longtime recipient of Koch money, of oil and gas industry money. Leading this you have the Heritage Foundation super deep pockets and then within all of this you have groups like Consumers' Research which have been propped up by Leonard Leo, most famous for buying a Supreme Court justice or two.David RobertsBuying a couple? Yeah, he's completing a set.And what do you give a man who already owns half the Supreme Court? You get him onto some new culture war issue and you know, we know his organizations have been pouring millions of dollars specifically into this anti-ESG woke capitalism fight. So very, very deep pockets. A lot of dark money on the right launching this effort.Yeah. Even more top-down than usual, I think.Kelly MitchellAbsolutely.David RobertsAnd it's interesting, they are pretty explicitly trying to replicate what they did with CRT. The whole critical race theory thing. They realize, like, CRT means nothing to anyone, but that means it's just an empty vessel that we can fill with all sorts of bizarre, p…

    Full show notes at the publisher

    How can AI help with climate change? Jul 05, 2023
    Show notes

    In this episode, Priya Donti, executive director of nonprofit Climate Change AI, speaks to how artificial intelligence and machine learning are affecting the fight against climate change. (PDF transcript)(Active transcript)Text transcript:David RobertsAs you might have noticed, the world is in the midst of a massive wave of hype about artificial intelligence (AI) and machine learning (ML) — hype tinged with no small amount of terror. Here at Volts, though, we’re less worried about theoretical machines that gain sentience and decide to wipe out humanity than we are with the actually existing apocalypse of climate change. Are AI and ML helping in the climate fight, or hurting? Are they generating substantial greenhouse gas emissions on their own? Are they helping to discover and exploit more fossil fuels? Are they unlocking fantastic capabilities that might one day revolutionize climate models or the electricity grid?Yes! They are doing all those things. To try to wrap my head around the extent of their current carbon emissions, the ways they are hurting and helping the climate fight, and how policy might channel them in a positive direction, I contact Priya Donti, an assistant professor at MIT and executive director of Climate Change AI, a nonprofit that investigates these very questions.All right, then, with no further ado, Priya Donti, welcome to Volts. Thank you so much for coming.Priya DontiThanks for having me on.David RobertsWe are going to discuss the effects of artificial intelligence and machine learning on the climate fight. And I think we're going to, for reasons that will become clear as we talk, kind of like taking on an impossible task here. As we'll see, it's going to be very difficult to sort of wrap our heads around the whole thing. But I think we can make a lot of progress and maybe get clear about sort of some of the directions and some of the applications and get a better sense of how things are going, because this is something I've been sort of meaning to think about and talk about for a while.I'm excited. But to start, can we just get some definitions out of the way? Because I think people hear a lot of these terms flying around. There's artificial intelligence, AI. There's machine learning, ML, in the business, and then there's just sort of the digitization of everything, and then there's just sort of more powerful computers. Like, if I'm running a climate model and I want to put more variables in there, but I'm constrained by the amount of computing power it would take, computers that have more power and more processing cores or whatever, then I can do that.So help us understand the distinction between these things, between just sort of more and better and faster computing and something called machine learning and something called artificial intelligence. What do all these things mean?Priya DontiYeah, so I'm going to start with AI: Artificial intelligence. So AI refers to any computational algorithm that can perform a task that we think of as complex so this is things like speech or reasoning or forecasting or something like that. And AI has two kind of main branches. One of them is based on rule-based approaches where you basically write down a set of rules and ask an algorithm to reason over them. So when, for example, Deep Blue beat Gary Kasparov in the game of chess, this was a kind of rule-based scenario where you were able to write down the rules of chess and get an algorithm to understand and reason over what to do given that set of rules. Of course, there are lots of scenarios in the world where it's really difficult to write down a set of rules to capture a task, even though we kind of know how the task goes.David RobertsMost you could say are difficult.Priya DontiExactly. And so, one of these things is, like, if I have an image, what does it mean for that image to contain a picture of a cat? I can probably tell you, okay, there's got to be a thing with ears, a head, a tail, but it doesn't capture that always because you can't always see the tail. Like, how does this work? And so, machine learning is a type of AI that basically tries to automatically learn an underlying set of rules based on examples. So, for example, it takes large amounts of data, like, that it can analyze and use to help kind of figure out what the patterns are in that underlying data, and then apply those patterns to other similar scenarios, like classifying other images that the algorithm hasn't yet seen but are similar to what it saw when actually being created.And yeah, I would say that in terms of what's the distinction between these things and computing, I would say computing is a workhorse behind many of these algorithms. So in order for these algorithms to work, you need fast computers that are able to kind of execute the computations behind the creation of these algorithms. Behind the learning. You also need good data. And with those things together, you can basically create a lot of these more powerful AI and machine learning algorithms that you've seen today.David RobertsI see. So in AI, you're kind of telling the computer the rules and then hoping that the computer can use the rules to respond effectively to new data. With machine learning, you're just feeding it an enormous amount of data and it is deriving the rules or patterns from the data.Priya DontiRight. And those rules might be derived in a way that either is or is not interpretable. So I may or may not be able to go into the model and actually pull out what the set of rules are. But implicitly, at least in there, there's some set of rules that's being learned based on the data.David RobertsSo there are so many side paths that I'm going to try not to go down all of them as we go. But I'm sort of curious because one of the fears people are always bringing up is you feed it this enormous amount of data, it derives some rules from it and applies that to new data, but you don't really know what it's doing. And this is something we hear about AI a lot, is sort of relatively quickly the sort of complexity of what's going on and the kind of foreignness of what's going on to our way of thinking, to sort of human reasoning just puts these things out of touch. And pretty quickly we're in a kind of like, well, it seems to be working, so let's keep using it even though we don't know what it's doing.So I guess my question is, is that a limitation of our knowledge? In other words, is it theoretically possible if we had sort of the time and willpower to dig in and figure out what it's doing? Or is there some reason that in principle it's sort of impossible to know what it's doing? Does that make sense?Priya DontiIt does, yeah. And I'd say that one thing to kind of step back and note also is that there's a diversity of machine learning methods, some of which are inherently a bit more interpretable than others. So, linear regression, even though people don't think of it as a form of machine learning, it actually is, right? Because you're taking in some data and you're learning parameters that allow you to make some kind of prediction. And linear regression is, abundantly, interpretable. And similarly, you have things like decision trees. There are more complicated methods, like physics-informed machine learning or other methods, that try to just constrain the model in a way such that the goal is you can pull out certain kinds of rules.So, there is that axis of methods, but then there are these other methods, like some of the more complicated deep learning methods you see today, where, agreed, we basically view it. It is a bit of a black box. You don't know exactly why a prediction is being made, and there is some work going on to try to get at this issue and see if there are ways we can understand what the model is doing post hoc. But it's an area of research, I think, one that undergoes a lot of debate. Also, in terms of can you post hoc explain what a deep learning model did?For example, if I, as a person, make a decision and take some kind of action and you, David, ask me, "Hey, why did you do that?" I could probably come up with any number of explanations for you, all of which seem plausible, but those may or may not actually describe how I actually made the decision. So there's a bit of a debate about kind of even if you can try to somehow understand what the deep learning model did, what are the limits of that analysis and interpreting what it actually did and why?David RobertsYeah, there's a lot of things about this whole subject matter that sort of unnerve people. But this is kind of what I think is at the root of it is just that as these things get more complex, you pretty quickly get into an area of kind of trust or faith, almost like our machine masters. They seem to be doing well by us, even though we don't know exactly why. There's just something a little weird about that.Priya DontiYeah. And maybe just one thing I'll add. There are levers here, though, right? In any kind of machine learning pipeline, you have the data, the model, and then the outputs are how you evaluate the outputs. And you do have the ability to kind of quality control or constrain any of those things. So you should know exactly what's going into the data that's going into a model. In order to understand if your model is actually seeing quality things that it's trying to learn from. You can, as I mentioned, constrain your model to be an interpretable model.And then, what some of my work looks at is, you can actually often constrain the output in certain settings. So, if I create a controller for a power grid based on machine learning and it outputs some kind of action, but I know something about the control theoretic constraints that that action should satisfy, there are ways I can actually constrain the output so that it still satisfies various performance criteria that we recognize. So, it isn't sort of a foregone conclusion that AI and machine learning must be this sort of black box, scary thing. But I would say that there is work to be done and kind of intention that goes into making sure that we really understand and are constraining and quality controlling how the whole pipeline goes forward.David RobertsRight. And one other general question. So when people talk about AI these days, I think mostly in the popular imagination, I think mostly what they're talking about is what's called general intelligence. This idea that you could create a program that could find its own data and apply rules and figure things out, basically that has some autonomy, that would be the AI, right, the rules based. Like you give it the rules and then it goes and applies this to the world. Or is there a dispute about how you get to general intelligence? Which of these routes leads you to general intelligence?Priya DontiYeah, so I would say that the distinction between sort of general intelligent AI versus task-specific AI, it's not quite the same as this AI machine learning distinction of rules versus data. It's something different. And it kind of comes down to, when you create an algorithm, there is some objective that you're creating it with in mind. And so, for example, if I am creating a forecasting model of solar power, that's a very specific task. I'm kind of giving very specific data. I'm making a very specific ask when I look at the output of the model. But others are saying, can we somehow imbue a lot of data or a lot of rules and learn some kind of foundational representation that really is capturing a ton of general knowledge that can be kind of tuned or specified in various ways.These are kind of the kinds of works that really are trying to lead towards something more general. And so, yeah, I would say that there's kind of these different threads of work within the machine learning community at the moment.David RobertsRight. And just to be clear, we have not reached general intelligence and no one knows how to do that. And there's a lot of theoretical work going on, a lot of work going on in that. But practically speaking, almost all of the AI or machine learning that is happening today is task based. Right? I mean that's to a first approximation, when we talk about AI and machine learning, that's what we're talking about today.Priya DontiYes, that's right. So, I think that there is some kind of research going on in specific labs that is trying to work on artificial general intelligence. But when we think about the implementation of AI and machine learning across society and what it's really used for in practice, I think it is safe to say that a lot of it is task-based. And even some of the stuff that looks very clever and artificial general intelligence-like, there is genuine debate as to whether that is actually the case. For example, large language models and models like GPT have been called stochastic parrots, which is to say, they're not actually thinking; they are mirroring, parroting in a kind of stochastic way, what they're seeing in their data.And we potentially as people who then read text outputs that seem realistic, we maybe ascribe intelligence to that. But that doesn't necessarily mean there's any thinking actually going on under the hood.David RobertsYes. And then, of course, there's this whole, like, back in the "dark ages", I was in grad school in philosophy and I used to study cognitive science and consciousness and all these sort of theoretical debates around this stuff. There is a sort of debate. There is this sort of idea that all we're doing is what the language models are doing, just on a vast scale. So, there is no sharp line. They're just like, eventually you do that well enough that you are, de facto, deploying intelligence, and the models will eventually, eventually there will be no point in drawing a distinction between what they're doing and true intelligence.But that is well far afield of our subject here today anyway. So we're going to try to wrap our heads around how this all applies to the climate change fight, the clean energy fight. But just as a caveat up front, in one of your papers you write "those impacts that are easiest to measure are likely not those with the largest effects." So just by way of framing the discussion. What do you mean by that?Priya DontiYeah. So when we think about the impacts of AI and machine learning on climate, we need to think about a combination of AI and machine learning's direct carbon footprint through its hardware and computational impacts. The ways in which AI is being used for applications that have quote, unquote immediate impacts on climate change, be those sort of good or bad. But then we also have to think about the broader systemic shifts that AI and machine learning create across society that then may have implications for our ability to move forward on climate goals. And I'm sure we'll get into the specifics of all of those things.But I guess, briefly speaking, these sort of broader systemic shifts that AI and machine learning is going to potentially bring about are extremely hard to quantify, but they'll be large. And so it's important to make sure that as we think holistically about the impact of AI on climate, we do the quantifications in order to guide ourselves. But we also make sure to look at this holistic picture, even for things that we're not able to put so concretely into numbers.David RobertsYeah, I think about going back to, whatever, the beginning of the 19th century and just saying, like, well, what are the systemic impacts of automation go…

    Full show notes at the publisher

    Making shipping fuel with off-grid renewables Jun 28, 2023
    Show notes

    In this episode, Anthony Wang, co-founder of ETFuels, describes his company’s business model of using renewable energy to make green hydrogen, then using the hydrogen to make carbon-neutral methanol.(PDF transcript)(Active transcript)Text transcript:David RobertsAnthony Wang, a mechanical engineer by training, spent years as a researcher on hydrogen technologies. He worked with governments to develop policy and infrastructure plans — he was project manager on the EU's big hydrogen backbone project — and with private companies like Total and Shell to develop hydrogen technology roadmaps. He has authored or co-authored several industry-defining reports on hydrogen and been cited in countless publications.A few years ago, he decided to throw his hat in the ring and try to actually build hydrogen projects in the real world. All his research and contacts in the energy world led him to a very specific — and, to me, extremely intriguing — business model.ETFuels, the company he co-founded, develops projects that couple giant off-grid renewable energy installations with hydrogen electrolyzers; it then uses the resulting green hydrogen to synthesize carbon-neutral liquid fuels. (First up is methanol for shipping, but the company plans to branch out into other e-fuels.)This model somehow manages to implicate half the stuff I’m interested in these days — green hydrogen, markets for hydrogen fuels, off-grid renewables, coupling renewables directly with industrial loads — so I was eager to talk with Wang about it. We dug into the limits of “electrify everything,” the difficulty of transporting hydrogen, and the economics of e-fuels, among other things.This one gets fairly deep in the weeds, but if you find the real-world challenges of developing clean-energy projects interesting, you don’t want to miss it. All right, then, with no further ado, Anthony Wang. Welcome to Volts. Thanks so much for coming.Anthony WangThank you so much for having me, David.David RobertsSo you were sort of recommended to me as somebody who knows a lot about hydrogen, about sort of green hydrogen, the markets. I know you've worked with public on policy roadmaps. I know you've worked with private companies on technology roadmaps. So I know you've given a lot of thought and sort of analysis to the green hydrogen phenomenon, the green hydrogen market. And you settled when you decided to start a company of your own, you co-founded this company, ETFuels. You settled on a very particular business model, which I just find sort of fascinating as it sort of implicates half the things I'm interested in these days in the energy world.So I wanted to just run through it with you and talk about why you made the choices you did and get into some of the bigger issues that way. So just for listeners' benefit, the idea here is you find a big piece of land somewhere out in the middle of nowhere. You build a bunch of renewable energy, mostly solar, maybe some wind. Instead of hooking the renewable energy up to a grid, you pipe it directly into electrolyzers and make green hydrogen out of it. And then instead of exporting the green hydrogen or selling the green hydrogen, you use the green hydrogen, combine it with CO2 to make methanol, basically, carbon-neutral methanol, which you are then going to sell to shipping companies. So that's a big puzzle. That's a big puzzle with lots of pieces put together. So I want to kind of start at the front end of it. My intuitive reaction to this is you're taking valuable renewable energy and then you're converting it to hydrogen, you lose a lot in that conversion, and then you convert it again to methanol and you lose a lot in that conversion as well. It sounds sort of inefficient.So the question comes up like, why not just sell the renewable energy? So why off-grid in the first place?Anthony WangFor us, obviously, it depends where you're talking in the world, right? So renewable energy, if you can get it connected to the grid, you're completely right, it's extremely valuable. I mean, you've seen what prices of power have done in the last couple of years in Europe and in the US. And if you can use it to electrify your vehicles or heat up a heat pump, that's a very good use of that renewable energy. That said, there are many places in the world where solar and wind, on a levelized cost of production basis, are the lowest cost sources of energy we have.And on top of that, most of these locations are not connected to grids. And so one question that always puzzled me a bit was everyone's talking about renewable energy getting cheaper and cheaper and being the lowest cost source there is. So why, why aren't we seeing that being reflected at all in, in the prices that we see a) on the wholesale market, and b) ultimately on our bills at the end of the month? And thought a lot about this, and I'm not an economist, but it does seem to me that while we've got very good at producing renewable energy in a very cheap way, I'd argue it's the cheapest that we've got.We seem to have made a lot less progress in transporting, storing and balancing that renewable energy in a way that meets the consumer when they need it, where they need it. We know also that the energy transition is going to put this massive strain on power grids. Today we transport about 20% of our final energy through the grid. And in a fully decarbonized system, I mean, depending who you talk to, that number should be going up to 60, 70, 80%. We should electrify as much as we can. But that also means that we need about three, four, five times the number of cables, transformers and substations.And right now the grid does not seem to be set up to deliver that. And so we wanted to marry that problem in a way with an opportunity that we saw in producing hydrogen. And obviously, when you lose 30% through energy, conversion losses. That's a huge deal if your power is super valuable. It's a lot less of a big deal when your power is virtually free, depending on where you are.David RobertsSo sort of to summarize that renewable energy itself at the point of production is super cheap, but all these balance of system costs, mainly transmission and distribution, end up boosting the cost anyway. So your idea is just to use the cheap renewable energy and avoid all those other costs. Basically just use the cheap energy directly and not have to pay those additional costs?Anthony WangYeah, exactly. And cost is quite a simple way of capturing it. But there's lots of other things right in projects it's also time. The biggest risk in developing renewable projects is often getting the grid connection permit. I think, not to bash too much on the grids, I've got lots of good friends there, but the numbers speak for this. So if you look at the US, I think the Berkeley National Lab found there's a two gigawatt backlog or 2000 gigawatts, sorry, of PV, wind and storage.David RobertsYeah. Terawatts.Anthony WangTerawatts, exactly. Which is like almost double of the installed capacity base today. And you see similar numbers in Europe. And the cost of interconnection, the deposits that developers are asked to put down are twice what they used to be. They can be almost as big as your CapEx of your solar project. So it's lots of things that have come together that are just making it very difficult to connect the phenomenal amounts of renewables that are available to the demand where it is.David RobertsSo, I'm curious how you see this playing out. Because the enthusiasm is for electrifying everything and as you say, that's going to mean like four or five times our grid capacity and nowhere that I know of is a shining example of how to build grid capacity that much, that fast. I don't know that anyone's doing it. So, do you think that is going to be a serious constraint at the macro level on electrifying everything? Do you think that's going to push a lot of activities to this sort of off-grid model?Anthony WangWe hope so. At ETFuels we're definitely pushing it. Look, I've got nothing against the electrify narrative. I think it makes total sense and where we can, we should. But the reality is that it's incredibly difficult. I mean, we're finding this ourselves. We're trying to develop projects which are in the middle of nowhere. And even there, permitting and consent can be a challenge. So, imagine building a transport cable that crosses the entire country. These transmission highways in Europe, we're talking about the European super grid. Governments are trying to kind of coordinate about who gets what space in the North Sea.We're talking about kind of hydrogen backbones that should cover the entire continent. And you can just see the political and practical implementation challenge of doing projects like that I think. I was working closely on a hydrogen pipeline project between Spain and France, these countries putting a pipe through the Pyrenees. I think now they've landed on kind of putting it through the Mediterranean Sea and said, you see presidents shaking hands about which pipelines should happen and then it still takes eight, ten, twelve years before they're actually implemented. So, I think it's a question of let's do everything as much as we can and whichever one gets to market first, you should have some merit to that.David RobertsRegular listeners will know that. I'm sort of fascinated by this question. We had John O'Donnell from Rondo, the heat battery company on and that's sort of his thesis of his company is kind of the same logic. The grid constraints are going to push a lot of renewables off-grid. Basically, they're going to be coupled directly with industrial applications and just skip all the grid stuff, which I find a fascinating trend. That's one of the reasons your kind of business model caught my eye. So then you're generating all this variable renewable energy which notoriously comes and goes, waxes and wanes, sort of out of your control and you're using it to make green hydrogen.So part of the conventional wisdom that I always hear is that's a bad match because electrolyzers need to be run a lot of the time to pay off. Basically to be worth the investment, they need what's called a high capacity factor. And if they're sort of tied to variable renewables, how do you think about that problem? Have you thought about putting anything in between them? This is the heat battery question again. Have you thought about putting anything in between them to smooth the supply of the energy to the electrolyzers? Or is a lower capacity factor just a cost you think is worth bearing?Anthony WangYeah, a really good question. Obviously when we started the business that was probably the first question that we looked into because obviously we're only doing this because we think that we have a commercially viable proposition and we can provide hydrogen at lower cost than what is currently available on the market. And fundamentally when you look at this equation, you're kind of balancing three variables, right? You've got on the one hand, your cost of power. Secondly, you've got the number of hours that you're able to run your kit on that power, which obviously is lower with renewables.And then the third is just the cost of the kit itself. So let's say the CapEx of the electrolyzer and the cost of balancing the power. And when we look at modeling this out across the year, there are places in Europe, in the world where your renewable energy wouldn't be producing often enough for this to be worth it, right? So if you only have a solar production model in the north of Europe, then it's probably not going to work. You can't run your electrolyzer for 1000 hours a year and hope it to make money but there are also places where it definitely can work.And you're seeing lots of projects these days which actually combine solar and wind together in these types of hybrid configurations. And that's useful, one because they're not entirely I mean, so wind is a bit more expensive, but it runs a bit more often. But then on top of that, depending on where you are and there are special deserts where this is particularly the case where the wind and solar production hours actually very anticorrelate very well, where you essentially have solar during the day and then wind which mainly blows at night, not exclusively, but mainly at night. And when you combine those two, you can get very, very steady profiles up to 5500 hours a year of essentially base load production.And when you spread that across an electrolyzer, and especially obviously today electrolyzers are still quite expensive, but going forward their cost will come down. You'll see that the numbers actually pan out very well. And when we've done the math, we come to conclusions where depending on the power that you're using but if you're comparing a hybrid solar wind project in, let's say, the deserts of Chile or in the Middle East or in Western Australia, you can easily get to production costs of hydrogen that are 40% lower than if you were using grid connected power, paying essentially wholesale prices in Northern Europe. So that's on the economic side.Then there's of course the question around can the electrolyzer even run flexibly?David RobertsRight.Anthony WangAnd this is a bit more of a technical question. Obviously, you've got different technologies. You've got PEM, so the Proton Exchange Membrane electrolysis, and you've got alkaline ones. PEM is more flexible. But even the latest kind of pressurized alkaline models are able to run flexibly depending on their ramp rate. The specific model, you may need to add a small battery in between. But in principle you don't need to run, especially if you got 6000 full load hours from your renewables. You're mainly looking at balancing on the kind of second to minute level and the technologies that are on the market today can handle that.So you don't need any additional storage. It's more of just a pure economic thing. If your power price is low enough and your hours are good enough, then you can make it work.David RobertsRight. So two things: You go to places where a hybrid renewable system can actually reach relatively steady production and then you go to places where the power is super, super cheap. So what about electrolyzers then? Let's talk about electrolyzers because you're saying you're going to produce green hydrogen that's cheaper than what's on the market. Is that purely because the power you're making it with is going to be cheaper? Or is there something about your electrolyzers that is special?Anthony WangYeah, and just to clarify, so when we say our green hydrogen is cheaper, I'm comparing to other green hydrogen projects, not the fossil hydrogen projects that are of course hydrogen that's on the market.David RobertsBrown or —Anthony WangYeah, exactly.David Robertsgray or whatever the hell.Anthony WangSo, that stuff's definitely cheaper at the moment. So for us, the innovation is not in the electrolyzer technology itself. We're not an equipment supplier or manufacturer with our own technology. Our development IP, I suppose, is in the integration of the different technologies. So we haven't really spoken about the methanol component, we'll get there. But what we essentially do is we find the optimal end-to-end project configuration that makes the economics work for the final offtaker. Because we start with what is the price that we need to hit for our final product, which is methanol, we'll talk about, it can be a bankable commercially viab…

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    Steps toward a unified electricity market in the western US Jun 23, 2023
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    Unlike other parts of the country, the 11 western US states have not joined together in a regional transmission organization (RTO) to more efficiently and cost-effectively administer their respective electrical transmission systems. In this episode, Michael Wara, director of the Climate and Energy Policy Program at the Stanford Woods Institute for the Environment, discusses the current status of a potential western RTO and the political factors affecting the conversation.(PDF transcript)(Active transcript)Text transcript:David RobertsIn about half the country, power utilities have turned over administration of their electrical transmission systems to regional transmission organizations (RTOs), or what amounts to the same thing, independent system operators (ISOs). RTOs and ISOs oversee wholesale electricity markets and do regional transmission planning, which increases system efficiency and reduces costs for ratepayers.The power utilities in the 11 western US states are not joined together in an RTO. California has its own ISO, but it only covers that one state. In the rest of the region, utilities are islands — they each maintain their own reserves and do their own transmission planning within their own territories. It leads to enormous duplicated efforts and inefficiencies.For years, there has been discussion of creating a western RTO, to bring the western states together to share resources and coordinate transmission planning. Analysts have found that an RTO could save the region’s ratepayers billions of dollars a year.Recently the discussion has begun to heat up again. A regionalization bill in California was tabled this year but promises to return next session. Governor Gavin Newsom expressed his support for the idea. Nonetheless, numerous sticky technical and political issues remain to be hashed out.To explore the promise and risks of a western RTO, I contacted Michael Wara, director of the Climate and Energy Policy Program at the Stanford Woods Institute for the Environment. We discussed the political forces pushing for and against an RTO, the way the west's electrical system has changed since the last time this discussion came up, and incremental steps that can be taken in the direction of greater regional cooperation.All right then, with no further ado, Michael Wara, welcome to Volts. Thank you so much for coming.Michael WaraThanks for having me.David RobertsSo we're here to discuss something that is somewhat complex and rests on a set of concepts that might not be — that everybody might not come in understanding. But because I want to talk about the specifics and I don't just want this to be a 101 kind of thing, I'm going to assume Volts listeners have some basic background. So I think the main thing to know is the US electricity system is sort of divided in two. On the one hand, you have the traditional old school, vertically integrated utilities which own the generation and the transmission and the customer interaction, the whole deal.And then the other half is what's called "deregulated" or "liberalized" or whatever the term is. Basically have created markets, wholesale energy markets, where generators compete and sell into the markets. And then distribution utilities which interact with customers buy power from those markets and sell it to customers. And those areas with energy markets are overseen by organizations called Regional Transmission Operators or sometimes Independent System Operators. RTOs and ISOs, as everyone in our world is so familiar with saying over and over again I'll just use RTO, I think from now on as a shortcut for those. So in these liberalized areas RTOs sort of manage regional transmission planning.And the idea is if a bunch of different utilities can sort of share backup and share reserves and share generally they're going to lower costs for ratepayers. And so there are RTOs in the Midwest, there's one in the Northeast, et cetera. Listeners might be familiar with PJM and MISO. These are all regional transmission operators in various parts of the country. So as it happens, the western states, the eleven western states of the United States are almost all old school vertically integrated utilities which means they operate as islands. There's not a lot of sharing. So California has its own RTO or ISO, in this case California ISO or CAISO, but it only does planning for California.So what we are here to discuss is the long standing discussion about whether the western states should form an RTO of their own, join together into a regional organization so that they can do more of this sharing. That is the question before us. And there are all sorts of ins and outs and details about this but that is the basic background. So maybe the place to start is just at a very general level, sort of abstract level. You could explain what are the advantages of joining an RTO versus just operating as an island? What is the pot of gold at the end of this rainbow?Michael WaraI'd want to start by saying that there are advantages and disadvantages, right? And it's important to be straight about that. I think the key thing for listeners to remember and understand is that the primary mission of an RTO or an ISO is to operate. It's to operate the electricity system in a particular geographic footprint. And in general it is the case that it is more cost effective to operate across a larger footprint. And so a discussion around increasing the size of the California ISO or CAISO is about increasing the operational efficiency of the overall system. What I'd say also is that it's important to think both about the average conditions or kind of the expected conditions and then periods of extreme stress on the system.I guess my view is that the discussions around regionalization or growing the California ISO further outside of its California footprint have really become more important because of the challenges of the reliability that we've had in California and elsewhere. But especially in California over the last several years due to drought, the unavailability of hydro as a result, and the growth of intermittent renewables.David RobertsThe duck curve.Michael WaraThe duck curve.David RobertsThe dreaded duck curve. Yeah. So the idea here is just if you have more states or a wider area involved, you just have a larger pool to draw. And so if you're having a sort of like choke point or grid congestion here or a shortage of power here, there's maybe power over there that you can import just the larger geographic area you're covering, the larger sort of base of power and the larger variety of power sources you're drawing from. And that generally leads to resilience.Michael WaraYeah, I think an intuitive way for people to think about this is kind of national borders and trade, right? If you ship goods across an international border, they have to go through customs, and there are barriers to that. And we have rules about how those barriers are supposed to be under the WTO and other agreements we have with other countries. But it's just harder to ship things internationally than it is to ship something from California to Nevada, because we're all within a free trade zone. And what these ISOs or RTOs really create when they're done well is a free trade zone where electricity can be traded at very low cost.And what that means is that the optimal power plants turn on within a system footprint to meet the electricity demand that exists within that footprint. So that lowers costs because it means that you're not buying something expensive within your little market because it would cost money to get something cheaper that's just across the border.David RobertsRight. So it's just easier to share. And it's also worth saying, all these islanded utilities, the vertically integrated utilities, they're required by law to have a certain amount of backup available, basically resource backup in case of problems. And if you operate in an island, you have to have enough backup for your own island, which is and then the next island over also has to have enough backup for its island, et cetera, et cetera, et cetera. So you end up duplicating efforts over and over and over again. You have sort of like duplicated backups. And what this wider area allows you to do is sort of have a pool of backup, right?So not everybody has to have —Michael WaraThat's right.David Robertsenough to cover, and that also reduces costs. So these are the, I think, the sort of abstract benefits. Like a larger footprint means more sharing, better planning, lower costs. So back in 2016, 2017, there was a bill that came up in California, because at least one pathway to this, the first step would be right now, California's ISO is more or less controlled by California. The governor appoints the members and the California Senate approves them. So it's a very California-centric operation. So if you were going to expand that to incorporate other states, obviously you would have to restructure CAISO, so that it's not California-centric, because, like, other states are not going to join if California completely controls who's on it and how it works.So there was a bill back in 2016, 2017 to restructure CAISO this way, and that sort of prompted a whole round of this discussion back then. So what I thought I would do is sort of throw out at you some of the sort of worries and objections that were voiced back then and then maybe you could tell us, are those worries? Were they valid then and are they valid now? Have things changed, sort of catch us up on sort of stakeholder worries and issues. So I think probably the strongest opposition to the whole notion of regionalization, especially back then, came from unions because California's climate laws have a lot of domestic content requirements, so they require that the power be generated in California, which means a lot of jobs in California, a lot of union jobs in California.And I think the unions worried if we expand the footprint to include multiple states, California will be able to find cheaper power elsewhere and we'll just import it and that will mean fewer jobs here in California. So maybe you could say, was that a valid worry in 2017 and has anything changed now to address that worry?Michael WaraSo that, I think, is a primary worry about this proposal, and it does reflect the desire of the unions in California that have really benefited from the renewable portfolio standard here to make sure that those benefits don't evaporate. And I think it also in less maybe self-interested sense, the cooperation and support of labor unions in California has been critical to the political economy of getting hard bills through the legislature and signed by the governor that have been really important in terms of driving the climate policy situation forward in California. So we don't want to damage that. And the situation in 2017 was that you could build solar in California.If you do that, you have to pay prevailing wage and have an apprenticeship program, which basically means you're hiring unions to do the work. And that is not the case in many neighboring states. And so that was the situation circa 2017, I think there was a legitimate concern about that issue. There was some attempt to kind of massage the legal questions using clever language, which at the time made many of us, I think many of us were skeptical that that language would survive review if challenged. It's notable that the language in the California RPS, which you correctly point out, David, is I don't know if I'd call it protectionist, but it's certainly designed with particular outcomes in mind about where generation gets built, has never been challenged.So fast forward to today and the situation is different in a few respects that I think are worth talking about. The first respect, and this was actually true in 2017, but people didn't focus on it so much, is that we need to be real about who's going to want to join a sort of common electricity market with California. And probably it's not going to be states like Wyoming which are committed to subsidizing their coal-fired power plants as long as possible and in whatever way is legally tolerated by various courts and they also happen to have a really nice wind resource which if it were interconnected to California's grid would be extremely valuable. Rather than try to link up with Wyoming in a market sense what the CAISO is doing is actually building its own transmission line that it will control out to Wyoming to connect with Wyoming Wind.Right? So it's sort of decided that there's not a future where that happens. And I think many of the benefits that were envisioned for kind of out-of-state generation resources circa 16, 17 really depended on this vision where the entire west is in a single RTO. I personally think that's highly unrealistic. It's unrealistic today for two reasons. The first one is what I just mentioned that very conservative states do not want to share power with a very blue state like California. So I think it's unlikely those states are going to want to join whatever the economic benefits.It's a tribal issue. The second issue though is that there's a competing RTO under development in the west now that will be kind of the eastern side of the western interconnect and will involve a lot of these other states. SPP, which is an existing RTO based in Little Rock, is in the pretty advanced stages of getting ready to file with FERC to create an RTO across western states. So that's one set of issues. The big talk back in 16, 17 was "We'll get Wyoming Wind in the CAISO and that's going to really be great for various reasons" which it's still true it would be great to have more of that resource in the electricity mix in California.The other thing though that's changed is federal law: The Inflation Reduction Act passed. The Inflation Reduction Act says that if you want to get the full PTC, the production Tax credit then you need to pay prevailing wage and have an apprenticeship program. Period. Full stop. Starting on January 1 of next year. So any projects that would be a part of the California ISO and hope to receive federal tax credits which are material to the economics of these projects is going to have to pay wages and have unionized labor apprenticeship programs that are very similar to California's. Now the prevailing wage in Nevada or Arizona may be somewhat lower than in Kern County where a lot of the solar gets built in California or in the western part of the Central Valley and in the Westlands Water District.But at least a significant chunk of the kind of economic advantage to building out of state is eliminated by the changes to the Inflation Reduction Act the pro-union measures that the Biden administration has put in place. So I'd say we're actually doing some economic analysis right now to try to understand this with current data but none of the assessments that have been done of the ISO RTO concept and sort of regionalization really take account of this change and it's incredibly important. The unions are still opposed. And that may be the reason why we don't do this.They are very nervous. From the perspective of a California union, it might not matter whether nonunionized labor or a Nevada union construct.David RobertsI was going to say it's not necessarily quiet their worries to say "Oh, these jobs that will be taken from you will be given to a union somewhere else."Michael WaraThis is just anecdotal. But what I've heard is that there aren't actually unionized construction workers in a lot of these neighboring s…

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    Will the US have the workforce it needs for a clean-energy transition? Jun 16, 2023
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    Will the US clean-energy transition be hampered by a shortage of electricians, plumbers, and skilled construction workers? In this episode, Betony Jones, director of the DOE’s Office of Energy Jobs, talks about the challenge of bringing a clean energy workforce to full capacity and the need for job opportunities in communities impacted by diminished reliance on fossil fuels.(PDF transcript)(Active transcript)Text transcript:David RobertsNow that the Inflation Reduction Act has lit a fire under the clean-energy transition, a new worry has begun to emerge: can the US create the workforce it needs to build all of this stuff? And can it care for the fossil fuel workers who are displaced in the process?Across the trades that will be necessary to build out clean energy — electricians, plumbers, construction — industries are reporting worker shortages. Meanwhile, entire communities are being disrupted and displaced by the closure of refineries and other fossil fuel facilities.What can the government do to help growing industries create the job pipelines they need? And what can it do to help cushion the blow to fossil fuel communities?To get to the bottom of these questions, I contacted Betony Jones, the director of the Office of Energy Jobs at the Department of Energy. She has spent years thinking about clean-energy workforce issues and working with industries to create shared job training and apprenticeship programs. We talked about the jobs that are coming, the jobs that are going away, and the need for an active hand in smoothing the transition.With no further ado, Betony Jones. Welcome to Volts. Thank you so much for coming.Betony JonesIt's great to be here. Thank you.David RobertsYou know, ever since the Inflation Reduction Act passed and the rest of the legislation sort of like kicking off a new era of clean energy acceleration, I've been thinking about what are the remaining kind of now the policy log jam has broken, what are the remaining impediments? What are the remaining dangers? And I've sort of narrowed it down to the four Horsemen. The four or four horsemen of the clean energy apocalypse political blowback, which is basically Republicans taking back over and undoing everything NIMBYism, which is the difficulty of building all the things we need to build interconnection queue and transmission i.e. making the grid big and robust enough. And then, fourth, workforce issues. I'm going to try to do a pod on all these eventually, but we're here to talk about workforce issues. So just by way of background, maybe start by telling us what your office is and what it's for and what it's intended to do.Betony JonesFirst, I just want to say when the Inflation Reduction Act passed, that was really game changing for someone like me who's been working at the nexus of climate change and labor issues for so long. And so to answer the question of what my office does, the Office of Energy Jobs at the U.S. Department of Energy is responsible for a few things, but one of them is making sure that the jobs that are being created from these historic investments are good, quality, family sustaining jobs that people want. And so writing the rules around the funding and how it goes out the door and how it's made accessible.David RobertsWas the office created by Biden, or has this been around a while?Betony JonesThis iteration was created by Biden, but it has also been around for a while. I think Obama had an Office of Energy Jobs, and so did President Trump. But our office is really focused on, first and foremost, making sure that the investments are getting out into communities, that the investments are creating broadly shared prosperity and good jobs for American workers, and that we're investing in new industries in the domestic supply chain to provide the materials and equipment for this clean energy transition. So that's really exciting. It's actually just an absolutely incredible opportunity to show that we can address the climate crisis while creating real material benefits for American workers.David RobertsYeah, you're really at the nexus there. That's a white hot area. So when I think about workforce issues and the clean energy transition, there's sort of two sides of it. There are the people in communities who are going to lose fossil fuel based jobs, and then there are the people in communities that are going to gain clean energy jobs. I want to start with the latter, although we will return to the former later. So there's all this work to be done electrifying and everything else. But I wonder, do we have a clear quantitative understanding or projection or good models or a sense of exactly what the job shift is going to be? I.e. Like how many jobs are going to be created in what industries, how many will be lost in what industries, or is there so much uncertainty that we're sort of adapting as we go?Betony JonesThere's always uncertainty because nobody can tell the future. I mean, my office puts out the U.S. Energy Employment Report every year, which is a backward look at energy jobs. And we can see some trends in that backward look. But in terms of forecasting, that's really challenging to do. For the bipartisan infrastructure law, it's difficult to determine where exactly some of these investments are going to take place because for the Department of Energy and most of the energy investments, they're competitive. And so different private sector companies compete for funding, and then they decide where it is that they want to build their hydrogen hub or their battery factory or what have you.And so it's hard to determine exactly where those jobs are going to be. But we do know that a lot of them, and I would say probably 75% of them are in the construction sector. And so this is traditional jobs. This is laborers and operating engineers, the folks who move heavy machinery, earth moving equipment to prepare the ground for these things or drill the geothermal wells. They're electricians, plumbers, pipe fitters, iron workers. These traditional construction occupations. And it's not that different building a battery factory from building a data center or building a hospital, for that matter.Construction is construction. The jobs that are created are mostly in traditional occupations sort of regardless of the technology that's being deployed. For the Inflation Reduction Act, this is the really game changing legislation because of the way that it's structured with tax incentives, so we expect to see those investments pretty much everywhere. Now, obviously for things like wind and solar geothermal, you're constrained by the location, by the availability of that resource geographically. But if you're building a factory to make solar panels or battery cells or EV charging stations, you're much less constrained geographically. So that's one thing.I mean, communities all across the U.S. are competing for those types of investments and then at the same time and this maybe gets to the first part of your question there's fossil assets that can be repurposed for some of the things that we're trying to develop now. And so there's a lot of attention on how do we repurpose those fossil assets, these facilities that have grid connections, that have water and other resources, that have a workforce and a community that supports that. So that's another area of focus.David RobertsYeah. The reason I ask is just because a theme I'm going to return to again and again is just the difficulty of guiding this stuff with policy on any sort of macro scale. That's kind of something I want to interrogate a little bit. But as you say, this legislation that Dems passed we expect ought to create a surge of new jobs in the trades, in pretty conventional trades. And yet all I hear or read in the news is the trades telling us that they face a huge shortage of workers, that they can't find new workers, that the pipeline is drying up, that there's like a million jobs for every applicant, et cetera, et cetera.So I guess I want to know why is that? Clean energy aside, why doesn't — you would think a market like this is what markets are supposed to do, right? Like when demand for something increases, the market produces new supply. So what is going wrong here that we have these shortages?Betony JonesWell, a little bit of it is who you're hearing from. So there are employers out there who can't find workers for sure, and then there are others where there's a line out the door for the opening. You have these established firms with some, you know, where a worker feels like there's some reliability. Siemens, for example, or GE, they can generally fill their positions. The other thing is registered apprenticeship and in particular the union apprenticeship programs. I am being told that even now with this historic low unemployment, they have ten times the applicants as they have openings for.So what that really shows is that people want jobs but they want good jobs. And so if employers are counting on paying yesterday's wages or counting on the labor market from pre-pandemic, then yeah, they're going to struggle to find workers. But the employers that have a good track record, unionized firms, union pathways into construction as opposed to just general construction, but the pathways that provide reliable access to the middle class, the ability to buy a home, to go camping on the weekends, have a garage full of toys, whatever, people want those jobs. And so the more that we can make sure that we're creating those kinds of jobs, jobs that people are excited about, that they want, it shouldn't be a problem to attract workers.Is there a bit of transitional pain? Sure. But I think that that's okay because we're in a ramp-up. We're at the bottom of a ramp-up phase. And so what's really exciting, I think, is that we have this big boom. This inflation reduction act is really significant, not just in terms of the greenhouse gas emission reductions, which is huge, 40% by 2030. I've been working in climate change for over 25 years, and I never thought that I would see that actually. So it's really significant in terms of the greenhouse gas emission reductions, but it also is significant in terms of its ability to transform our economy and rebuild a lot of these jobs that historically have provided pathways to the middle class for workers without a college degree.And so the fact that this is all happening so quickly, yeah, it's an abundance of riches and we have to do some work to realign the labor market. But it's also a great opportunity because there's a lot of buzz and it's a really exciting time to get into energy.David RobertsThat's what kind of breaks my brain, is that on the one hand, we have all this hype, all this talk, all this new legislation, et cetera, et cetera. And then on the other hand, over here you have electricians saying "Hey, we have a graying aging workforce. We don't have enough young electricians. We're falling short here." Trying to fit those two things together in my head is what kind of doesn't compute.Betony JonesWell, I think that's exactly where this is an opportunity because, yeah, there is sort of this silver tsunami in the trades, and it hasn't been an area of work that parents have pushed their kids into for a while. And that's also true with manufacturing. But now with these investments tied to actual labor standards that will make sure that these are good career track, family-sustaining jobs, that's going to shift. The promise of a college degree has changed. It's no longer the reliable path to the middle class that it has been. And so we're seeing even people with college degrees going into apprenticeship programs where not only do you not have to take time off work to go get trained because you're earning as you're learning, but there's also no tuition associated.So you're not going into any debt. You can tomorrow go sign up, get into a registered apprenticeship program. You start earning money immediately. You get to work with your hands. You get to see the fruits of your labor. There's a lot of people actually who want to do that. And so this wealth of investments that we're making really, I think, shows workers, young people or people looking to transition in their careers, that this is a pretty stable area of work to get into, that there's going to be investments for a while. This is a reliable career path, and I think that's really attractive to people.David RobertsYeah. One of the articles I read, it says the Bureau of Labor Statistics estimates that there will be 80,000 job openings for electricians every year until 2031 as we electrify everything. My own 17-year-old son is seriously considering going into the trades instead of college.Betony JonesAnd how do you feel about that?David RobertsBecause of all the stuff you mentioned, working with your hands, making decent money, not going into debt. And of course, he's like, I don't want Zoom meetings. I don't want cubicles. It's not just that blue-collar life maybe is looking a little better these days, but also that white-collar life is like "ugh". Young people aren't all that excited about it. Yeah, so we're thrilled. Of course, he's a teenager, so we're trying not to act thrilled. But the Bureau of Labor Statistics also says that the manufacturing sector is short 764,000 workers. So just catching up from that deficit plus all the new growth prompted by IRA to me just says that these labor markets, these particular labor markets in the trades, are going to be tight for a long time.Betony JonesThey're going to be competitive for a long time. They're going to be competitive. And I think they'll compete with other sectors for workers like warehousing or the service sector. These sectors that have traditionally relied on low-wage labor are probably going to feel a bit more of a pinch than they have for decades, because now there's manufacturing and construction work that have the ability to pay more, be more stable, be more rewarding.David RobertsBut I see you would think if you're a company in one of these areas and you're short on workers and you're competing for workers, one of the things you could do to compete for workers would be to make the jobs higher paying union jobs. And you would think that would attract people. And yet it just doesn't seem like that's spontaneously occurring to many companies. Instead, they're complaining to the press about entitled workers and asking the Fed to raise interest rates to weaken the labor market. What would it take? And now you're here basically saying it's got to be policy forcing, basically, or using incentives and tax credits to force these companies to make these decent jobs.Why is it just habit of having crappy jobs in these sectors in the US? Like, what is it with US employers and the resistance to the sort of obvious solution of just making the jobs better?Betony JonesYeah, I think there is some habit there. And to be honest, we don't have a lot of really strong policy levers. We have carrots and carrots and carrots and we're trying to use those. And I think this administration is really committed to helping companies to provide better jobs. I mean, certainly at the Department of Energy, we bake job quality into our funding guidelines because we know that these companies are really only going to be successful if they are able to attract and retain the skilled workers that they need. And so we want them thinking about that up f…

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    Everyone agrees Democrats suck at messaging. How can they do it better? Jun 14, 2023
    Show notes

    In this episode, Jenifer Fernandez Ancona of Way to Win discusses the ins and outs of Democrats’ notoriously ineffective political messaging, and what needs to be done about it. (PDF transcript)(Active transcript)Text transcript:David RobertsIf there is one thing upon which almost everyone in US politics agrees, it is that Democrats suck at messaging. They constantly find themselves on the back foot, struggling to respond on culture war issues that make them uncomfortable. Biden's approval rating remains abysmally low and the enormous accomplishments he and congressional Democrats have secured despite the barest of majorities remain almost entirely unknown to most of the public.But why? What exactly is the problem with Democratic messaging? That is where the agreement breaks down.Is it too liberal or not liberal enough? Has a young vanguard distorted the party's perspective and alienated it from swing voters or is an old guard holding back a diverse new coalition? Is Democratic messaging using the wrong words and phrases, or is the problem that it simply doesn't control enough media to ensure its messages are heard?To dig into some of these questions, I wanted to talk to Jenifer Fernandez Ancona, the co-founder, vice president, and chief strategy officer for Way to Win, a Democratic research, analysis, organizing, and fundraising group that came together in the wake of the 2016 election to make sure its mistakes were not repeated.Way to Win just released its final report on the 2022 midterm elections, digging into who exactly bought advertisements, where they ran, and what they said, as well as how they performed with various demographics. I’m excited to talk to Ancona about what Democrats are saying, what they’re not saying, who’s hearing it, and how they can do better.So with no further ado, Jenifer Fernandez Ancona, welcome to Volts. Thank you so much for coming.Jenifer Fernandez AnconaThank you so much for having me.David RobertsI'm excited to do this because like anyone who's followed U.S. politics for many years, I have beefs about Democratic messaging and theories about it and all sorts of stuff to say about it. And I found over the years that everybody has a lot to say about Democratic messaging and everyone feels that they're an expert on it. But what I've come to see over time is most people, probably including me, are full of it and are just going off instincts and hunches and projecting their priors overinterpreting their own particular epistemological bubbles on and on and on.So I'm extremely glad to have, I think, probably the closest thing the world has to an expert on this subject, on the pod to discuss it by way of bolstering that claim. Before we get into the details, let's just talk about Way to Win. Like, why did it come together and what has it been doing since the 2016 election?Jenifer Fernandez AnconaWell, we came together essentially in the wake of that election when we felt like the same strategies that led to that complete failure. And honestly, a lot of the losses that we had seen over the course of the last four years across the country at the state level and local level, that we needed new strategies to change, that we weren't going to get out of this crisis using the same strategies that got us into the crisis. And that is what we were hearing as we were in Democratic big, major donor funding circles at that time, a real inability to recognize that major shifts were needed and an unwillingness to even confront what had led to Trump's rise and ultimate power.David RobertsAnd one wonders what could shake people out of that kind of complacency if not that.Jenifer Fernandez AnconaExactly. Yeah. So a bunch of us came together, and it was those of us who had been working in the field of trying to bring more resources to movement building, progressive movement building, multiracial coalition building. Especially. We had Tory Gavito, who was one of our co-founders, who's now the CEO of Way to Win. She came from Texas. She's in Texas and was part of trying to, over time, flip Texas blue and had learned some really important lessons in the past few years. And we just felt like we needed to nationalize this idea of taking the fight to different places.So we got so stuck in a battleground state world, which was really focused in the Midwest, and yet so much of the population growth is actually happening in the South and Southwest. And we saw the importance of states like Georgia and Arizona coming into power, but not enough resources actually going there. So that was one of the things, is, like, we need to re-imagine the map and actually expand the places where we could go to build power and to take power from Republicans. So we were some of the first coming on the scene to say we need to put major resources into Georgia, just as Stacey Abrams initial campaign was going, but it wasn't on the map of most national political organizations.They still weren't talking about Georgia or even Arizona. So we were part of that. And we were saying we have to push into places like Texas as well as North Carolina, Florida, places across the South and Southwest that are growing and changing. So that was one thing. The second thing was funding politics in a way that actually leaves something behind. So when you only fund candidate campaigns, as you know, there's nothing left at the end of the day, the candidate wins or loses. There's no infrastructure to keep going, so you have to start over. So we wanted to create a way for donors to fund electoral victories in the short term, but that would also build toward the long term.David RobertsI think they call that losing well.Yeah, exactly. And knowing that if we're going to build in a place like Texas, we're going to lose statewide a few times, but we're winning in local areas, we're flipping counties, we're flipping congressional districts, we're showing how you can build over time. But then funding organizers, leaders, and groups that are going to be there the day after the election to continue to keep fighting. So that was two. And then the third thing was having essentially a three-part strategy, but a comprehensive strategy that would ensure not only we have, like I was saying, base expansion, community builder, power builders working in cities in states and actually growing and building a base over time also that the purpose of winning power is to pass policy.Jenifer Fernandez AnconaIt's not just about electing a democrat. We want to make sure that we're arming the communities in that place with the tools and the ability to actually push for policy, whether it's democracy, climate education, et cetera. And then the third part, which I know you're interested in, given your intro, is that we have narratives that shape the multiracial diverse coalition that we have. We need to be going toward inclusion. So we want to make sure that we're winning, but not in a way that is more divisive or causing different groups to fall out of our coalition.We need to continue to grow and forge this multiracial coalition that we have, our winning coalition. And we do that with a narrative strategy that is all about building across those differences.David RobertsRight. So it is this latter part I want to focus on this sort of research you've done, on what messages Dems are using and how they're hitting. But before I get into that, I want to address my main hobby horse in this area, which I come back to again and again, which is I come up in the climate area. So I'm most familiar with the sort of agonizing, over climate messaging that has been going on and on and on and on as long as I've been following this area, and mostly has manifested in endless research and resources put into these kind of focus groups where you get a group of college students in a room and you read them various paragraphs and then you see which ones they react well to, and then you wildly over interpret that as some sort of messaging strategy. In other words, this sort of obsessive focus on what words are we using, what are the words and phrases, is it national security, is it home and hearth? Like what's the right themes? And I have come to think over the years that this a little bit misses the forest for the trees in that the reason the right wing seems to dominate this kind of messaging sphere and that they're always on the attack and the left is always on the defense is not their cleverness, they're not particularly smart.A lot of their messages are quite stupid. They just are repeated over and over and over and over and over and over and over again in your face, everywhere you look. So in other words, it's not the cleverness of the message, it's ownership of the means of distributing messages. And that's Fox News, that's OAN, that's all the local newspapers they're buying up. All the local news stations they're buying up. Basically, right wingers are running Facebook now. Basically right wingers running Twitter now. I mean, they're just on a march through media, dominating media. And if you spend the money and exercise the power to dominate media, you can get your messages in the heads of the public, even if the messages are super dumb.So I guess what I want to ask you is, is this a fair dichotomy, this dichotomy between the sort of messaging focus versus capacity to get the messages out? Do you think that's a fair dichotomy? And how do you sort of view the balance between those, or, like, how should resources be divided up between those?Jenifer Fernandez AnconaYeah, it's a great question. The way I see it is not that it's not a dichotomy, because it really, I think, has to be both. And how I would think about dividing it is a good question, but I would say how we think about it is we absolutely need to be building different modes of ownership of media. Like, it should be a huge part of our strategy. We haven't focused on it enough. The right is certainly beating us, so I'd say we're behind there. I think we have to put significant resources there, but it really can't be the only thing, partially because that takes time to grow and build and we have low hanging fruit on the table.Now, that I think that's what I've really been focused on is how do we actually build a process that can understand where voters are through research, then make content that tries to reach them in an emotional way, and we can test that content. There's lots of tools that can help us see what does this actually move people the way we want to move them. So there's a lot we can do. Now, I think that's not about necessarily being clever or finding the right words. It's like, can you deeply listen to the community you're trying to move?Can you hear from them? Where are they actually? And not just trying to test in a poll with some words and see if they like what they hear. It's more like understanding how they think. It's like deeply listening is what we call it. And we use a lot of research tools that actually are much deeper than you would get from a focus group or for sure a poll. We use a lot of online panels where people actually you can kind of get underneath how they think. So that's what we're sort of about, like, how do we actually figure out what's underneath what people really, truly want, and then how we can speak to it in a message and then test that to see does it work or not?So for me, it's not about necessarily finding the right words, but it is about finding the right kind of frames and the right overarching argument that we're trying to make. And then it absolutely is about repetition, repetition, repetition. So I think we can do it at the same time we can get better and smarter about how we actually do our message work. A lot of Way to Win and a lot of our partners that we work with do. But it's not the norm of the Democratic establishment or major campaigns right now that's what we're trying to do is influence and push in that arena, because I think there's just low hanging fruit that we could actually reach do better.And I think that the midterms is a good example of where we actually did that. And so that just gives me hope. And we can talk about that if you like, but that experience just gives me hope that there is a way for us to get more aligned overall across the ecosystem, whether it's candidates, the president, groups on the ground, activists, et cetera. If we're all kind of rowing in the same direction on our message, it doesn't have to be all exactly the same words, but we're kind of saying the same thing in a big picture argument way that can actually break through.David RobertsHerding cats. Famously difficult to do on the left.Jenifer Fernandez AnconaIt is. But like I said, we did it in the midterms. I mean, we should talk about it as an example of what we did, because it was really interesting.David RobertsLet's get into that. I want to come back to the capacity question later, but let's get into that because I think the thrust of your report was that the midterms were a success story in terms of Democratic messaging, which you don't hear. Success story and Democratic messaging don't go together a lot.Jenifer Fernandez AnconaSuccess and warning signs.David RobertsI want to ask a semi specific question. So going into the Midterms, I think there was a piece of conventional wisdom among Democratic elites which went something like this the sort of positions of power in the Democratic coalition, the staffers, the people who are actually out there doing the work. That class has been kind of taken over by a young, very diverse, highly educated, highly liberal set of young Democrats who just talk to one another and convince one another that everybody's as liberal as they are. And they've sort of taken over the messaging, they've taken over the party's posture.And what they don't realize is that whatever Joe average voter, Joe average mid-state voter, those concerns and things that they value don't resonate with him. So there's one story that goes the Democratic establishment has been taken over by lefties and they're alienating everyone else. And I sort of want to know a couple of things. Like a was there a lot of lefty messaging in the Democratic advertising going into the midterms? Like, were people actually out there saying defund the police and make immigration legal and all these kind of things. A was that the face the Democrats were showing the public?And B is that the way the public actually does view the Democrats as sort of captured by their left flank, too far left? In other words, sort of like is the kind of rising left flank a vulnerability for Dems in terms of kind of messaging and posture?Jenifer Fernandez AnconaI really don't think so. I mean, my position is a couple of things. I think that those of us on the left and myself included, I consider myself progressive. Way to Win certainly has been funding a lot of progressive groups over time. So we're situated in that. We're progressives. We consider ourselves part of the left and the folks that we talk to in our coalitions really don't see things that way. I think we're very clear who our coalition is. Right? And it's ideologically diverse and it's racially diverse and it's diverse in terms of age too. And a lot of those things overlap, of course, but it's fundamentally a different task than the Republicans have.When you're looking at we have 42%, 43% of our overall people who voted for Biden are not white. And then on the Republican side, it's 92% white.…

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    Transcripts and a live event Jun 09, 2023
    Show notes

    Hey Voltrons! I’ve got no guest today, just a couple of little announcements.

    First: At long last, we have gotten serious about transcripts around here. I hired a company called Fanfare and they are methodically going back through the Volts catalogue and transcribing everything. I believe they’re back to May 2022. Before too long, every pod will have transcripts.

    Also, they are transcribing new episodes quickly — usually within a day or two of posting.

    Each transcript comes in three forms. The first is full text on the episode page; the second is a downloadable PDF, in case you want to print it out or send it to someone; and the third is an “active transcript,” where you can play the sound file and it will follow along in the text for you. The active transcripts are really cool, especially for hearing-challenged subscribers; I encourage you to check them out.

    (As an example, here's the geothermal pod: text transcript; PDF; active transcript. Once transcripts are done, I add links to the different versions at the top of each episode page.)

    I considered making the active transcripts available to paid subscribers only, but ultimately, I came back around to the same reasoning I've used thus far: I want this content to be as available to as many people as possible. So they are free to everyonel

    Which I guess is a good time to remind everyone that the only way I can keep doing this, keep adding features like this, is through the generosity of my paid subscribers. My gratitude to each and every one of you remains unbounded. (If you’d like to make a one-time donation, you can do so here.)

    The other thing I wanted to note is for listeners in the Seattle area. On June 28th, Canary Media will be holding a live event in Seattle, at the headquarters of the radio station KEXP. In addition to some other speakers and some mixing and mingling, the main event will be my onstage discussion with Ramez Naam, a well-known clean energy analyst, about the state of the clean energy industry.

    For those who can't make it, the conversation will be recorded and released as a podcast. But if you are in the area, I encourage you to drop by and say hi. Tickets are $49, which will help raise money for Canary, the best thing to happen to clean energy journalism in ages.

    I’m cooking up some other cool stuff here in the Volts kitchen, but that’s probably enough for now. As always, to all you listeners, paid and unpaid, thank you so much for your time and attention. I know there's lots of content out there, new outlets clamoring for your subscription dollars, so rest assured that I never take that time for granted.

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    Maryland finds a more just & politically durable way to fund offshore wind Jun 07, 2023
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    In this episode, Maryland state Delegate Lorig Charkoudian, author and primary sponsor of the state’s newly passed Promoting Offshore Wind Energy Resources (POWER) Act, shares about the exciting policy innovations embedded in the ambitious bill and what they have the chance to accomplish.(PDF transcript)(Active transcript)Text transcript:David RobertsMaryland was one of the first states in the US to see the potential of offshore wind energy. It passed its first offshore wind bill in 2013, and another supportive bill in 2019, but a few weeks ago, the Maryland General Assembly passed, and newly elected Democratic Governor Wes Moore signed, a bill that dwarfs both of those predecessors.Whereas the state’s previous target was 2.5 gigawatts of offshore wind energy, the Promoting Offshore Wind Energy Resources (POWER) Act targets 8.5 gigawatts.But that is just the headline. Underneath that target are clever new policy innovations that promise to make the funding and development of offshore wind energy more politically resilient and economically just for the long term, and to bring thousands of offshore-wind supply-chain jobs to the state. And the whole process is going to be turbocharged by the tax credits in the Inflation Reduction Act.I love me some clever policy innovations, so I was eager to talk to the bill’s author and primary sponsor, Delegate Lorig Charkoudian, about who will pay for the new offshore wind, the transmission backbone that can help accelerate development, and the high-paying union jobs that will be created by the industry.All right, then, without further ado, delegate Lorig Charkoudian. Welcome to Volts. Thank you so much for coming.Lorig CharkoudianThanks for inviting me. It's a thrill to be here.David RobertsI love a good policy talk. I love a good policy.Lorig CharkoudianMe too.David RobertsAnd this Maryland bill is a delight, so I'm excited to get into it. The first thing to say is promoting offshore wind energy resources where you get "power" as an acronym. Just well done, good acronym work. I don't know who on your staff is responsible for that, but I love a good acronym.Lorig CharkoudianAnd I have to say the advocates always give me a hard time because I write brilliant policy and then I have terrible names. So on this one, Jamie from Chesapeake Climate Action Network came up with a name, and they were key on getting the bill passed too.David RobertsAwesome.Lorig CharkoudianThat worked out well.David RobertsThe Power Act. So before we jump into this, this is a bill about offshore wind in Maryland. Just to set everybody's expectations. Before we jump in, though, I want to back up a little bit and talk about offshore wind in Maryland. My understanding is that Maryland passed its first offshore wind bill in 2013, and then there was another bill in 2019. And yet, as far as I'm aware, there is no operating offshore wind off the coast of Maryland. Why is that? What's gone on in the history of this industry in this state that there's kind of so much hype and so little actual wind turbines?Lorig CharkoudianYeah, well, it's a real challenge and it's kind of the story of renewable energy the challenges of renewable energy and offshore wind in a lot of places. So we were first out of the gate in 2013, one of the first on the East Coast, and then we had a couple of things happen. And so first we had the — Ocean City fought really hard against having the wind actually built. The Hogan administration really pandered to the Ocean City opposition. And so there were a bunch of sort of slow walking things that happened at the Public Service Commission.David RobertsYou got nimbied.Lorig CharkoudianYes. So you've heard that before. So we had that going on. And then that ran into the Trump administration and all the things that were going on at the federal level and BOEM and slowing things down from that perspective. And then all of that ran into the buzzsaw of PJM and the interconnection queues and slowing everything down from that end. And then we hit the pandemic and supply chains.David RobertsWell, you really hit the perfect storm of all the things wrong with renewable.Lorig CharkoudianEnergy, everything that could go wrong. But I'm happy to say that those projects are really back on track now, so we expect to see them in the next couple of years. And a lot of things that we have in this bill set us up so that the various delays, transmission in particular, PJM, interconnections, that those don't become the barriers going forward. Got it as disheartening as that has been, all that's going forward now, and we learned from the last ten years and set ourselves up for success on this bill.David RobertsRight, so there's construction underway offshore, or what stage are the current projects at?Lorig CharkoudianWell, yes, some construction. And the really exciting thing just when we keep in mind that offshore wind is not only a really important renewable energy resource, but it's also a really important economic driver and a manufacturing on the manufacturing side, Tradepoint Atlantic, which is where Bethlehem Steel was for years and years and years. And the closure of that just really decimated the community and the economy. So in that same place now, Sparrows Point Steel, US Wind has a factory they're building, Ørsted just broke ground on a factory they're building. And so we can see it sort of starting, things starting to happen actually in the ocean.But we're also seeing the beginnings of manufacturing coming back. And really importantly, those are union manufacturing jobs. And when we get to talking about the policies, getting the labor policies right within the legislation is key, but we're starting to see those jobs coming back. And so there are things happening on the ground and in the ocean now.David RobertsAll right, we're going to get back to that union stuff for sure. But first I want to sort of set the stage for the innovation in your bill by talking about the previous offshore wind bill. So the Clean Energy Jobs Act of 2019 was generally, I think, great, overall a positive, but it created some conflict between clean energy proponents and ratepayer advocates. And the reason for this is that the bill basically paid for the new offshore wind with what are called ORECs. I'm sure that sounds completely obscure to 99% of the listeners. So maybe explain what is an OREC and why did that mechanism lead to that conflict?Lorig CharkoudianI actually want to put it in a little bit of context because I do think it's important whenever we're talking about subsidies, which we're going to talk about now for a little bit, an offshore wind. Whenever we're talking about subsidies for renewables, I think it's important to remind everyone that we have been subsidizing and continue to subsidize fossil fuels for over 100 years. And that's really important. And the other really important thing to highlight about it is that those subsidies for fossil fuels are in all different kinds of things, right? So there's direct subsidies, there's subsidies in terms of tax credits, there's subsidies in terms of indemnification, there's subsidies in terms of lower than market rates, access to federal lands for drilling and it's like hidden in all these little places and —David RobertsPermitting much easier to build a pipeline than a transmission line.Lorig CharkoudianThat's exactly right. And that doesn't even start to talk about the externalities right, like all the costs of climate change and pollution and health and all those kinds of things. So that's just a really important context. And I know probably most of your listeners know that and kind of come in understanding that. But I do think every time we open up a conversation about the subsidies that are needed for emerging technologies to reach the point that they're competitive, I think it's really important to put that in context and to take an opportunity to say we need to end those fossil fuel subsidies last week.David RobertsCan't say it often enough.Lorig CharkoudianNow that I've said that I'm happy to talk to you about ORECs. So then the question becomes when we do need to find places to subsidize to close this gap, to basically internalize the value of the social cost of carbon that we're not emitting, right? Like however you want to think about that, when we need to find a place to put that, that is kind of the next conversation. And I think what we've seen in state policy, and I kind of think this is unfortunate and what I'm hoping my bill does is not just solve this problem in Maryland, but really start a different kind of conversation in other states.What we've seen in a lot of state policies is that RECs the renewable energy credits is a primary driver of how we do renewable energy subsidies. And the renewable energy credits are generally required from our utilities and they are purchased. And those purchases of those RECs, whether they're solar RECs or general tier one RECs in our case, which is the land based wind and whatever else is in the mix.David RobertsIs that what O-RECs means what is the O in ORECS?Lorig CharkoudianO-RECs is different. ORECs is the offshore wind RECs. So we've got the RECs for everything else and then we've got SRECs or solar RECs, and then we've got ORECs. Now, this is where it gets tricky. ORECs are not actually RECs like SRECs and other tier one RECs are, right? So ORECs are actually more like a guaranteed price and a guaranteed amount that's being purchased. It's more like a PPA, although it's not a PPA. It's more like a PPA than RECs are because there's not a separate OREC market where they could get traded and the price would go up and down depending on how much you have in the mix.David RobertsRight?Lorig CharkoudianSo we call them orcs because they're sort of managed by the Public Service Commission and they're reflected on a ratepayers bill, but they're not actually like other types of RECs. So they really just kind of create the guaranteed price and purchase amount, which is what a wind developer needs to get capital at the lowest possible rate is having the guaranteed $56 megawatt hour and 5 million MW. Right? Like that's what you take to the bank and that's how you finance the project. So that's what ORECs do. But what that means is that ratepayers are paying for that subsidy.And so this is the challenge that you talked about earlier, which is that it makes sense in some ways, right, because you are tying the clean energy costs. The more energy you use, the more you're paying for the clean energy. But what it means is that rates are especially residential rates, are the most regressive place to put a subsidy like that. So while taxpayers and ratepayers theoretically are the same people, but ratepayers rates are the most regressive because people who struggle the most to pay their bill don't pay less because they earn less, right? People suffering from an energy burden are going to suffer from that energy burden regardless of what they make.And they're suffering. The less they make, the more they're suffering, right?David RobertsAnd tax systems can and often do exempt low income people from taxes. But nobody is exempted from rates. No matter how poor you are, you're paying rates.Lorig CharkoudianYou're paying rates. And generally if you have a house that is drafty or is not weatherized because you can't afford that, right, you're probably paying more in your electric rates and people have cut offs and everything else. So as much as I feel like we need to make our taxes more progressive, they're at least more progressive than our rates are. So that's a show for another time. Maybe it's a different podcast. But anyway, sticking to the rates for a second. So as we have looked at ways to continue to expand subsidies for offshore wind clean energy in general, one of the things that I've really looked for is ways to create those subsidies, create the same guarantee that the offshore wind developers need in order to take it to the bank and get the financing right.But do it in a way that is out of a state budget which is going to come out of taxes as opposed to putting it on ratepayers.David RobertsPause here because this is so conceptually important and underlies everything else. It really is, and as you say, can be a lesson to other areas, which is just like so much clean energy policy, especially because it's all about electrification, it's all about electricity. So much of it gets piled on electricity ratepayers, which as you say, is the most regressive possible way to pay for something and just shifting to the tax base, much more progressive, much more the burden falls on high income people. It's much fairer, generally fairer way to pay for things. So it's just about finding the mechanism, right?Like how do you tie the subsidy to taxes? So how does that work?Lorig CharkoudianSo I think one of the interesting things that happens, and I often think about this as the difference between doing compromise, like split the difference as opposed to creative problem solving, which I think we need to be doing more of. I think what happened with the Clean Energy Jobs Act is that we had a compromise which is we said, okay, ORECs, go on the bills, we're worried about ratepayers, so we'll put a cap on how much this could cost ratepayers. And so what that does in the end is it protects ratepayers. Like they're not going to pay more than XYZ, whatever the cap was that we put on there.But it also means that we're only going to produce as much as that cap will allow for, right? And so rather than doing that, what I try to do is to say, what are our values? Our values are to protect ratepayers, our values are to build as much offshore wind as we possibly can. And so given that we can in fact come up with new ways of doing things. But it was an interesting process because I looked at basically every other state and talked to a lot of people about what are the other ways that we could do this?And there is often within policy making circles there's this way that we get stuck in, like, this is just how it's done. This is the way that we create that guarantee to the developers. This is the way it's done. But you start to see the danger of that. And like, I think in New Jersey, there was a filing by the Office of the People's Council, their ratepayer advocate there, suggesting that they ought to slow down some of the offshore wind because of the ratepayer impact. And so eventually there'll be the pushback. And so it's worth taking the time.And it did, it took me like a year and a half to figure out a way to do it. And once I tell you what that is, which you already know, but once I tell your listeners what that is, it seems so obvious. But just because people haven't done it, I think a lot of people are just hesitant to try something new, especially in an area where it feels like it's risky.David RobertsLike many good policy ideas, it's like once you hear it, you're like, oh, duh.Lorig CharkoudianDuh. Right, exactly. So the idea is what the developers actually need is a guaranteed amount of offtaking, and they need a guaranteed price. That's what they need to go to the bank, right? So what we did is we said, okay, so the state is going to do a power purchase agreement, and the state is going to put out an RFP, and the state is going to take a look at the social cost of carbon, the state's goals. The state's RFP has the ability to consider things other than just the lowest possib…

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    California's coming transit apocalypse Jun 05, 2023
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    Many transit systems are reeling financially in the aftermath of the pandemic, and the situation in California is particularly dire. In this episode, Nick Josefowitz of SPUR and Beth Osborne of Transportation for America discuss the urgent need for the state budget to boost transit funding, and the catastrophic implications if it doesn’t.(PDF transcript)(Active transcript)Text transcript:David RobertsThe pandemic was devastating to America's transit systems — not only the lockdowns, but the enduring shift to working from home that followed. It has left transit systems everywhere desperate for riders and funding.Nowhere is that more true than California. The state’s transit systems find themselves at the edge of a fiscal cliff. If they do not receive some new funding from the state in this year's budget — which will be decided and finalized by June 15 — they are going to be forced to implement dramatic cutbacks in service. Bay Area Rapid Transit (BART) could eliminate weekend service! It’s grim.As anyone familiar with municipal transit systems can tell you, once routes and service are cut, it is extremely difficult to bring them back. And without transit, it will be that much more difficult to build infill housing, get people out of cars, or revive flagging downtown districts.It’s a looming catastrophe — for climate, for social justice, for the state’s reputation. So where is the governor? Where is the urgency in the legislature to prevent this? The deadline is rapidly approaching and the escalating urgency of transit activists has largely been met with silence or indifference.To discuss the crisis, I contacted Nick Josefowitz. He’s the chief policy officer at SPUR, a California nonprofit focused on sustainable cities that has been one of the most prominent voices raising alarm about the situation. And to avoid total doom and gloom, I also contacted Beth Osborne, the director of DC-based Transportation for America, so she could share some stories about states that aren’t screwing up their transit systems.With no further ado, Nick Josefowitz and Beth Osborne, thank you so much for coming on Volts.Nick JosefowitzThanks for having us.Beth OsborneGlad to be here.David RobertsI have wanted to do stuff on transit for a while. It's always been a little difficult to know how to wrap my head around it, how to carve off a distinct issue or what angle to approach it from. But helpfully, reality has served up a horrible crisis. So just a wonderful excuse to jump into this subject. So before we back out to a more general picture, let's start there. Nick, with you. Just tell us, what is the transit funding cliff crisis and how the heck did it come to this?Nick JosefowitzWell, the transit fiscal cliff, as we're calling it, is sort of most acute in California, although it's something that's happening elsewhere as well. And as a result of more people working from home, fewer people are commuting every day. Transit agencies rely in part on fare revenue to sustain themselves, and in California, they rely more on fare revenue than in other places. And as a result, we are about to see massive service cuts for California transit agencies with the big transit agencies in the San Francisco Bay Area most impacted. San Francisco Muni is saying that they're going to have to cut one line a month for the next 20 months.David RobertsYikes.Nick JosefowitzBART is saying they would have to stop weekend service, potentially stop serving certain stations. It's a real mess. And it's the type of mess that once you're in it, it's very difficult to get out of it.David RobertsAnd this was just the natural upshot or consequence of the pandemic and work from home. There's nothing beyond that that came and took money out of the transit kitty.Nick JosefowitzNot really, no. It's really just sort of people commuting less. And so much of our transportation infrastructure and our transit systems were built around the commute, and that's what's sort of driven the crisis. But the fact that we've allowed ourselves to be on the precipice is a decision that we've all collectively made, or that I should say in this case, the state government has made. The federal government stepped up during COVID and provided operating support to transit agencies around the country to help them continue to run buses and trains.David RobertsThrough the infrastructure bill.Nick JosefowitzRight, exactly. Through all the COVID relief bills, there was really meaningful support for transit. But that's run out and there's not any more coming. And now it's really up to the state of California to support transit like other states have done.David RobertsAnd this is really coming down to the wire. So what is the wire exactly? What is the deadline here?Nick JosefowitzSo the deadline is June 15. That's when California is constitutionally required to adopt a budget. And so it's a good 15 days away. And so we basically have, I think, two weeks here to convince the state, the governor, the legislature that this year would be the year that we need to save transit.David RobertsAnd so what exactly are advocates asking the government to do? Is this taking money from some other bucket? Is this just raising taxes? Is reallocating something, or is there a pool of money that they have their eye on? In particular, what precisely would you like California legislators to do?Nick JosefowitzWell, there's really two things. The first one is that in the Federal Infrastructure Act, the IIJA, there was money that was allocated to transportation and it flowed through highway accounts but is eligible to support transit operations. And President Biden, even in his budget memo, said "Hey, states, we gave you this pot of money and you can use it on transit operations if you want." And so we're asking the state to use some of that money that is not allocated yet, over one and a half billion dollars, to support transit operations. And then the second thing is that California has a cap and trade system —David RobertsYes!Nick Josefowitzwhich I'm sure all your listeners are sort of familiar with. And transit is an essential climate strategy. We're almost certainly not going to be able to meet any of our climate goals without massive increases in transit ridership. And so we're also asking the state to take some of the money that's generated by cap and trade and put it into transit operations.David RobertsAnd I bet I'm not the only person that hears it this way. It just sounds weird to be in a blue state, a liberal state, an allegedly climate forward, climate leading state, you're begging them not to let transit die. Why do you have to beg them? Why isn't Gavin Newsom, the climate governor, et cetera, et cetera, why isn't he first in line pounding the table about this? Our legislators like, why on earth has it come to this? Why does this require advocacy at all?Nick JosefowitzThere's a lot of reasons, but I think, like with a lot of things, it comes down to political power. And the grandma on Social Security who takes the bus to go grocery shopping doesn't have a lobbyist in Sacramento and is not getting state legislators elected. And the interest groups, like the folks who the contractors who build highways, they do have many lobbyists in Sacramento and they're very powerful and very sophisticated. And I think it really comes down to that power dynamic. And not just the power dynamic in this moment, but as sort of a power dynamic that has built up over many, many years where the people that transit serves most are the least powerful people in society.David RobertsRight.Nick JosefowitzAnd so there is especially at the state level, they've really struggled to kind of get the state to pony up the resources that are really necessary.David RobertsYou just have to wonder how loud the clanging and banging about climate has to get before that changes. And also the other aspect of this is a lot of this is, as you say, people are working from home. They've abandoned downtowns. And so downtowns are hurting in California. Google San Francisco downtown and spend several days reading apocalyptic accounts. But the thing is, those people that used to come into downtown, at least half of them ish came in on transit. So if the state wants to revive these downtowns, as it alleges to, and there are some pretty powerful interests involved in those downtowns, commercial real estate and stuff like that, and lots of retail, what do they think is going to happen to downtowns if the transit gets cut? Why aren't they at the front of the line?Nick JosefowitzYou're absolutely right. For BART, for instance, 80% of BART trips start or end in downtown San Francisco, downtown Oakland or downtown Berkeley. And the geometry of downtowns in California don't allow them to actually be served by simply cars. So we estimated that if we were to replace just a fraction of the BART riders that come into downtown and they were to drive every day, we would need a new square mile of parking in downtown San Francisco. And downtown San Francisco is not much larger than a square mile. So it's a pretty existential issue for these downtowns. And in downtown San Francisco, you have office buildings that are 30 stories built with six parking spaces.David RobertsAnd the stadiums, too. I forgot about this. Aren't there downtown sports stadiums with very little parking?Nick JosefowitzYes, it's amazing. I think that the Giants stadium in downtown San Francisco has the least parking of any baseball stadium in the country.David RobertsYeah, that blew my mind.Nick JosefowitzSomething like that. Yeah, at least vying for that title. And so I think what's happened is that this is a crisis that has kind of snuck up on people because, like with so much of the discussion in California around climate, every politician says the right thing. They all say they care about it. They care about climate. It's their top priority. They vote for goals that sort of set the state on a path to zero carbon future. They all support transit deeply, deeply, deeply. And then to a certain extent, everybody was taking their word for it on this one, that they actually did care about transit.It was only about a week and a half ago when the proposals actually came out, that the legislature passed their budgets, that we realized that there was no money.Beth OsborneNick, I think you might be really hitting on something very important that goes back to something Dave said earlier, which is how loud does the clanging have to get on things like climate and equity before people realize they need to fund transit? And it comes down to the fact that, a, no one thinks about the transportation system and climate. They think they're going to electrify all the vehicles and everything will be fine. Two, they don't think about transportation policy really much at all. It's very much a build stuff and go to the grand opening sort of approach, even in the most thoughtful of states.And there is this perception, this mythology that Democrats are good on transportation. I don't know where this came from. There is no evidence of this. Some of the greatest updates to the transportation program, which are quite old at this point, having transit added to the federal program, happened in the early 80s, pushed by House members that represented cities. And at the time there were a fair bit of Republicans there. It was not a Democratic thing. It was not a progressive thing. It was an economic thing. And I often find that the best folks to convince to do transportation differently are those that are looking to make their money go further, not the climate and equity folks.It is the folks that are saying this doesn't seem to be working and it seems to be wasteful. And you can get further with conservatives on that a lot of the time. So laying back and assuming that so called progressives are going to stand up for transit has always been a losing strategy that somehow no one has noticed.David RobertsWell, let me ask you about that then, Beth, because you have sort of a national perspective on this. The fact that transit had an anemic, let's say support, grassroots support, and then relatively anemic support, even among Democrats, has been true for a long time. All you have to do is look at where states spend their transportation dollars, like in blue states and red states. It's all going to highway, highway, highways. But it seems like to me, at least in parallel with the rise of the clanging and banging about climate change, there's been the rise of the YIMBY movement and the movement about more housing and the moving about cities and urbanism and transit and bikes, et cetera, et cetera, et cetera.It seems like there is something like a grassroots upswell happening. Do you see that being of sufficient size and scale to change that basic calculus? The calculus being nobody loves transit, nobody will fight for it.Beth OsborneWell, I think it's growing and it is moving in that direction. It's really positive to see people pushing back on things that used to be considered too nerdy, too in the weeds to get involved in, like fights about parking minimums and fights about single family housing and things like that. So there is something happening that is positive. We have a lot of ground to make up and we have a very short period of time to do it. But I don't know that it's a lack of love for transit. I think it's a lack of thought about transportation and transportation policy. That people don't feel like they need to go deep on this because transportation is just the bipartisan good news story that doesn't have deep policy connected to it for most elected officials.That is not always true. There are some excellent examples otherwise, particularly the leaders in Minnesota who really just showed the rest of the country up.David RobertsWe're going to get to that later so that we're not depressed the whole time we're talking.Beth OsborneBut I will remind us all that the fight here in DC, to come up with that federal operating support, happened with a Republican Congress under the Trump administration. And a great deal of that money, that original $25 billion that we got in 2020, was to a large extent thanks to Senator Wicker from Mississippi, who really stepped up on behalf of his own transit systems in Mississippi and he knew that they were important.David RobertsI don't associate Mississippi with transit.Beth OsborneLet me just say that Senator Wicker also, from an economics perspective, is the reason we have a robust rail program in this country. So the champions come from many different places. But I have to say it's rarely amongst the big elected, so called climate champions, it really tends to be people who see some real potential locally. Senator Wicker has been very involved in starting Gulf Coast inner city passenger rail service, and he's very close with his transit agencies and his local governments. So that fight was successful in DC. Because people understood fundamentally that if we didn't have transit for nurses and lab techs and people like that to get to the hospital during the COVID crisis, it didn't matter if you had a car.And that was so obvious to everybody then that we were actually at my organization, Transportation for America, making the case for more money than even the American Public Transit Association was asking for, and we got it. So it was not a hard fight. People instinctually understood that we needed transit to survive and that the feds, who have never supported operating assistance at that level before and certainly not in cities, stepped up and m…

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    How to make small hydro more like solar May 31, 2023
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    In this episode, Emily Morris of startup Emrgy discusses the promise of small-scale hydropower and the opportunities it could provide for both power infrastructure and water management.(PDF transcript)(Active transcript)Text transcript:David RobertsHello Volts listeners! I thought I would start this episode with what I suppose is a disclaimer of sorts. I suspect most of you already understand what I’m about to say, but I think it’s worthwhile being clear.Every so often on this show, like today, I interview a representative from a particular company, often a startup operating in a dynamic, emerging market. It should go without saying that my choice of an interviewee does not amount to an endorsement of their company, a prediction of its future success, or, God forbid, investment advice. If you are coming to me for investment advice, you have serious problems. I make no predictions, provide no warranties.The fact is, in dynamic emerging markets, failure is the norm, not the exception. My entire career is littered with the corpses of startups that I thought had clever, promising products — many of whom I interviewed and enthused about! Business is hard. In most of these markets, a few big winners will emerge, but it will take time, and in the process most promising startups will die. Such is the creative destruction of capitalism. I'm not dumb enough to try to predict any of it.More broadly, I am not a business reporter. I do not have much interest in funding rounds, the new VP, or the latest earnings report. (Please, PR people, quit pitching me business stories.) I do not know or particularly care exactly which companies will end up on top. I am interested in clever ideas and innovations and the smart, driven individuals trying to drag them into the real world. I am interested in people trying to solve problems, not business as such.Anyway, enough about that.Today I bring you one of those clever ideas, in the form of a company called Emrgy, which plops small hydropower generators down into canals.Now I can hear you saying, Dave, plopping generators into canals does not seem all that clever or exciting, but there’s a lot more to the idea than appears at first blush. For one thing, there are lots more canals than you probably think there are, and they are a lot closer to electrical loads than you think.So I’m geeked to talk to Emily Morris, founder and CEO of Emrgy, about the promise of small-scale hydropower, the economics of distributed energy, the ways that small-scale hydro can replicate the modularity and scalability of solar PV, and ways that smart power infrastructure can help enable smarter water management.Alright, then, with no further ado, Emily Morris of Emrgy. Welcome to Volts. Thank you so much for coming.Emily MorrisThank you for having me. It's exciting to be here.David RobertsYou know, I did a pod a couple of weeks ago about hydro and sort of the state of hydro in the world these days. And one of the things we sort of touched on briefly in that pod is kind of small-scale, distributed hydro, but we didn't have time to really get into it. And I'm really fascinated by that subject in general. So it was fortuitous a mere week or two later to sort of run across you and your company and what you're doing. Your sort of model answers a lot of the questions I had about small-scale hydro.Some of the problems I saw in small-scale hydro, just because it just seems to me so at once small, but also kind of bespoke and fiddly. And your model sort of squarely gets at that. So anyway, all of which is just to say I'm excited to talk to you about a model of small-scale hydro that makes sense to me and some of the ins and outs of it.Emily MorrisYeah, absolutely. And I'm thrilled to be here. I'm thrilled to tell you more about our model. And I love that you called small-scale hydro bespoke because I was talking with one of the larger IOUs a few weeks back and they referred to hydro as artisanal energy. And I got such a kick out of that because it is in so many ways, hydro can often be a homeowner's pet project that has a ranch or something like that. And bringing hydro into a world in which solar panels are taking over distributed generation and utility scale, and doing it in such a standardized, modular, repeatable format, bringing that architecture into water, is something that hasn't yet really been done successfully. And what we're trying to do here at Emrgy.David Robertsit is kind of like a lot of this echoes solar. It's sort of an attempt to sort of replicate a lot of what's going on with solar. But we're getting ahead of ourselves. Let's start the business model is, to put it as simply as possible, is you make generators and you plop them down into canals. So let's start then with canals, because I suspect I am not alone in saying that I've gone almost all my life without thinking twice about canals. I know almost nothing about them. Like, what are they? Where are they? How many are there?This water infrastructure kind of surrounds us is almost invisible. So just talk about canals a little bit. What are they used for and where are they and how many are there? What's the sort of potential out there?Emily MorrisYes, canals are almost invisible, but my goal is that after this podcast, you'll never look at a canal the same way you'll look at it, as a source of energy. That, man, we should be tapping that energy and using it. Canals are our main target market. They're really our only target market right now. We get asked all the time, well, couldn't you do this in a river? And couldn't you do this in tides? And the answer is yes. If you're focused on the engineering but as a commercial founder at Emrgy, I'm focused on the market and where can we install projects today that can be immediately delivering economic benefit and environmental benefit.And so canals are that market. A canal is an open channel of water conveyance that's moving water from one place to another for a specific purpose. That purpose might be because it's raw water that's being delivered into the city to be treated for drinking water. It could be that it's an agricultural channel taking water from a river out to farmland. It could be an industrial flow of water that's coming from a large brewery or a large factory and delivering that into either a river or another piece of water conveyance. But canals are seemingly invisible. I'll be honest, when I started Emrgy, I thought that the technology would first thrive in a water treatment environment.There's 30,000 water treatment plants in the US. And many tens of thousands all around the world. And that water is running 24 hours a day, seven days a week, 365. And man, the ability to take something modular that looks and feels like solar in terms of its ability to seamlessly integrate into the surrounding infrastructure, but deliver power in a baseload format was something that immediately, I thought, water treatment. Yet when I was really early in my entrepreneurial journey, we did our first pilot at the city of atlanta's largest water treatment plant. And I went out to Los Angeles and gave a white paper on it at LADWP.And when I was there, the city of Denver had two representatives there. And they came up to me after my presentation, and they said, we think you're thinking about this all wrong. You got to come to denver and see what we've got in terms of water infrastructure. And when I went out to Denver that next couple of weeks, I spent three days touring probably 500 or 600 miles all around the Denver metro area of canals that are transporting water. You may not know that the water you drink in denver actually comes from the other side of the continental divide, and they bring it into the city of denver through a series of canals and storage reservoirs that allow for the appropriate amount of treated and stored water for the city.And so when I was there, I thought about, okay, as a business model, being able to deliver one to ten of these modules at 30,000 water treatment plants sounds like I need a big sales force. And then looking at the Denver infrastructure and seeing hundreds of miles of uniform canal that's transporting water where thousands or tens of thousands of these generators could be deployed with one partner just made a ton of sense. And so then I started peeling back the curtain on that.David RobertsYou say one partner. So are most of these two of the sort of features of canals? That came as somewhat of a surprise to me, and I'm sure you're familiar with this response is, first, when I thought of canals, the first thing I thought of was agriculture. I assumed they were mostly out in farmland. But what you have discovered is that they are laced throughout urban infrastructure, they are in cities.Emily MorrisOh, absolutely. It's both. It's certainly both. Our project we have a project with the city of Denver that overlooks the Denver skyline right there near the city. And if you overlay a map of Phoenix roadways with map of Phoenix waterways, you can see two highly sophisticated transport systems all throughout the metropolitan area. Not just Phoenix, think of Houston 22 canals and bayou's flow all throughout the urban metro area that are both a source of water or even an attraction for the city, but also have an inherent energy, sometimes too much energy during hurricane season and whatnot to be able to harvest and hopefully deliver value from as well.David RobertsYeah, and so the other feature is they're not privately owned for the most part. Most of these canals are operated by a city municipal water district.Is that sort of the standard?Emily MorrisYeah, that's correct. Typically there is an organization that manages the water infrastructure, the canal infrastructure. It is often public. It can be a political subdivision, like a municipality or a local not for profit organization or co-op. It also can be a private canal company, although those typically remain nonprofits. They're typically a public service for the good of the recipients of the water.David RobertsBut the point is, you are not having to track down a bunch of individual owners of individual canals. You can get at a bunch of canals through one partner.Emily MorrisThat's absolutely the case. And it's all public record the managers of water infrastructure and their contact information. You're not going and knocking on someone's home asking if you can put something in the backyard or something like that. This is an operated and often, from their contractual perspective, they're typically buying water from an entity and selling water to a series of entities, buying water from the US Government and selling it to farmers, something like that. And so the reporting aspects about that water that flows through, they tend to be detailed. They tend to be long running. And so as you think about developing a resource assessment of how much energy is inherent in that water that you can produce electricity from, it's not necessarily like needing to go build a MET station and understand exactly what resources there.They're typically well organized, well operated, and well documented.David RobertsA well characterized resource.Emily MorrisAbsolutely.David RobertsOkay, so you go to these canals. You make a deal with the owners of these canals, and then you go plop down energy generators into the canals. Let's talk about the generators, try to give the listeners kind of a sense of how big one of these things is and kind of what it looks like. What are you plopping down into the canal?Emily MorrisIn terms of physical size. Our generators are an eight foot cube, and they have their own precast concrete structure that holds them together. So you can think of sort of half of a precast concrete culvert, if you are familiar with the construction world, that is an eight foot cube. We do that strategically, they are easy to lift and handle.They're easy to transport by trucking or other means. You can even containerize them if you need to. And we place those into the channels without doing any construction, any modification, any impounding of the channels, which is a really important part of the canals, because, as I mentioned before, that water is going to a destination for a purpose. And so going in and saying, yeah, we're just going to build a dam right here in the middle of your canal doesn't seem to resonate so well. And so being able to bring something in that's fully self supported can be placed into the channel and held there by its own weight.And it only weighs about seven tons, so it's not a super heavy lift, but it's hydrostatically, designed to not shift or slide or overturn once the water hits it. And inside of that culvert or the concrete structure, there is a vertical axis turbine that looks probably very similar to vertical axis wind turbines that many of the listeners will be familiar with. And so they take advantage of the kinetic energy in the flow using the swept area of the turbine and the speed of the water, and generate torque and speed around the shaft up to the power takeoff and the generator. And so physically, they're eight foot cubes.But from a power perspective, our smallest turbine that we sell is a 5 kilowatt turbine. And it's the same physical footprint that the 8 by 8 cube, but it can generate mechanically and electrically up to 25 kilowatts per turbine based on the depth and the speed of the water.David RobertsI was going to ask whether the sizes vary. So the generator, the eight foot cube is standard. All the generators come in these eight foot cubes, but the generators themselves vary in size based on the water flow.Emily MorrisYeah, that's exactly right. We do have a deeper water platform that goes up to about 18ft of water, and then we're working on an even deeper platform in conjunction with the DOE. But right now, our main platform is the eight foot cube. And the beauty of water is that the power is exponential by the speed of the water. And so we can place a turbine in and it can generate 5 kilowatts at say a shallower, slower speed. Or that very same equipment can put out five times the power output if placed in a different location. And so as we think about coming down the cost curve, growing to scale, we can immediately find higher density resources that make sense today, even as a young company that hasn't quite gotten fully to the quantities that other adjacent industries like solar and wind have.David RobertsRight. So I have a bunch of questions about that. But just this question about size brings up the question about canal size. If you have a standard sized module, I'm assuming that canals themselves are relatively standardized in size. With this eight foot cube, can you confidently say, we can go to more or less any canal and it'll work? Or do canals also vary?Emily MorrisCanals vary, but not substantially. There are standard sizes, and our eight foot cube does cover a wide envelope of canals in the US. And abroad. We do see, though, that this is the array planning and array specification, which is how we deploy these. We never deploy them as single turbines, but really as arrays, just like solar and wind, that with the arrays. It's a very similar planning method to solar is you look at your total square footage across the canal, you look at the gradient of fall along the canal, and you plan out the optimized number of turbine modules that make sense for that canal.So sometimes if you have a canal that's 18 feet wide, rather than build two 9 foot cubes, all of a sudden, you do two 8 foot cubes, right. And you standardize and you optimize for cost even…

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