The USA vs Climate - Trump's New Climate & Energy Policy with Dr. Jesse Jenkins

Jesse Jenkins, David Keith, and Ed Whittingham break down the key policy reversals, their impact on U.S. emissions, and the broader geopolitical and economic consequences—for Canada and beyond. Plus, audience questions!

Full Show notes with links to references on our website

About Our Guest:

Jesse D. Jenkins is an assistant professor and macro-scale energy systems engineer at Princeton University with a joint appointment in the Department of Mechanical and Aerospace Engineering and the Andlinger Center for Energy and Environment. He leads the Princeton ZERO Lab (Zero-carbon Energy systems Research and Optimization Laboratory), which focuses on improving and applying optimization-based energy systems models to evaluate and optimize low-carbon energy technologies, guide investment and research in innovative energy technologies, and generate insights to improve energy and climate policy and planning decisions. 

About Your Co-Hosts:

David Keith is Professor and Founding Faculty Director, Climate Systems Engineering Initiative at the University of Chicago. He is the founder of Carbon Engineering and was formerly a professor at Harvard University and the University of Calgary. He splits his time between Canmore and Chicago.

Sara Hastings-Simon studies energy transitions at the intersection of policy, business, and technology. She’s a policy wonk, a physicist turned management consultant, and a professor at the University of Calgary and Director of the Master of Science in Sustainable Energy Development.

Ed Whittingham is a clean energy policy/finance professional specializing in renewable electricity generation and transmission, carbon capture, carbon removal and low carbon transportation. He is a Public Policy Forum fellow and formerly the executive director of the Pembina Institute, a national clean energy think tank.

Produced by Amit Tandon & Bespoke Podcasts

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Transcript

[00:00:00] Ed Whittingham: Hi, I'm Ed Whittingham, and you're listening to Energy vs. Climate, the show where my co host David Keith, Sara Hastings-Simon, and I debate today's climate and energy challenges. On March 4th, the day the U. S. imposed new tariffs on goods and energy from Canada, David and I recorded a live webinar with Dr. Jesse Jenkins of Princeton University. The topic was the Trump administration's substantial changes to U. S. climate energy policy. We cheekily called it the USA vs. Climate. It was an engaging conversation on a pretty sobering topic, and it generated lots of questions from our live audience. Despite the sobering nature of it, I think you'll enjoy it nonetheless.

Now here's the show. Hello everyone, and welcome to Season 6, Episode 9 of Energy vs. Climate. My name is Ed Whittingham. I'm joined by my co host David Keith. Our third co host, Sara Hastings Simon is still on medical leave for the time being. As a Canadian, it's a bit of an inauspicious day to be talking about U. S. policy and its implications for Canada and the broader world. And in case anyone's been living in a cave without cell service these past two months, today 25% Tariffs across the board on Canadian goods and 10 percent tariffs on energy and the Canada has, of course, retaliated of President Trump's actions are Prime Minister Justin Trudeau said today, what he wants to see is a total collapse of the Canadian economy because that will make it easier to annex us and I quote, he also said at the same time they're talking about working positively with Russia appeasing Vladimir Putin.

Aligning with a murderous dictator. So I think it's safe to say that Canada U. S. relations are strained at this current moment. Um, Trump's team has of course been busy upending other issues, including climate and energy. They have withdrawn the U. S. from the Paris Agreement, declared a national energy emergency, revoked climate and environmental regulations by executive order.

And are trying to revive the Keystone XL pipeline, but so far without getting a lot of traction. So today we thought we would learn more about their maneuvering and what it all means for the world, for its climate future, and for Canada's role within that future, we needed someone to take on the unenviable task of parsing it all.

Unfortunately for us, Dr. Jesse Jenkins. Answered our call. Jesse is an assistant professor in macro scale energy systems engineer. At Princeton University with a joint appointment in the Department of Mechanical and Aerospace Engineering and the Anglinger Center for Energy and Environment. He leads the Princeton Zero Lab, where his research focuses on improving and applying optimization based energy system models to evaluate low carbon energy technologies, policy options, and robust decisions under deep uncertainty.

And, uh, maybe that's the theme for today as well, Deep Uncertainty. Today, we'll, uh, dispense with any kind of primer. We'll get straight into a three way conversation before opening it up to questions from you, our audience. So, uh, as always, feel free to send in your questions via the Q& A box. And, as always, thanks for not using the raise hand function or the chat box.

So, Jesse, welcome. 

[00:03:34] Jesse Jenkins: Hey, thanks for having me. It's a, yeah, deep uncertainty. Definitely the theme of the day. 

[00:03:39] Ed Whittingham: All right. Well, let's get into that theme. There is a headline in the New York Times over the weekend that read full on fight club, how Trump is crushing us climate policy. So Jesse is Trump actually crushing us climate policy right now?

[00:03:55] Jesse Jenkins: Well, he's certainly attempting to do so. And, you know, there are certain things that are solidly within the executive's authority to do. And he's doing all of those things. There are some things that are not within the executive's authority to do that breach contract law or congressional authority over things like budgets and appropriations, which he is also attempting to do.

Uh, and there are a set of legislative changes that, uh, have been proposed, but of course require congressional action, uh, to actually implement. I think that's where, uh, he'll fall, uh, most short, I hope, in the long term, um, you know, with very thin margins in the House and Senate. Um, but I'm happy to break down each of those three things.

I mean, there certainly hit, he's attempting across the board to use whatever, uh, tools at his disposal to, you know, with a certain degree of vindictiveness, right? Beyond any policy disagreement, but, uh, with a certain degree of personal vindictiveness. Um, up and anything that the Biden administration accomplished, and that includes, um, a wide range of, uh, energy and climate related policies and investments.

And so it's, um, yeah, full fight club indeed. 

[00:04:58] Ed Whittingham: Yeah. Uh, and those are great categorizations. And we're kind of wondering as Canadians, if, uh, the tariffs have to do with some of his vindictiveness toward an antipathy toward our prime minister. Yeah. So I'm going to take you up on your offer. If, if you could follow those three categories and break it down, uh, and then we can go from there.

[00:05:17] Jesse Jenkins: Yeah. So, I mean, typically when you have a change in administration parties like this, we expect a pretty substantial reorientation and policy priorities. And unfortunately, you know, over the years, climate has become one of those partisan topics that we do see, you know, a flip flopping back and forth and priorities as.

Administrations change. And so, you know, going into the Trump administration, you know, my assumption, and I think the assumption of many others was that the Trump administration would use the sort of normal prerogatives that the administrative state has, which is to. You know, change the stance towards permitting of fossil fuels, uh, to be more, you know, permissive of fossil fuel development in the United States to, uh, begin the administrative process of rolling back and replacing environmental protection agency or EPA regulations on greenhouse gases.

Something that had been finalized under the Biden administration for vehicle tailpipe emissions for oil and gas methane emissions. And, um, more most recently for, uh, power plant CO2 and greenhouse gas emissions as well. Um, so to begin to, you know, roll those back, um, and replace them with weaker standards.

That's exactly what he did in the first, uh, Trump term, um, and to, you know, work with Congress to change budgetary priorities, right. To shift where investments are going. Um, and perhaps to, uh, even to freeze or attempt not to spend the unobligated funds from the inflation reduction act or infrastructure law.

Um, there were discretionary funding, the grants, tax credits, you know, rebates, uh, state funded funding programs, uh, that, um, the IRA, the Inflation Reduction Act of the Infrastructure Law authorized and appropriated funds for. During the campaign, um, Trump had said that he had the authority to impound those funds, that's sort of the technical term for not spending the money that Congress said you're supposed to spend.

There's some, you know, uh, Congress, the Constitution seems pretty clear to me, not as a constitutional scholar, I should admit, but That Congress's authority is overspending money. And the executive's task is to, um, is to spend that money as directed. Uh, but that was sort of the area where they're beginning to push back, you know, say funds that had not been fully obligated or contracted, we can decide that we're not going to do what Congress told us to do, and we're not going to spend that money.

And that was about 15 percent of the total sum of discretionary funding under the IRA and infrastructure law, the Biden administration and its civil servants had worked their tails off to get as many of these grants under contract and obligated and out to states and other entities. As possible. So roughly 85 percent of that funding had been committed and about 15 percent was sort of in this limbo.

So that's kind of what I expected going in. And he is indeed doing all of those things, you know, with an immediate executive order on day one saying, you know, somehow, even though we're producing more oil and gas than ever in American history, that there's some kind of energy emergency that we need to produce more, um, that, uh, you know, they're going to try to change permitting procedures to make it easier to produce oil and gas.

Um. And then the parts that we were sort of unexpected that they're also going to freeze, uh, the spending that had already been obligated. So these are commitments that the government had made under the, you know, Biden administration, various contracts and grant agreements and awards to spend, you know, a couple hundred billion dollars of, of grant funding.

Um, that they were saying that we're not going to process those payments, even though they're under contract. And that was the first sort of step beyond what typical authority, you Into this very gray area where the Trump administration across a wide range of areas is very clearly trying to expand executive authority, push boundaries and wait for the courts or Congress or the public or someone to check them, uh, if they do.

And so this, this decision to not, to freeze all IRA related spending on clean energy programs is really unprecedented. That's not something anybody's ever done before. And it calls into fundamental question the, you know, faith and credit of the federal government, right? If you sign a contract with the government, you should expect the U.

S. government to follow through on that contract. Unless, you know, the contract has terms that say we can modify this contract or we can. You know, we can, uh, you know, choose unilaterally to withdraw and very few of the contracts say that because what would be the value of a contract that does that? So this is really quite scary, I think, um, and shows a degree of follow on, uh, beyond, you know, a degree of action beyond what, what we expected.

Um, and it's thrown a lot of the recipients, you know, into this sort of chaotic situation where they don't know whether they're going to receive that funding or not. Um, and this is alongside a substantial dismantling of the administrative state, you know, in terms of firing. Uh, large portions of the workforce, um, under the direction of Elon Musk's, uh, Department of Government Efficiency that he's, uh, established, where they're really making pretty indiscriminate firing decisions.

You know, for example, firing all probationary employees, uh, these are employees where it's a lot easier to let go of them because they have been hired or promoted into new positions recently. And, um, you know, that's not like any kind of. Uh, well thought out effort to make the government more streamlined and efficient.

It's just firing everyone who's been hired or promoted, you know, to a new job within the last couple of years. And so that's also happening simultaneously, and that is heavily impacting agencies like the EPA, the, um, uh, NOAA, the, um, National Science Foundation, you know, the Department of Energy. Uh, and others that are tasked with carrying out, you know, current energy related, uh, and in climate related programs as well.

[00:10:46] Ed Whittingham: And, and thanks in mentioning firing. So I want to go to David with the same question is Trump crushing U. S. climate policy, but also David, you just told me yesterday when we were having a little visit, a personal story from last Thursday, being at a NOAA office and witnessing firsthand those firings.

[00:11:04] David Keith: Yeah, I mean, so I think my answer to is he crushing climate policy? I'll give you a yes, and I'll give you a no, and I'll give you a I'm too distracted to care. So three different answers. So the yes is is that story? Uh, yeah, I was at the NOAA National Oceanic Atmospheric Administration, uh, their lab in Boulder, Colorado, which is the preeminent lab in the world by far for, um, Understanding and monitoring the stratosphere.

They build a launch of the instruments that fly in the high altitude aircraft that actually allow us to see what's happening in the stratosphere, see the impact of volcanoes or the gradual repair of the ozone layer and so on. Uh, the day I was visiting, we had a colloquium or a quiet closed door group meeting with a group leader and me and a bunch of people.

And actually one of the young up and comers in that group got the firing notice while I was there. And that was really pretty shocking. And I mean, just to state the obvious. It's just dumb by any measure. If what you actually want to do is make it more efficient and cut costs, you should be firing people of my agency in order you get high paychecks.

Obviously, I'm not and no employee, but I was joking with this with the other senior guys. Uh, you shouldn't hire the really smart young guy who's frankly getting a pretty low salary and has developed the new instrument that does the work of six old instruments and is more efficient and better. It's just There's no version of that that makes sense is cost cutting.

Um, and it doesn't really make sense to just killing the climate business either, because then you should just kill the whole thing. There's a way in which it just, it just clearly not thought out in a serious way, but it was, you know, after reading about this, it was quite a thing on a kind of personal, emotional level just to be there.

There was a, not a calling in that group who, you know, escorted me out of the building later. Cause it's a area where you've got to be, uh, escorted. And as we were standing by the exit door, some other people who he didn't know were Leaving where they're belonging. So obviously just being fired too. And this is a, you know, guy I work with and know for a few years as a colleague, but not a friend.

And he was obviously so upset. I kind of offered him a hug and we had a nice hug there. And that's just shows you how it just is like outside the normal world. It was something, it were tears in the hallways. It was a pretty emotional and crazy situation. So that's happening. Um. It's awful. How much that really matters to climate policy to fire some climate scientists.

I think it's arguable in the sense that, you know, we, we know that climate science says admissions are bad. And while of course I am a climate scientist and I'd love to have more climate science, the reality is it kind of isn't going to change anything much for climate policy to fire some of those people, although I think it's a terrible and stupid idea.

Um, As to how big an impact this really has on U. S. climate policy, my kind of no on global climate policy, my no answer is that while it's really shocking to remind people that the U. S. is just one country of order a quarter of the world economy in emissions, and that what matters for climate is integrated emissions over historical time, and that this is one four year administration, assuming it doesn't continue forever, and, and Indeed, it's really not that because there'll be midterm elections.

It'll look a lot different probably in a couple of years. So when you think about that as a kind of contribution of the integral emissions or change, my guess is this matters less than you might think. You know, if you think about say the progress of electric vehicles, I think there's sort of no version of the world now where electric vehicles don't take over most of light duty transportation.

I think this will slow it down a little bit because Trump will throw some, um, I want to say, uh, sand in the gears, but that's not the right analog. Throw some, uh, uh, short circuiting metal fibers into the batteries to foul them up. He certainly will slow it down, but I don't think it's going to dramatically change the arc of what's happening globally on decarbonization.

And then finally, my kind of, I'm too distracted to care is, is a, is a. you know, both Canadian and American citizen. I care about climate a lot. It's the whole thing. I worked on my entire career, but I am really freaked out about what's happening with geopolitics. I mean, the idea of, of, you know, the U S voting with North Korea in, in the UN, the idea of, of the fact that You know, with these tariffs, uh, Canada, uh, is well, I mean, Jesse mentioned that, uh, uh, this throws into doubt the U.

S. government's sort of full faith and credit whether companies can sign contracts. Well, of course, Canada signed a trade, a free trade agreement with this same president, which is now being just Torn up and thrown away. And I think lots of people in Canada are having more wild conversations than I would have believed.

Like, should we be developing nuclear weapons? Should we make a deal with China? Like, what should we do? This is a completely unprecedented situation. And I think in that context, uh, it's, climate is still my day job, but it just feels like it pales compared to the potential geopolitical outcomes. 

[00:15:52] Jesse Jenkins: Yeah. As I say, David, I concur with a lot of that, especially the sort of broader anxiety about the state of, of global affairs, you know, geopolitics of the, you know, health or of the U.

S. democracy and, and our system of, you know, checks and balances. All that certainly is quite, um, you know, near term and quite scary. Um, and I agree that in the longterm, you know, the, even with all the efforts Trump is, is making to roll back policy, that's not going to roll back the energy transition, right?

Which will continue to move forward. The question is just the pace, right? And in the U S in particular, the question is how quickly we make our transition, which again is only a piece of the global. And, you know, the repeat project, which I have been running for the last, uh, two years, you know, assesses, uh, the impacts of federal energy and climate policy.

Actually the last four years, sorry, time flies. Um, yeah, including during the, you know, the passage of the IRA and the infrastructure law, and you know, what we basically concluded in the last couple of years is. That those bills effectively doubled the pace of decarbonization, maybe tripled in an optimistic scenario in the US, but even that fell short by about half of the pace that you would want to be on if we were to meet our international climate commitments.

So our goal of reducing emissions to 50 percent below peak levels by 2030 or net zero by 2050. So we are already in a position where we wanted to be going faster, not slower to stay on track for those kinds of goals. And again, that just is where, as an American, I, you know, I feel an obligation to be doing our part in that transition.

And so to be moving in the wrong direction in terms of, you know, hitting the brakes instead of the accelerator, I do think is, you know, is concerning, even though it may have a small impact on the overall. long term equilibrium warming temperature. 

[00:17:27] David Keith: Totally agree. I guess I'd like to hear your view about kind of federal versus state, because there's a lot of different things that shape energy policy.

And, uh, you know, I've read and appreciate your guys analysis. My view is you might have been a little on the high end about the impact of IRA. I think there's a lot of different things that are driving decarbonization. And so I, the federal government obviously is hitting the brakes, uh, but kind of like your guesses about what it actually changes in terms of real deployment.

I mean, it's like restart coal, what, what actually happens on the ground? 

[00:17:59] Jesse Jenkins: So I should say we are in the middle of updating our, all of our modeling assumptions to the latest, although how do we account for tariffs and trade wars? That's become my new headache, um, to, to be able to run exactly that kind of quantitative analysis.

But I'll give you a sense of sort of a couple of the areas that I think are most impactful. I should say, I didn't talk about the legislative repeal, which is the part that would address the tax credits in the IRA, which is the bulk of the incentives. It's the bulk of the emissions reductions. It's the bulk of the financial impact.

Uh, and those tax credits are really kind of across the board in varying degrees and various strengths for kind of all of the pieces of the decarbonization toolkit. I would say with the exception of industrial decarbonization and agriculture, which had some short term grants that really is still lack a long term, uh, strategy.

But if you look at buildings, transportation, and power, which are the, you know, power and transportation being the two largest sources of emissions, and then depending on how you count, uh, consumption in, in buildings, you know, direct emissions versus indirect from power consumption, it could also become the largest share if you count it that way.

Each of those have pretty comprehensive policies. And I think while the building incentives, tax credits for, say, heat pump adoption, things like that, Are probably not going to move the needle a lot, you know, a couple thousand dollars off of the price of a heat pump that might cost, you know, 16, 20, 000.

It's probably not moving too many people on the margin. The tax credits for wind and solar and all other carbon free electricity resources are amounting to something like 30 to 50 percent of the revenue that those projects are receiving. And so while there are a lot of wind and solar projects across the United States that remain competitive, even without tax credits, just because they're it's really cheap now to build solar and wind.

Uh, and their cost competitive at, you know, current market rates in certain parts of the country, the pace that we're starting to see, you know, accelerate, especially for solar and batteries, um, which have been smashing kind of new records each year would really taper off quite dramatically. And the question is how much that's what we're trying to, you know, get our picture on.

But, you know, you just think about if I'm going to remove half the revenue from most of these projects, that's going to certainly hurt. The pace of decarbonization. And there's really very little that states can do beyond what they've already done, which is establishing renewable portfolio standards or clean electricity standards to sort of counteract that trend.

Um, they just don't have the budgetary ability to absorb anything like that. 

[00:20:11] David Keith: I, I buy that. Is your betting really that those tax credits for wind and solar We'll go, I guess. 

[00:20:16] Jesse Jenkins: No. And so that's what I say is that this is what they're trying to do. Yes. 

[00:20:19] David Keith: Yeah. 

[00:20:19] Jesse Jenkins: Yeah. And so I would say my prior is, and you know, if I had to bet right now, I would say that those tax credits are not fully repealed, that they stay around either as they are, or with some modification to when they expire or other sort of changes like that, that yield some revenue in the magic world of budget scoring that Congress needs to go through this sort of imaginary world where they try to balance the budget.

Um, you know, the way they do that is over a 10 year scoring window. And so, you know, now we're talking about things happening out in 2032 or 30, you know, 4 or 35. That are pretty divorced from near term economic impacts and, you know, political consequences that these folks care about. And so I could easily see them saying, all right, well, instead of keeping these tax credits on an open ended basis until we hit emissions reduction targets, which is what the current law specifies, the tax credits stick around until we reduce power sector emissions 75 percent below 2022 levels.

You know, so that could be out through the 2040s easily, uh, or, you know, through the end of the 2030s easily. They, they truncate the credits to say, no, we're going to phase them out in 2030 or 32 or something like that. And then that would raise a bunch of money because the out years are the more expensive in the budget score.

Again, this is all just fictitious scoring because there's nothing to say we're not going to extend the credit again in the future, right? I hope the 

[00:21:32] David Keith: audience really hears that because that feels this is this Jesse, why we had you on that feels like a very realistic call on what will happen politically.

And I think the translation of all that is for those credits, which are the most important things driving the main electricity carbonization. It might make no difference because that's really a fictitious thing. The next administration will change. 

[00:21:51] Jesse Jenkins: Yeah. And because the, you know, and because any change that Congress makes basically requires unanimity amongst the Republican party right now, I mean, they have a three vote majority.

In the house and Senate. I mean, they basically can't lose anyone. And the caucus is quite fractious. I mean, you're seeing that already around their sort of budgetary priorities. And so it's, you know, they, they would need a huge amount of unanimity to unwind these credits. And there is a large amount of economic benefit to, you know, going to Republican districts, you know, manufacturing jobs, opening a Republican states and communities.

And so that would be a pretty big, um, you know, uh, that would hurt a lot of members if they did that. Now, I, I, you know, I'd say, I bet that that's more likely, but who knows, I mean, the kinds of people that they just approved. To be cabinet secretaries that are totally unqualified and quite dangerous in many cases.

Um, you know, they did that unanimously without much dissent. And so. You know, if, if President Trump and Elon Musk get on the phone and say, you have to fall in line or we'll fund, you know, challengers, uh, you know, we'll see what happens. So, I think the question for the next month or so, as they sort of work out this debate is, how much are they hearing from political constituencies, from economic constituencies that value the maintenance of this clean economy, right?

The maintenance of these tax credits over time, whether that's electricity or the EV tax credits that are driving huge amounts of investment in U. S. manufacturing in, uh, EV assembly and battery cells and manufacturing. Um, across again, almost entirely Republican represented districts. Um, you know, and, and, and how much political heat are they going to take?

Right. If they, if they feel like they're going to, if they, uh, pull back on those credits, so it's going to be a fight. Uh, it could go either way and that's what we're really watching closely right now. But I do think it's a lot harder for them to succeed legislatively than it has been for them to take these actions.

Uh, you know, as an executive, you know, that Trump is taking on his own and again, even some of those actions are not legal, right? They're, they're extra legal. They're pushing authority and the courts are steadily coming in and saying, no, you can't do that. And so we're having this sort of constitutional fight that bordering on full crisis right now between, you know, the executive branch and the judicial branch, uh, that is also just, you know, the key thing I'm keeping an eye on, like if, if they do ultimately pull back and say, okay, fine, we're going to release these funds.

We're not going to go forward with these sort of measures. I'll feel a lot better about where we're at, but if they just say to the courts, you know, you and what army we're going to do whatever we want, you know that we're in a full on constitutional crisis and that's quite disturbing. And it's, you know, for somebody who works in energy, it's quite scary to be like, it's energy is the thing that might throw us into that crisis, right?

You know, it's, it's these topics that have become so contentious that they might drive us over the edge. That's scary and quite disappointing. 

[00:24:28] Ed Whittingham: It seems like any number of issues right now could trigger a constitutional crisis. That's true. It's not the only one. It would be ironic were it energy just on coal.

I was in Ottawa meeting with Canadian officials last week, and we're comparing notes on the G7 and how the U. S. is showing up. No surprise that we're tiptoeing around the U. S. right now, and career officials are unclear. Uh, on the U S side, what's going to happen. One thing we do know is that they're asking for not just the word climate to be scrubbed from anything to do with, for instance, G7 planning, but they're also asking the word clean to be scrubbed with the exception of clean coal.

And it sounds like the U. S. is interested in pushing the clean coal agenda. And of course, that's going to be very difficult with some of the other G seven countries. I'm wondering, though, I mean, going back to Ira, you know, a couple thoughts. One is it might be a chance a couple of years in for a bit of a reset because you know what you say when you look at some of the renewables projects and 20 to 30 percent of the revenue is coming from that.

Well, you look at SAF, Like SAF, last I heard, uh, the most subsidized company producing SAF right now is receiving in subsidies over a thousand one hundred and seventy bucks per ton. And that's before they actually sell it. That seems to be a massive over subsidization. It's not actually dropping the price of SAF at all.

It's still costing one to two thousand bucks in a lot of markets. Um, and it seems that that could use a reset. On IRA, given the political support that it has in both Democratic and Republican. Uh, Republican congressional districts, I wonder if they're still able to drive a lot of results with a skinny IRA, or is there the possibility that you might actually get some new bipartisan agreement around replacement measures that would happen before the summer recess?

Because I'm hearing Rumors of that, Jesse, what do you think? 

[00:26:22] Jesse Jenkins: I mean, I think in this particular political environment, it's going to be very difficult to see any productive bipartisan policy ideation, you know, happening. And so while there are certainly, you know, here we are. You know, two years, almost three years on from the passage of the IRA, you know, clearly there are some things that are working as planned, some things that aren't, some things we could change.

Like, you know, if we were just sort of having, all right, let's do kind of a midterm review and course correction, you know, adjustment, I'm sure there are areas where Republicans and Democrats could agree to get down to work and sharpen their pencils. I think in the context of a massive, you know, four and a half, 5 trillion tax cut primarily for, uh, for the wealthiest Americans and for corporations, uh, funded by substantial reductions in discretionary spending for healthcare, for, you know, nutritional assistance programs, you know, the kinds of things they're targeting, uh, I have a hard time believing that we're going to say, you know, plus the broader perspective when we Chaos that, you know, Trump is, is unleashing.

I have a hard time seeing Democrats and Republicans coming together to do any sort of proactive, you know, productive policymaking in the next six months. If every, all that whole agenda falls apart and Trump gets reigned in and we move forward in time a little bit, and maybe, you know, we're getting closer to the midterms or, or after the midterms and, you know, there's a split government.

Maybe that's a different environment, but in the near term, I wouldn't hold my breath for. Any creative, you know, legislative changes. I think we just need to survive the next, you know, six to 18 months and see where we're at. 

[00:27:50] Ed Whittingham: Gotcha. I want to talk a little bit about the implications for the world broadly, and then we'll try to, as we do on the show, narrow down to what it means for Canada specifically.

So first, on broadly, you know, the U. S. withdrawing from the Paris Agreement, that's obviously a challenge, but you could look at it differently. Two ways. And David, um, to echo some of what you're saying yesterday with China's economy being so geared around the production of clean energy technologies, China might be incentivized now to actually raise its voice and be more assertive in international fora.

There are others, you know, you could also look at it and say that There's no way that China is going to fill that leadership vacuum in 2025. And if it doesn't, then we're going to have a meaningless cop and it's going to be difficult to view 2025 as anything but a massive re uh, uh, a step back for climate.

Beyond the U. S. withdrawal from Paris, what are you seeing as some of the, the repercussions, Jesse? And then, if, if you're advising Chinese leadership, or if you're advising EU leadership, what would you say? 

[00:28:55] Jesse Jenkins: Yeah, I mean, I have been skeptical that the COP process yields a whole lot of policy substance in any case.

Um, and so while I'd certainly would prefer the United States to be a proactive leader in those discussions rather than a recalcitrant, you know, a problem or a, you know, simply absent entirely, you know, I do think it's what's in the domestic interests of China, the EU, the United States, Canada, Australia, you know, et cetera, that really matter and really drive the domestic policy equation.

There's some degree of, you know, sort of trying to encourage each other, ratchet up ambition at those meetings. But I think that's really the kind of the tail on the dog and domestic policy and politics is really the core. Um, so I don't lose a lot of sleep over that personally compared to what's going on in domestic policy in the U S where I do worry is, uh, about bilateral engagement around development and around technology and around trade policy, competition, you know, et cetera, that, that can have very significant impacts on the development and improvement.

Of the suite of technologies that we ultimately need to decarbonize the world. That's the impact. that I think individual countries can have outside their borders is how do we drive down the cost of technologies or improve those technologies or lower the risk or lower the cost of financing them so that they can be more readily uptake, uh, you know, uh, taken up in emerging economies around the world.

And Paris, you know, the convention of the parties doesn't do a whole lot on that front, but there are a lot of bilateral, uh, relationships that do. And clearly the negotiators going into those relationships are gonna have a very different set of priorities on their minds now, right? I mean, under the Biden administration, they were working with the EU to negotiate a clean steel trading block, right?

You know, to, to sort of find a set of countries that were interested in buying cleaner steel, lower carbon steel, in producing that steel and kind of using trade barriers to encourage others to join that block over time. That is obviously not something that is going to be a priority for this administration, right?

Maybe steel in the United States, sure, but not clean steel, right? They don't care about that. You know, same thing around development in Africa, you know, promoting the development of low carbon energy technologies, right? That's not going to be what's happening, right? They're not going to do that. Bilateral engagement with China, which, you know, is already, I should be fair, quite tense and going in a very, you know, um, saber rattling direction under the Biden administration could get worse, although who knows it could get better because he's friends with Xi Jinping, I don't know, but I worry a lot about those bilateral relationships.

And already it's gotten a lot harder for me, even as an academic with research partnerships and, you know, relationships. Students, you know, guests, you know, visiting students and others in China, you know, to sort of navigate that relationship on both sides, it's just much tenser now. And that if that slows down, you know, bilateral cooperation between the U.

S. and China on low carbon technologies and on climate. That, that does damage too. So I think I'm more worried about the broader reset in US foreign policy posture, um, than about our, you know, showing up at the convention of the parties or not. 

[00:31:45] David Keith: I've been thinking a lot about how the fact that, that selling clean energy technologies, you know, it's principally solar and batteries and battery electric vehicle components is a bigger and bigger fraction of China's exports still not.

Actually that giant, but it's growing to be a significant part, how that really changes their politics. And one interesting thing, when I started looking at that, is it surprisingly small amount of those exports go to the U S and Europe. Really? A lot of this is going to the developing world. And that means that China has a kind of fundamental self interest in driving decarbonization in the developing world.

It just, it's quite different than the way we thought about climate. Really important. 

[00:32:19] Jesse Jenkins: Yeah. I mean, I think this, this is a macro trend that I think is underappreciated. I've been saying this sort of same thing that like China is now kind of positioning itself. As the first like global clean tech hegemon, right?

You know, like the U S built its empire on oil, you know, uh, Britain built it on coal, right? And, and China's going to build it on clean energy technologies and, and because of trade barriers, which are only getting higher, it's very difficult for them to sell those products in the U S and Europe. Um, and so where are they going to go to expand that market developing countries?

And you know what, I mean. If that's what makes clean energy cheap and accelerates decarbonization around the world, then like that is the most important climate trend in the world right now, probably, you know, far more important than what's happening in the U. S. And that's a positive silver lining to all this that I think could, you know, could play out.

Now, as an American, that has very serious implications for the influence of the United States and, you know, sort of broader, uh, role of, uh, of democracies in the world. But, you know, from a climate perspective, that's what success looks like. It looks like cheap solar. Uh, wind, batteries, EVs, you know, two wheel electric vehicles going, becoming the cheapest way to power development and, you know, get mobility services and get lighting and, and, you know, power industry in Sub Saharan Africa and Southeast Asia and everywhere else.

[00:33:34] David Keith: Agreed. So my quick bilateral question that maybe you'll have an answer to, or maybe you do some calculations is. In this bilateral relationship with Canada, U. S., if Canada played hardball by kind of pulling the plug, some of us were laughing during Super Bowl Sunday that, you know, Quebec had, I looked it up, it was about two gigawatts of power flowing north in New England.

Quebec would just say, Oh, sorry, you know, the breaker tripped. Too bad you guys have to freeze in the dark. Like, how much could Canada mess with U. S. electricity prices through that? I don't have any quantitative sense of it. 

[00:34:05] Jesse Jenkins: Yeah. I mean, my sense is not a lot in the short term, right? Because the, this, and this is where the sort of conversation in Washington about, you know, being trading dependence on foreign oil for dependence on foreign solar Chinese, you know, uh, batteries or whatever is just a little of a, it's, it's a strained analogy, right?

Because of course we, we buy, you know, billions and billions of dollars, uh, of oil and gas every year and, and then burn it. Whereas we're, you know, installing a solar panel and that solar panel generates electricity for free, basically for, for, you know, 30 years. Yeah. And so what would hurt is our pace of deployment of new electricity technology, right?

So, you know, wind and batteries, I mean, sorry, solar and batteries are the fastest growing sources of new capacity in the U S grid. Now, a lot of that content still is imported, although not much directly from China due to existing trade barriers. It's more through other sort of more circuitous routes. Um, and so if they cut off, you know, material supplies that go into those supply chains.

Uh, if they make it harder for Chinese owned companies set up in other areas outside of those trade barriers to export to the U. S. or just broadly the tariffs that we're implementing on all of our trading partners make it more expensive to import these products. It could make it much more difficult for us to keep up with demand growth in the electricity sector, which is starting to trend up quite substantially for the first time.

In my professional career, basically, in, you know, in 20 plus years. 

[00:35:24] David Keith: No, no, I understood. And although you just said made sense, but my question was really about Canada. Like if Canada did literally Canada does not China because there's a direct electricity export and oil and, and the, but, but as you know, electricity markets have like no storage.

So how I'm really wondered how much Canada could spike. Prices like in PJM by actually cutting that off. I don't have a sense of it, but I mean, 

[00:35:48] Jesse Jenkins: if you did it quite like short term, it would certainly, I mean, if the loss of a couple of gigawatts of capacity is one of those major contingency events that would cause some emergency action and prices to spike longer term.

Right. There could be other changes made. Um, but yeah, certainly, I mean, the, the, the whole Northern, you know, the whole Northern tier of the United States is firmly integrated with, uh, with. Uh, with Canada's electricity system, in many cases, sharing a synchronized interconnection and in the cases of MISO, even the same, uh, regional transmission organization grid, you know, grid operator, uh, is international, you know, spans across the border.

Canada is the largest exporter of crude oil to the United States as well. And we have refineries, as we talked about on, on Shiftkey a few weeks ago, we've got, you know, a lot of refineries across the Northwest, across the Midwest and Great Lake States that have specialized in blending Canadian heavy crude with lighter crude from, you know, the Bakken and other shale formed nations in the United States.

And if we lose that, you know, heavy crude imports, these are not coastal refineries. They can't just go to the open ocean and find it somewhere else. You know, they're, they're dependent on fixed pipelines. And so. You know, the near term impact of even a 10 percent tariff on, you know, on Canadian oil imports is that prices at the pump in Michigan and Wisconsin and Ohio and, you know, other states largely that voted for, you know, Trump are going to go up, um, in the near term and, and that's going to hurt, um.

You know, pocketbooks for, for Midwesterners and others across the country too. 

[00:37:14] Ed Whittingham: And it will be interesting to see how much resolve, uh, President Trump has as these prices go up and as consumers start to push back more, Paul Ryan was so hard to get your head around. Cause it's just 

[00:37:25] Jesse Jenkins: so crazy to do this in the first place that the markets and that so many other people were saying, well, he's just bluffing.

Right. And the fact that he pulled back. Initially in February on the first salvo of tariffs in Canada, Mexico, I think reinforced that idea that he's just using this for negotiations. I never actually bought that. Maybe he's just a really good poker player, but I think he means it. I think that he thinks tariffs are good.

You know, that trade deficits are bad, that tariffs raise revenue, that can offset all these other things he wants to pay for and keep taxes low in the U. S. And, you know, he's not a brilliant macroeconomist, so he's not thinking through the multiple, you know, follow on effects that these trade wars have.

And so Maybe he'll see that effect firsthand now, both politically and in the markets and will, you know, that will cause him to, to turn about, but he's also the kind of guy that never apologizes for anything right? When he does something wrong, he doesn't pull back and say, oops, he, he digs in and, and tries to justify it in any number of ways.

And so while I would love these to be very short term, I, I don't, I don't think so. I mean, my, if I had to bet, I would, you know, I'm, um, I'm not calling his bluff. I think he's actually, uh, I think he actually means it. And I wouldn't be surprised if these tariffs are here for a while. 

[00:38:36] Ed Whittingham: Yeah. Paul Ryan was quoted in our national newspaper, you know, former vice presidential candidate and speaker of the house as saying, Oh, well, don't worry.

Canadians. These tariffs won't last beyond four years. 

[00:38:48] Jesse Jenkins: I mean, that's plenty long, a lot of damage, 

[00:38:52] Ed Whittingham: a lot 

[00:38:52] Jesse Jenkins: of 

[00:38:52] Ed Whittingham: damage 

[00:38:53] Jesse Jenkins: can be done in those four years. And why would you ever trust the United States again? Right. And again, like you were saying, David, in that context, like, and we've, we're permanently damaging, you know, at least for a generation.

A whole lot of long term relationships here that of trust that are falling apart in six weeks, and that's just. It's hard to watch 

[00:39:08] Ed Whittingham: for sure. And on security. And Dave and I were chatting about this yesterday. You know, you've got European NATO countries have been talking a good talk about. Yes, we'll meet our spending commitments and we'll defend ourselves.

But they really haven't done anything substantial, anything significant now. And this is a Perhaps one of the, if you're looking at Europe and looking at security, it's like, well, we want to depend on the United States, but now it's really time for us to step up and it's taken a crisis or it will take a crisis like that, like this for that to happen in the same way Canadians have talked about diversifying our trade and exports and now.

We really have to do it or else we're going to be in quite a pickle for the next four years. Jesse, one last question. Then I do, we've got a ton of questions I want to get to, you know, so I've been involved in the G7 and trying to get carbon removal on the G7 agenda. And I've had umpteen conversations with officials over the last several months.

The question is, are we now looking at A U S that is going to be absent like there's someone say the best case scenario is us doesn't show up to a G seven and then we can do something at a G six level or are we looking at a U S that's going to be actively obstructionist when it comes to international cooperation on climate and clean energy and that's no one knows right now because as I see career officials aren't getting any kind of direction and secretaries right and secretaries Boregum they haven't said much either like do you have Any sense of just the degree to which the U.

S. might actually go out and not just not show up, but actually obstruct. 

[00:40:44] Jesse Jenkins: Yeah, I mean, I think it's again. No one knows at this stage, but I do think it's much more likely that they play an obstructionist role than last time. I mean, if you look at the first Trump administration, I mean, I don't think they expected to win.

They did not have a smooth transition. They fired. You know, um, their, their transition, you know, uh, lead in the middle of it, you know, there was a long period of time where most of the agencies simply lacked political appointees. So it was just the career bureaucrats doing their thing without very little, you know, political direction.

They couldn't show up to any of these sorts of fora. And, you know, and to some degree that saved us from a lot of damage because, you know, the machinery just kept humming along, uh, under the status quo. You know, this time around, they've come in with project 2025 behind them with a set of. You know, of staff and, and, and goals from heritage foundation and others, uh, with Elon Musk and his, you know, uh, wrecking ball and are, you know, being quite a bit more proactive, right?

About dismantling prior policies about implementing, you know, pretty explicit political litmus tests, right? For, for staff and for firings. Um, to make sure people don't step out of line and the deep state is killed, you know, ever. They want to frame it. So I wouldn't be surprised if that extends to international diplomacy as well, where they do deliberately send people to these events in a way that is trying to actively roll back previous priorities and to, to support, you know, fossil fuel promotion and exports and things like that, uh, in ways that are, you know, counter to previous goals and, and, 

[00:42:12] Ed Whittingham: Gotcha.

Now, thank you for that. Uh, let's get to questions. We're going to start with Helene Dekonick. David, do you want to just speak quickly to Helene? 

[00:42:21] David Keith: Uh, Helene, I worked together years ago on the IPCC special report on CCS. That's how I know her. And then we've, uh, kept in touch intermittently over the years since.

[00:42:31] Ed Whittingham: Great. Helene, over to you. Your mic should be unmuted. 

[00:42:34] Heleen de Coninck: Hi. Uh, good evening from Europe, uh, where the situation is, uh, very scary as well. Uh, also given what's happening in your country. So we're following it with, uh, with, with care. My question is just very, very simple. What do you expect will happen to the tax credits on CCS project?

You talked a lot about renewable, super interesting. And thanks so much for your insights, all of you. But I was curious whether the clean coal focus would have something positive for that. 

[00:43:05] Jesse Jenkins: My expectation, I think most people, you know, betting odds are that the carbon tax, the carbon capture and storage tax credit 45 Q.

And the advanced manufacturing tax credit, 45 X, which is the one that sort of directly subsidizes manufacturing activities in the wind, solar battery and critical minerals supply chains are least likely to be repealed because they have the strongest base of support amongst Republican and Republican aligned constituencies.

So in the case of CCUS, I mean the big players, there are most the oil and gas companies with, you know, which are practically lobbying to keep these credits around and have made pretty substantial investments. Uh, around them, including, um, Oxy and, and Exxon Mobil and others. And so I think the assumption is that those are, are least likely to be targeted, um, that they're, you know, most likely to stick around.

So barring a kind of full, you know, repeal of everything where they just say, you know what, we're going to get rid of every single tax credit. I think those are probably safe. Um, the ones that I think are most politically vulnerable, or at least the one that's been discussed the most in the, the press. Is the EV purchase tax incentive for individuals and businesses, the 7, 500 tax credit for light vehicles and up to 40, 000 for heavy vehicles.

Um, and, and there the assumption I think amongst Republicans is that they can have their cake and eat it too. They can keep. The manufacturing jobs that they're starting to see in their districts in the EV supply chain and get rid of the credit. And, you know, I've been doing analysis on that front that, you know, pretty clearly shows that's, that's a pretty poor assumption that if you, you know, raise the cost of EVs by 7, 500, that's going to depress overall demand.

And the 30D tax credit is the one that has the sourcing rules in it to say that if you can't, you know, you don't get the full credit unless you're sourcing battery materials. And components from within North America and with the production subsidy that's largely within the United States. So market share in the U.

S. would probably also take a hit. Um, so while that one's more politically vulnerable, I do think, again, there's a constituency there. And so, you know, the key with each of these is to think about who is the political constituency that's going to stand up and actually go to bat either publicly or privately behind closed doors with, you know, members in the House and Senate to say, look, just leave this off the table, right?

You got other ways you can pay for this stuff. This is good for your district. It's good for my industry. Um, you know, leave it alone. And to the degree that the Republicans are hearing that around specific credits is going to go. I think it's gonna be credit by credit. It's not going to be a comprehensive thing.

Um, then those credits are more likely to stick around. And I think CCUS has a pretty vocal and clear base of support for that one. 

[00:45:32] Heleen de Coninck: Sorry, just a follow up question. Is it actually making a difference in terms of emissions? 

[00:45:36] Jesse Jenkins: Not yet much. I mean, so one of the challenges that were the odd things about the 45Q tax credit is most of the tax credits that are production based are inflation adjusted.

And so, you know, they got automatic increases as inflation was running at, you know, six, 7 percent in the last few years. Now I should say the producer price index is always going up faster than the consumer price index that that inflation adjustment is tied to. So the cost of building a wind or solar farm or battery or whatever has actually gone up in real dollar terms, you know, even after adjusting for that consumer side inflation.

And so the tax credits have been devalued kind of across the board by that dynamic. But it's worse for 45 Q for CCUS because they are. For some reason, the way the tax credit was written, it doesn't inflation adjust until 2027. So it's been, you know, flat in nominal dollar terms. And so in addition to the fact that, you know, the producer price index is probably up 20, 25 percent per year last year.

You know, and, and the year before, you know, and we're only seeing inflation, you know, adjustments that are, you know, six, 7%, they're actually devaluing again by in, in real dollar terms. And so what I've heard from industry, and I haven't been able to verify this, you know, myself is that they're, the economics has deteriorated for a lot of the plan projects that looked like they penciled in August of 2022 when the IRA passed, probably don't pencil right now because the cost of everything has gone up, you know, interest rates have gone up.

Cost of steel is going up. It's going up again because of the tariffs that we're implementing here, you know, for steel pipe and everything else is not had a huge impact or haven't been very many final investment decisions. Um, and so maybe there's a demand to change that again, like in a proactive context, you would say, all right, let's go in and modify that one line and change the inflation adjustment.

Uh, so that the, the numbers pencil again, but, uh, you know, barring that kind of creative change. I actually, I'm, I'm pretty skeptical that there's going to be much. Impact from 45Q in the short term. Um, and so it, you know, it might stick around. There might be some projects built, but not at the scale that we originally anticipated.

[00:47:32] Ed Whittingham: My follow on, uh, Jesse is, uh, do you have any speculation around the DAC hubs money as well? The direct air capture hubs? And I think of David's old company, uh, um, the South Texas hub, uh, south of Corpus Christi. Qualified for 500 million. And it's not going to happen without that 500 million. That's fine.

Yeah, 

[00:47:50] Jesse Jenkins: exactly. And again, you know, normally I would have said, Nope, those are fine. They're already contracted. You know, they're obligated that they'll go out as planned. You know, right now everything is sort of frozen up and it's unclear what the status of those payments are and whether they'll continue.

Now, I do know that Occidental and Oxy that is involved in that project is again, is actively lobbying on that right now, right? Trying to make sure that that money continues to flow. So they can move forward with those projects, but it does, I mean, it's not just the DAC hubs. It's the hydrogen hubs funding.

It's demos for industrial decarbonization where there was, you know, 6 billion of funding provided to a whole wide range of projects for industrial decarbonization loan guarantees from the federal, you know, from the, the department of energy loan programs office, you know, all of these commitments that we were sort of counting on that, that companies around the country.

Okay. We're counting on when they made final investment decisions are now, you know, an open question. So I hope we get some clarity on that. I hope the courts, you know, again, consistently come in and say, look, you've got to pay your bills. That's just fundamental. And that the Trump administration gets things back on track.

And after the, you know, it's only been, it's crazy to think it's only been about six weeks. So it feels like it's been forever, but it's actually only been a few weeks. You know, if this continues on for months and months, I think many of those projects will start to get canceled just because they can't defer forever.

And if they can't count on that money, then the projects likely don't pencil anymore. So, yeah, 

[00:49:09] Ed Whittingham: yeah. And the loan guarantees in particular, that's a head scratcher because, you know, that's a relatively easy policy mechanism. Okay. We've got a regular EVC listener and contributor. Rob Trombley is going to ask a question over to you, Rob.

[00:49:22] Robert Tremblay: Thanks you guys, can you hear me? Okay, so there's been a lot of talk here in Canada about looking back at old pipeline projects in the name of Canadian energy security. So given that electricity is likely to be the primary energy source in a net zero world, shouldn't we be talking more about east west transmission for energy security instead?

And then secondarily, so beyond the physical wires, um, we kind of look at creating a sort of supermarket between provinces, you know, like California's EDAM or SPP's MarketsPlus to actually facilitate trade on those wires. And then just one little maybe cop out to get out of the pure purely kind of Canadian context, you know, on markets plus and, you know, specifically there's Canadian provinces that are already kind of looking to participate in those markets.

How do the, how does the trade war affect that participation as well? Yeah, great questions. 

[00:50:16] Jesse Jenkins: Uh, yes and yes and badly. Yeah. I mean, I think building East West transmission in Canada makes a ton of sense for both an economic Perspective writing, enabling gains from trade across a much broader geography and, uh, from a resilience perspective, right?

Enabling the ability to wheel power from one part of the country to another when one period, you know, one place is under an extreme weather event or has some other stress. And, you know, we've seen that play out and, you know, around the world, right? I mean, that you look at the European market and your integration, look at the United States and its expansion of regional transmission organizations, right?

And in particular, moving east west, you know, it's important in general because the sun does that. So the wind and the solar power output also shift around and demand does as well. And so integration east west is quite valuable, um, to manage diurnal variability. And of course, already, you know, most of the Canadian system is vertical, right?

Going north south to access hydro systems and others in the north, uh, and bring it south. And so there's very little interprovincial connections right now. So I think it would make a lot of sense. It's much more about domestic trade than it is about international trade. My understanding of the oil.

Pipelines is the goal is to get to the coast so that you can then access global markets and that's a bit different and I'd certainly say if you're thinking about reviving pipeline projects, you know, why would you think about reviving projects to the United States in this context? Right? It's, you know, not going to want to deepen that trading relationship and dependency anymore.

And I think that also carries through potentially to the integration of power trading. And, you know, the idea that You know, more of the Canadian provinces would integrate with the Kaiso, you know, the California and Western day ahead market. I mean, that becomes a lot harder if all those trades are slapped with a 25 percent tariff.

And so it seems much less likely that we'll see that happen under that environment. 

[00:51:55] David Keith: Yeah, I'll jump in for a second to say, you know, frequent EBC listeners will have heard me say that if you really just wanted to most efficiently decarbonize electric grid, you'd run mostly north south. But I think in this world, I mean, there's certainly the Alberta BC integration makes huge sense because of, you know, one has lots of solar and wind and no hydro, then one has lots of hydro.

But I think in this geopolitical world, the idea of a long HVDC line feels to me like it makes a lot of sense. Whereas the energy east oil pipeline, I just don't think there's any credible pathway to do it. Fiscally, no company setting up, uh, there've been a bunch of analysis that just say, I mean, by the time you build it, it's likely irrelevant.

Uh, if you wanted to do anything, you'd build another line to the West coast. 

[00:52:37] Ed Whittingham: Yeah, you get a lot of politicians. You're very excited about new pipelines. And you, the market is much more quiet on that question, including new LNG export terminals. Jesse, for your benefit, we've talked about East West transmission quite a lot on this show.

To date, I think the single Biggest absent ingredient to make it happen has been strong federal leadership to get the provinces together, get the crown corpse together, little fiefdoms, knock heads together to make it happen. Maybe this time we'll actually get that leadership. Maybe 

[00:53:10] David Keith: just to say, I mean, this is one potential upside of this Trump insanity.

Is it is going to shake some policy loose that should happen anyway. So, I mean, in Canada, you know, forever, I'm no, I'm no Canadian econ expert, but we've been talking about interprovincial trade barriers and how they're inefficient and stupid. And they may actually now all come down pretty fast and maybe the Europeans will actually, you know, be able to integrate their, uh, armies and geopolitical.

Yeah, 

[00:53:38] Ed Whittingham: and once Doug Ford cuts off electricity exports from Ontario down to New York, then you'll actually have the U. S. really discovering energy independence. I've got a question from Karen Spencer. Her question is, it does feel like the U. S. is taking itself out of the renewables race or setting themselves back.

Could Canada and Mexico perhaps really swing our policies and take advantage of this in the North American renewables market? i. e. put much stronger incentives in Canada, work with Mexico for new LNG perhaps? Jesse. 

[00:54:11] Jesse Jenkins: So I think the race framing is a little bit like It's a little too high level, right? I think we need to be a bit more careful and clear about what you mean by a race.

Um, You know, there's sort of a numerical race who's building more and that's sort of more about like who can claim leadership and, you know, rapid decarbonization, but that doesn't really have much, that's not a zero sum game in the end of the day, right? Anybody moves faster, that's good on their own terms and globally for emissions.

Where the race comes in, I think is around economic competitiveness. And the question is whether the U S. Or Canada or Mexico really has any objective in becoming a manufacturing hub for, uh, wind and solar power components. And there, I think we have to just be a little clear about what our goals are. I mean, in the U.

S. context, we're a big market. Have clearly a pretty strong bipartisan, you know, I'm not endorsing it, but it's, you know, just descriptively a bipartisan objective to decouple the U. S. economy from Chinese supply chains. China dominates wind and solar manufacturing today. We want to supply chains that are more resilient to global disruption, whether those are pandemics or otherwise.

So it might make sense to sort of a basic trade substitution policy to build up U. S. manufacturing capacity for wind or solar, and you can make the same case on a smaller scale for Canada or Mexico. Just so that if there is disruption, we're insulated from that, you know, if, if there is conflict or trade wars or whatever, are we going to be a globally competitive supplier of solar panels to the world?

I don't think so. That seems highly unlikely at this point, right? Not at 

[00:55:40] Ed Whittingham: all. 

[00:55:40] Jesse Jenkins: And so it's not an export market play the way it is for China, right? They have secured that lead so definitively that there's not a lot of ability to catch up there. I think the case for batteries is very different because batteries are a kind of general purpose technology for the 21st century.

They're going to be in, they already are in everything. And Having the ability to innovate and spawn new companies, developing creative products, and, you know, push the frontiers of capabilities in those areas is going to be important for anybody's economy, I think, especially, you know, any, any advanced economy.

And it's going to be important to military prowess, right? Because increasingly. The military is running on electricity, right? Drones and everything else, and I do think it's an area where China's lead in the supply chain is strong. Their lead in technology is clear, but not impregnable. I think that there is a potential for the U.

S. and others to compete in that front. Um, and so I think you just need to be clear when we're talking about our race. What do we mean, and what are our objectives, and what does winning look like? Because it leads to very different policy recommendations for different countries. 

[00:56:45] David Keith: I'm going to follow on for a second in strong agreement with what Jesse just said, but going to amplify on batteries.

Batteries are a much more differentiated market. The solar market is more or less solar modules and more or less a commodity. And you know, you just buy them. And so it's clear that China, just as Jesse had. China has them. Batteries are actually not a commodity in the same way. There's very differentiated markets for different kinds of things.

Storage, uh, um, high end applications, the kind of military or aircraft applications, cars, quite rapid technological change of batteries as we are not seeing so much in solar. And so I think there's much more room for, um, you know, bits of Europe or the US or whatever to grab some piece of that and, and be the leader in some particular battery niche because it's not a single market in the same way.

[00:57:32] Ed Whittingham: Yeah. And the, the irony, Jesse is, you know, of course, uh, on this day of all days, Canada's, uh, crying foul on, on the tariffs that were put in place. Canada has put in place pretty strong tariffs on imported Chinese solar panels to protect what is really a small nub of a domestic manufacturing sector, which is ramps up or ramps down depending on what's happening to the U S and whether the U S can find panels elsewhere and has to turn to Canada to get supply.

So I'm not a big. Fan of it. I just, in this case, but I, we had Shirley Meng on the show, David's colleague, and we had this great discussion on batteries. I'd agree with both of you. Uh, I'm going to do a two parter and then that's going to be it because we're at the top of the hour and this hour has gone very quickly.

Clearly, Jesse, we've touched a nerve and people have wanted to hear what you have to say. The, uh, So the first question from Barry McNichol is, uh, just a bit tongue in cheek with the Trump regime making plans to overthrow democracy and make Trump King, dictator, emperor forever. How can the world move forward to mitigate the negative effects of an anti climate government?

We've touched upon it a bit, but let's unpack it separately. Second part is, do you think the voter base is starting to see the risk to the policy direction the country, in this case, the U. S., is taking and the impact on economy environments, or is the mass or the massive supportive of what's happening as good television?

So, how's the American voter reacting? What should the world do? 

[00:59:03] David Keith: Ask the Princeton professor about the average American voter. Yeah, definitely. I'm totally in touch, man on the street. Yeah. 

[00:59:09] Jesse Jenkins: Yeah. Yeah. So that that caveat being stated up front, uh, stipulated, um, so first of all, I'd say it's, it's early. It's too early, right?

It's, it's, again, it's only been six weeks. Um. A lot of the chaos and uncertainty that has, you know, unfolded isn't yet impacting too many people's lives in a concrete way. Now that's changing pretty quickly, right? I mean, tariffs going to went into effect today, right? Prices are going to go up quickly for a variety of goods.

Hundreds of thousands of federal employees are getting laid off. Those are real families and real people in communities all over the country, not just in Washington, D. C. We have federal employees everywhere. Um, and, you know, they're gonna be looking for jobs. They're not gonna have money to spend. They're gonna have that's gonna have an impact in people's lives.

Um, you know, the sort of broader anxiety and uncertainty that this sort of capricious decision making causes on business investment and hiring on consumer sentiment and spending that is going to lock up a good chunk of the economy. I think, right. Um, you know, it's just going to make it a lot harder for anyone to pull the trigger on any discretionary spending or capital investment or hiring, right.

They're just going to freeze in place to kind of conserve resources and see what the heck happens. And so I would not be at all surprised, right. If We see a return to inflation because tariffs do that if we see the Fed not lowering interest rates, they were already pretty clear. They're not going to do that.

If you know, Trump is not an able partner and trying to reduce costs, right? And which is not. Um, and I think we're going to see, you know, negative impacts on hiring and consumer spending and You know, capital investment, et cetera. And so, I mean, maybe that isn't a deep recession, but I don't know. It's pretty probable that we're, we might already be in recession.

According to St. Louis fed, you know, we might, that might be deepened, right. By these kinds of measures. I think the latest, most of the macroeconomic modeling on the impact of the tariffs on the U S are that we're probably going to lose somewhere between roughly a half and 1 percent of GDP just to the tariffs, right, right away.

Um, so, you know, if we were growing at 4%, maybe we can absorb that. If we're already pretty much stagnant, that's the difference between. You know, GDP growth and recession. Um, so when those things start to become real for people, I don't think that's going to be popular. Trump ran on the exact opposite, right?

He ran on lowering costs for people. He ran on the cost of eggs. He ran on the price of energy and, and how he was supposedly going to fix it. And what has he done? He's done basically the exact opposite. Um, and while I'm not a man on the street, there was some recent polling that, um, uh, has been reported over the last week about the range of policies that he's implementing.

And what that found is that basically majorities of Americans don't find what they're doing popular. However, strong majorities of Republicans do. So the base, the party, the people there in their echo chamber that Trump is surrounded with the media, the right, you know, the Republican media that he's hearing.

Are very excited about what's happening the other 60 percent of Americans, not so much. And so it's a question of how long that takes to bust through the bubble, right? And start to look like a political liability for, you know, congressional Republicans for, for, for Trump himself. Um, and, and when, when that, you know, political gravity will reassert itself.

And I, I just, you know, how long that's going to take, but I do think there is a political cost to all of this that you can't, you know, you can't cause this much damage. To real people's lives without any consequence. I don't think what should the rest of the world do? I mean, in some ways, it's like, just write us off for a while.

Let us figure our stuff out and figure out what you can do without us because we're clearly, you know, at the government level, right? Not a reliable partner on. Anything at the moment. And so that does require, I think, some rethinking, right. As we're talked about already have a lot of, you know, previously well held assumptions about what the world looks like.

Um, but that doesn't mean that progress can't be made. I mean, there's all kinds of ways in which decarbonization makes. domestic sense for countries around the world already, um, you know, ways that makes economic sense to continue deploying these technologies. Um, and you know, there are new trade arrangements and new deployment, diplomatic arrangements and others that can be made, uh, to continue making international progress, even if the U S is, is absent.

And then, you know, this isn't the first time we've done this. It's a little bit more dramatic this time around, but You know, we do have the, the, the first Trump term as, you know, experience of seeing this kind of, um, you know, whip, whiplash back and forth between, uh, administrations. And, uh, so the world has a little bit of practice here before.

[01:03:32] Ed Whittingham: And I think part of the, the worst whiplash. And certainly we feel it as Canadians is what was formerly an ally of the U. S. is now being villainized and being treated as an enemy. What was formerly an enemy of the U. S. is being lionized. And we're, we've all got sore necks because it's happened so quickly.

Yeah. 

[01:03:54] David Keith: There was a Globe and Mail podcast that was talking about, you know, our neighbors to the south and how to manage the craziness. And it referred to the U. S. as the crack house downstairs. 

[01:04:05] Ed Whittingham: Yeah. You know, sorry, David, I want to turn to you. I'm looking at it. No one has dropped off yet. So clearly they're okay with us running a bit over time.

David, you asked me this question. I'd put it back to you. You asked me the question yesterday. If you were prime minister and beyond climate energy stuff, if you were prime minister, What would you do? 

[01:04:25] David Keith: I would be a terrible prime minister. I am not. That is not my job. We're not going 

[01:04:30] Ed Whittingham: to start a draft David Keith for PM.

That is for sure 

[01:04:34] David Keith: a dumb idea. I don't know, but I think the puzzle is how to get, speak to regular, uh, Americans. And I mean, obviously Trudeau said he was doing that in a little speech today. And I thought his speech was pretty good, but I don't think that does it. I think the challenge is how to. Get through to regular Americans that this really matters, that it's unjust in some way, especially Republican Americans without antagonizing Trump too much.

And I don't know how to do that. Um, it might be very specific tariffs that might be shutting some things off. It might be, sounds very trite, but like kind of encouraging Canadians to reach out to their neighbors on one on one basis. I don't know, but I feel like that's what Canada needs to do is get, uh, you know, a small but serious group of regular, especially Republican Americans to say, this is nuts.

[01:05:20] Ed Whittingham: I think those are good words to end on. Uh, thanks. And thanks, Jesse. Uh, fabulous guests. And again, due to the lack of a nutrition rate on this podcast past the hour mark, uh, it's clearly a topic of interest to our audience. So we're really thankful for you stepping up and answering that call. 

[01:05:37] Jesse Jenkins: Thanks for having me.

And if you do have room for one more, uh, podcast in your feed and you want to keep track of what the heck's going on down here, uh, please, uh, find shift key our weekly podcast on the energy transition, uh, wherever you get your podcasts too. I co host that with Robinson Meyer from Heatmap News, uh, and we're covering topics like this every week.

[01:05:54] Ed Whittingham: Cool, right on. And just to say, my producer, our producer, Amit Tandon has reminded me, if you want to continue this conversation, you can do so on LinkedIn, Blue Sky, and YouTube, and we see that Uh, Jesse, you're also on Blue Sky too, right? And probably other social channels. Yep. Great. I'm on, uh, I'm on Blue Sky and LinkedIn.

See you there. Thanks for listening to Energy Versus Climate. The show is created by David Keith, Sara Hastings Simon, and me, Ed Whittingham, and produced by Amit Tandon, with help from Crystal Hickey, Vinuki Arachchi, And Harris Ahmed. Our title and show music is The Wind Up by Brian Lipps. This season of Energy vs.

Climate is produced with support from the University of Calgary's Office of the Vice President, Research, and the University's Global Research Initiative. Further support comes from the Trottier Family Foundation. The North Family Foundation, the Palmer Family Foundation, and you, our generous listeners.

We'll be back with a new EVC show in the weeks to come. In the meantime, you'll see episode two of my new podcast, Scrubbing the Sky, drop on the EVC feed, and the audio from a panel conversation that I moderated at Carbon Removal Canada's Ottawa Carbon Removal Day back on February 27th. I hope you enjoy the bonus content, and we'll see you back here again soon.