0:02

Latitude Media Podcast At the

0:04

Frontier of Climate Technology. Where.

0:07

You either you fall on the ai optimism

0:09

spectrum. I. Just think. That

0:12

we're not as far along

0:14

as everybody is worried that

0:16

we are. I see the

0:18

applications, especially an energy and

0:20

so optimism is my default

0:22

setting. Well. I'm training your voices right

0:24

now. I'm going to replace you in the next

0:26

episode of I'm Just gonna write the commentary. Use

0:28

your voices and we'll see how optimistic you are.

0:31

Date our are going to put data and body.

0:34

Can't replace either of you to fit, but. This

0:39

is the carbon copy. I'm Steven Meisel.

0:43

By Dynamics' the Ai Revolution electrify

0:46

everything he's are more than just

0:48

slogans. They represent real physical changes

0:51

to the world around Us. As

0:53

President Biden screen industrial policies reignite

0:55

the Us manufacturing base. A I

0:58

computing workload, store and machines across

1:00

the economy turn electric. The power

1:02

grid is facing an historic increase

1:05

in demand after almost two decades

1:07

of flat electricity consumption. Suddenly America's

1:09

grid planners are doubling their forecasts

1:12

for demand, raising the. Urgency for

1:14

new infrastructure. We will ask this week

1:16

what is needed and what happens if

1:18

we can't build it. Then some major

1:20

changes in the world of tax Finance

1:23

will look at how transferable tax credits

1:25

are, opening up new kinds of deals

1:27

for clean energy, and take a deeper

1:29

dive into the long awaited and controversial

1:31

details of hydrogen tax credits Catherine Hamilton

1:33

and Shiny Romanov and or with really

1:36

talk about these trends coming right up.

1:45

What? Are you reading to help understand the

1:47

industry? If. Latitude Media's free weekly newsletter

1:49

isn't in the mix. You are missing

1:51

a vital piece of your energy business

1:53

news diet. Latitude Media is of course

1:55

the company that makes this podcast but

1:57

we're so much more were destination for

1:59

best. The business news, research and events

2:01

focused on the new frontiers of clean

2:04

energy and climate technology. When you signed

2:06

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2:08

their coverage on tax markets and deals

2:10

across renewables, batteries, artificial intelligence, long duration

2:13

storage, carbon remove hydrogen and more. So

2:15

head on over to Latitude media.com or

2:17

you can tap that link in the

2:19

show notes and you'll get lots of

2:21

stories from our team of reporters to

2:24

help you dive even deeper into the

2:26

topics we cover on this show. Thanks

2:28

for reading. So.

2:35

It's the end of the months ever going

2:38

to be doing something this year where monthly

2:40

I bring to experts who are now familiar

2:42

to you shall any Roman ossining Catherine Hamilton's

2:44

where we're going to recap some of the

2:47

most influential stories playing out. and Catherine is

2:49

the chair of Thirty Eight North of Though

2:51

Catherine. Happy to be here again and happiness

2:53

of the irregular gag. And sounding

2:55

Ramona son is the director of a

2:57

region. A snack when Brick Infrastructure Partners

3:00

hello sell any welcome back. The loan

3:02

get to be here. So we are

3:04

going to talk about one of the

3:06

big stories. It emerged in December and

3:08

into this year, combining a couple different

3:10

trends. Firstly,

3:13

The. I is out with a

3:15

new analysis this month's showing that

3:17

global data center use could double.

3:20

In. The next three years and that's

3:22

largely to a I in Crypto

3:24

and there were a bunch of

3:26

experts at Davos recently who were

3:29

talking about this and open a

3:31

I see. Oh, Sam Altman, who

3:33

is also an investor in Advanced

3:35

Nuclear, said on stage that we

3:37

need energy breakthroughs in order to

3:39

power the computational demands of artificial

3:42

intelligence. and in reality, The.

3:44

Breakthroughs we need are probably less about technology

3:46

and more about grid infrastructure planning which were

3:48

going to get into. And. A

3:50

new report from Grid Strategies. Shows.

3:53

Us: Why are grid strategies recently

3:55

analyze us load gross and

3:57

these find your forecast some good

3:59

plan. There's an increase power

4:01

demand and it turns out that

4:04

these forecasts nearly doubled since

4:06

last year. That means thirty eight

4:08

gigawatts in new demand could come

4:11

on line from a combination

4:13

of data centers, new manufacturing facilities,

4:15

and residential industrial electrification. Any

4:17

sports as don't actually take into

4:19

account potential hydrogen production from

4:21

elect years that could be coming.

4:24

So meeting that demands gonna require

4:27

tens of billions of dollars in

4:29

new transmission. but transmission investments among

4:31

investor and utilities of actually declined

4:34

in the last few years and

4:36

so that's causing massive backlog of

4:38

renewables and batteries. This terror was

4:41

still backlog that's just sitting ensues.

4:43

So what is the end of

4:45

flat power demand? Moon.

4:48

Catherine. Give us a historical

4:50

context here how long as electricity demand

4:52

and flat in the Us and it's

4:55

why is this projection this five year

4:57

doubling? So. Important. And

4:59

attention grabbing. Yeah, so this is

5:01

not the first rodeo for increased demand.

5:03

Ah, I'm away back in the dark

5:05

ages when agonising was invented, there was

5:07

a significant increase in demand. We had

5:09

to build a lot more power plants

5:11

in this country and then from that

5:14

nineteen seventy five to two thousand and

5:16

five there was massive just economic growth.

5:18

That with when I was working at

5:20

a utility for about ten years designing

5:22

grads and we had to literally upgraded

5:24

medium voltage power line some like four

5:26

kb to twenty kb so we could

5:28

get more do through. we did things

5:30

like time I used to man response

5:32

we were even or even working on

5:34

thermal energy storage to try to bring

5:36

down the man so we could have

5:38

time to build out more feet or

5:40

lines and more sub say And then

5:42

for about twenty years. Who's. Really flat

5:44

and part of that was because we built

5:46

out what we needed to. We had the

5:49

system someplace that we needed when. we also

5:51

did a ton on energy efficiency so that

5:53

was really able to manage a lot of

5:55

the low growth and demands through a plant

5:58

standards. All of the efficiency standards that. We

6:00

have have been incredibly helpful but

6:02

now it looks see are changing

6:04

again and it's just like what

6:06

you were talking about. These data

6:08

centers a I manufacturing facilities thanks

6:10

in large part to a lot

6:12

of the investment that the Inflation

6:14

Reduction Act is creating here in

6:16

this country, but also electrification. So

6:18

now what do we have to

6:20

do? I mean this is significant

6:23

because it looks like and this

6:25

is compared to so point five

6:27

percent annual demand growth over the

6:29

last twenty years. Now it's

6:31

two point six percent and twenty twenty

6:33

two. And then and twenty twenty three.

6:35

It was revised to four point seven

6:37

percent. So as you say it's doubling.

6:39

It is really significant. And so the

6:41

question is, what do we do about

6:44

that now? Yes of when we

6:46

can see all the new manufacturing

6:48

facilities getting built, we can see

6:50

the state it infrastructure needs increasing

6:52

And then we've been talking about

6:54

electrify everything for years now. Sony

6:56

does this. Load forecasts, Does. A

6:59

surprise you at all. I

7:01

think it's an intensification of a

7:03

trend. We saw before I is

7:05

Catherine Benson and things like the

7:07

Electrification of Transportation Right have been

7:09

underway for. A while so that was

7:11

a predictable i'm upset and load ai

7:13

in the fourth the day I and

7:16

how quickly the data. Demands of Ai

7:18

is becoming a topic of conversation

7:20

and a real A real. Causes.

7:23

That how quickly a I is.

7:25

A scaling up and am

7:27

so quickly data centers for

7:29

a i need green power

7:31

that items is zoo and

7:34

a. Supervisor. It's let's remember

7:36

that disposes whole goals and go.

7:38

The high demand is not all

7:40

bad and need. A few years

7:42

ago i think probably seven years

7:44

ago is that the trough that

7:46

was our race to the bottom

7:48

climate and power purchase agreements. And

7:51

you know margins, we're we're not

7:53

very exciting. I'm if you were

7:55

doing solar wind projects and I

7:57

think that at the higher demand.

8:00

and the difficulty of getting

8:02

projects done, for all the reasons we've talked

8:04

about on the show, you know, transmission and

8:06

permitting and siting, does mean

8:08

that prices are more buoyant.

8:10

So it is an

8:12

interesting development that has, you

8:14

know, all kinds of implications.

8:17

Yeah, and Shani, 33% of those

8:19

global AI data centers are in

8:21

the US, 16% in the EU

8:23

and 10% China, but

8:25

the United States has a vast majority of them. Let's

8:28

pause on the data centerpiece for a second,

8:31

because I made this flippant remark in

8:33

my opening remarks about Sam Altman saying

8:35

we need to invest in new

8:38

nuclear. I don't think

8:40

we really need any energy breakthroughs to

8:42

serve these data centers, though. We just

8:45

need a lot more transmission to get

8:47

clean power to these data centers. And

8:49

it's an infrastructure challenge. And

8:52

there are a lot of ways that you can build

8:54

more modular data centers that basically

8:57

connect to, you know, there are

8:59

direct off takers of renewable electricity.

9:02

So there's ways that you can, and then you

9:04

can create data centers that

9:06

have specific workloads like data

9:08

centers with AI specific workloads

9:10

that can be cycled differently

9:12

than other services on the

9:14

internet. And so there

9:16

are ways to adjust the

9:19

output and computational workloads of data centers,

9:21

build them differently, and then just build

9:23

the infrastructure around it. We

9:25

don't need some advanced nuclear breakthrough

9:27

to serve this particular load. Yeah,

9:30

I totally agree. I talked to Rob Gramlich

9:32

from Grid Strategies that produced this report. And

9:34

I said, what do we need to do,

9:36

Rob? Help us fix this. And he said,

9:38

we really need to plan for the future.

9:40

We need to do much better planning. Over

9:42

the last couple of decades, a lot of

9:44

the planners, just kind of the

9:46

load forecasters, everything was sort of flat. We

9:48

didn't have to be super creative. We have

9:51

been super creative in the past. We need

9:53

to get that way in the future. So

9:55

Stephen, just as you talk about the data

9:57

centers and the sort of the load centers,

10:00

And I consider that part

10:02

of the resource mix, if you have customers

10:04

with resources like solar and storage,

10:06

that they could also be part of

10:08

the solution. But when you

10:10

think about what we need to plan for,

10:12

you also have to look at how do

10:14

we get every electron

10:17

out of every line? Because

10:19

our system has places that are, yes, congested,

10:21

but others that aren't. So how do we

10:23

best use our system? How do we plan

10:26

for the future? There are a lot of

10:28

ways we can tackle this, and we really

10:30

have to really put a lot of thought

10:32

into this without having to come up with some

10:35

kind of a new technology. And even

10:37

if we got a new technology, why

10:39

do we think it would be so easy

10:41

to roll out? Implementation,

10:44

this is something I have learned the

10:46

hard way, is I think we all

10:49

in our field get excited about technology.

10:51

I know I do. And

10:53

that is part of the puzzle. Technology is

10:55

part of the puzzle, but commercializing technology,

10:58

implementing projects to get it

11:00

out there, that's going to

11:02

be as hard for any

11:04

new technology as it has

11:06

been for wind and solar.

11:09

So might as well try to solve it for wind and

11:11

solar. Clearly, breakthroughs are not

11:13

needed. Better management of

11:16

the supporting infrastructure is needed. But

11:18

that is a simple thing

11:20

to say, not an easy thing to do. And

11:24

so it's still a big concern that

11:26

we can't actually build the transmission and

11:28

distribution infrastructure to support this new load.

11:30

Are either of you worried

11:32

at all that we see 38 gigawatts

11:34

of new potential demand coming and not

11:36

a great plan to connect

11:40

the infrastructure to service? So

11:42

Georgia Power has been one of

11:44

the largest beneficiaries of the Inflation

11:46

Reduction Act, $6.3

11:49

billion in investment in their service

11:51

territory of EV manufacturing,

11:53

solar, data centers, et cetera,

11:56

6,600 megawatts of

11:58

new load coming online. And

12:00

the issue is they are

12:03

doing RFPs for new solar

12:05

and batteries, but in the meantime, what

12:07

do we have to do to sustain

12:09

the demand? And they're looking at, well,

12:11

are we going to need to keep

12:13

some coal plants open in Mississippi and

12:15

cut a deal to be able to

12:17

use those as a bridge? Do we

12:19

keep some of these single cycle peaker

12:21

units going for a bit longer until

12:23

we can build out enough other infrastructure?

12:25

And what you want them to do

12:27

is say until we can make sure

12:29

we have enough renewables and storage on

12:31

the grid to be able to accommodate

12:33

that, rather than, oh, let's

12:36

instead try to build some more combined cycle

12:38

units, because those, of course, will have a

12:40

40-year lifespan and maybe the data centers won't.

12:42

I think Catherine nailed

12:44

it, is the

12:47

demand isn't met with clean energy.

12:49

And if it isn't reasonably easy to meet

12:51

it with clean energy, I do

12:54

worry that we will revert to

12:56

more polluting, more polluting field staff

12:59

just because it's easier to do. And

13:01

that would be a shame because we have an

13:03

opportunity to clean it up. Yeah,

13:06

it sure would. And in the southeast,

13:09

Kevin, I know you have been focused on

13:11

this. There are a lot of new commitments

13:13

to fossil gas plants. And what

13:15

are we seeing in terms of new

13:17

gas planning and how it's overshadowing renewables?

13:19

Yeah. Yeah, I think the

13:22

issue is just that, yes, they're trying to do

13:24

as much renewables as they can.

13:26

They're very used to doing gas. And we're

13:28

talking about the southeast. Like what parts of the southeast are

13:30

we talking about? Yeah, so I was just talking

13:32

about Georgia. But there are a bunch of

13:35

other states that are involved, too. So like

13:37

there is a big deal in Mississippi

13:39

with energy and Amazon where there is

13:41

going to be a deal cut. It's

13:43

basically going to let energy do whatever

13:45

it wants to do to supply Amazon

13:47

with reliable power. And

13:50

the thing is that the thought that

13:53

a reliable power source is

13:55

fossil gas is what's confounding

13:57

because there is still stealing

14:00

from Yuri and Elliot storms and

14:02

the insecurities in the gas system,

14:04

which have still not been addressed.

14:06

So part of this is we

14:08

got to fix that side

14:10

of the equation, the supplies of the equation

14:12

to make sure we meet the demand side.

14:14

I see some of the biggest

14:16

hang ups of all in

14:18

interconnection and actually being able to

14:20

show any like you say, get

14:23

renewables and storage on quickly because

14:25

they're cheaper and faster to build

14:28

and you can put them in a lot of different places

14:30

that you can't build a combined

14:32

cycle natural gas plant. And if we

14:35

can get that interconnection and we can

14:37

make the planning processes work for it,

14:39

that's going to resolve a lot of the issues. I

14:42

think market reform also has a role to

14:44

play here. You know, the West

14:46

is a lot of different RTOs,

14:49

a lot of different, a

14:52

lot of different ISOs. And because

14:54

of that, you know, you can't

14:57

necessarily get power to where

14:59

the demand is high. And it's,

15:01

it's been a

15:03

problem that we've been talking about for

15:05

a long time. There's some new energy,

15:07

I think around fixing it, especially, especially

15:09

in the West. And it's

15:12

a really important piece of the

15:14

puzzle because where it is cheapest

15:16

to generate renewable power may not

15:18

be where it's most needed

15:20

to be used. Unless, Stephen, to your

15:23

point, you're bringing in manufacturing, bringing in

15:25

data centers to follow

15:27

the physical location of renewables. So

15:29

market reform to use the existing,

15:32

you know, mechanisms

15:34

we have to deliver power, I think

15:36

is really important. Yeah, and

15:38

independent system operators or regional transmission

15:41

organizations are really helpful in that way, because

15:43

you are able to pull from a portfolio

15:45

of resources and manage and plan accordingly. So there

15:47

has been also a lot of energy, Shalini, in

15:50

the Southeast on trying to make that a more

15:52

organized market. And that would kind of feed into

15:54

what you're saying. And thank you

15:56

for defining the acronym. something

16:00

that you just mentioned, Shalini, which is

16:02

the co-location of these projects. And I

16:05

know that there are some developers that are thinking

16:07

about different offtake strategies and

16:09

partnering with data

16:12

centers or manufacturing facilities. Are you

16:14

seeing more of a co-location strategy

16:16

for renewable energy

16:18

projects and storage projects? It's

16:21

certainly a very appealing

16:23

concept. There are some

16:25

practical challenges, like what if you don't

16:28

have the fiber infrastructure for a data

16:30

center near where you have the renewables

16:32

develop that. There's certainly no guarantee they're

16:34

all going to be in the same

16:36

location. Workforce issues

16:38

are also a concern. If

16:41

you have a manufacturing plant, you need

16:43

people to work various jobs.

16:46

And those people come with families and

16:48

kids who need to go to school and spouses

16:50

who have

16:53

to find jobs. And those

16:55

may not exist in

16:58

rural areas. In many ways, it's

17:00

a great opportunity to

17:03

revitalize rural areas. But

17:05

if you're just one company trying to

17:07

make that decision, you may find that

17:10

all the factors are not in fact aligning.

17:13

So we have underinvested in

17:15

transmission distribution for decades. We

17:18

have seen outages increase.

17:20

We have seen massive backlogs

17:22

of clean energy projects. The

17:25

Biden administration has pulled together $30 billion

17:28

for potential grid upgrades.

17:31

Catherine, where are these dollars

17:33

going to and how will they make an

17:35

impact in the medium term? When will they

17:37

start making an impact? Yeah, first of all,

17:39

there's an unprecedented attention that

17:41

this administration is putting on

17:43

transmission. So that is huge

17:46

good news. Of

17:48

the $30 billion, about $5 billion has

17:50

been focused on new transmission lines. So

17:52

much of this is on really

17:55

the protocols, the rules, the

17:57

processes, permitting, they established. a

18:00

grid deployment office at the Department of Energy.

18:03

There's a lot that's going on to try to

18:05

get it set up. That certainly

18:07

dwarfs the investment that we really need

18:09

to build out. FERC

18:11

is also doing an interregional planning rule,

18:13

which is really important to make sure,

18:16

as we've spoken before, that

18:18

power is able to flow between regions,

18:20

that the markets are set

18:22

up to do so. That's supposed to come out in

18:24

April, so we're watching for that. Other

18:27

than that, we also need so much on

18:30

interconnection to make sure that we can

18:32

get these plants online,

18:35

all of these, whether it's storage,

18:37

any kind of renewables,

18:40

also transmission. One

18:43

thing that fell out of the mix in

18:45

the Inflation Reduction Act was an investment tax

18:47

credit for transmission, which would reduce the cost

18:49

of building these lines by 30 percent. That,

18:53

to me, was a huge miss. You

18:55

can't fix that just with good permitting

18:58

policy. You really need to have investment.

19:00

I would think Shalini would have something

19:02

to say about that too, investing

19:04

in infrastructure. Yeah. One

19:07

of the things about investing in

19:09

infrastructure is it really is a

19:11

public-private process. It is all something

19:13

that a private entity can do.

19:15

There have been, like Sunzia recently

19:18

reached a milestone this moving forward.

19:20

I think it's been 15 years under development,

19:24

like a really long time for maybe not

19:26

that long, but a long time for a

19:28

private entity to take this on. I

19:31

am glad. I agree with Catherine.

19:33

The focus on this issue is

19:35

great, but it feels like there

19:38

aren't easy solutions. It is just a

19:40

very technical discussion, and

19:42

I hope we can keep our eye on that.

19:51

I want to tell you about a few things our team

19:53

at Latitude Media is working on that you should check out.

19:55

Firstly, if you missed our January 31 frontier forum with Alfred

19:57

Johnson of Crutch, I'm going to turn it over to you.

20:00

the transferable tax credit market.

20:02

You can watch it at

20:04

latitudemedia.com/events. It was

20:06

a great conversation, tons of good info and

20:08

questions from the audience about how the market

20:10

is shaping up. In mid-February,

20:13

we've got a big report coming out that

20:15

our research team has been working on for

20:17

months. It's a first-of-a-kind study

20:19

on the pathways to adoption of

20:21

AI solutions in the power sector.

20:23

It is very comprehensive. It includes

20:25

what utilities are doing, the characteristics

20:28

of different kinds of utility adoption

20:30

and the vendor landscape. Go

20:33

to latitudemedia.com/research to find out more.

20:35

It will be worth your time.

20:38

And finally, subscribe to our newsletter. We're covering

20:40

tech deals and markets across a range of

20:42

sectors from solar to storage to microgrids to

20:44

carbon removal. Go to latitudemedia.com/newsletter

20:46

to sign up for free.

20:49

And thanks so much. Okay,

20:57

let's talk about two important

20:59

tax-related stories. We

21:02

finance a lot of clean energy through the tax code

21:04

in the U.S. That's how we've always done it. And

21:06

there's a shift happening in the market

21:09

right now, thanks to these new rules

21:11

under the Inflation Reduction Act that allow

21:14

tax credits to be transferable. And that just

21:16

means that project owners can now sell

21:19

tax credits for cash. And

21:21

that is so far with

21:23

about a half a year of real

21:26

trading opening

21:28

up the market to mid-sized deals that

21:30

maybe wouldn't get financed or

21:32

supported through complicated tax equity deals at

21:35

the limited number of banks that have

21:37

historically engaged with tax equity. And

21:40

the tax equity market is where

21:42

banks with enough tax appetite,

21:44

tax liability actually invest capital in projects

21:46

and then they take advantage of the

21:49

tax credits. And there are a lot

21:51

of different structures where

21:54

the bank can partner with the project. That

21:57

market was worth about $23 billion last year. year.

22:00

And the market for transferable tax credits

22:02

where a lot more companies can buy

22:04

these credits was somewhere in the seven

22:07

to nine billion dollar range last year

22:09

according to this new market analysis from

22:11

Crux. So that's actually growth that's a

22:13

lot faster than people expected. It could

22:16

help bring the value of tax financing of

22:19

clean energy to 50 billion dollars by the

22:22

end of the decade. And

22:24

so the big question is what does this mean for

22:26

the way we deploy capital? We

22:29

also have this really important story

22:31

on the tax credit side. We now

22:33

have guidance on the 45V tax credit

22:35

for hydrogen production. This is like a

22:37

really hot story in energy right now.

22:40

We alluded to it at the end of the year and

22:43

and then in December we got more details.

22:45

And so it looks like the government is

22:47

going to create rules that will ensure coming

22:50

hydrogen production is as clean as possible

22:53

but as we'll hear it is potentially

22:55

stalling the market and

22:59

there's a real debate over how stringent

23:02

these rules need to be and how much

23:04

hydrogen and whether they'll hold

23:06

back hydrogen production. And we're

23:09

going to talk about that now.

23:11

First let's talk about these Treasury

23:13

rules. Shalini, what did Treasury propose

23:15

about how these hydrogen tax credits

23:17

should work? So this guidance

23:19

has been hotly anticipated. As you said

23:22

it came out near the end

23:24

of last year, right before Christmas I think. That's my

23:26

memory of it. And it's

23:28

described as having three pillars.

23:30

So and this all goes

23:33

to what a project has to do to

23:35

qualify for the the highest

23:38

amount of the hydrogen

23:40

production tax credit. The most you can get

23:42

is three dollars a kilogram and for it

23:44

to do that you have to be emitting less

23:47

than 0.4 or 5 kilograms

23:49

of CO2 equivalent. So

23:52

it you know that's it's a high bar

23:54

and if you hit if you aren't quite

23:56

that clean then you get you

23:58

can still qualify for the PTC but you may

24:00

not get the full $3 a kg. So

24:03

the three pillars to get you

24:05

to, you know, that higher PTC

24:08

amount that you definitely want

24:10

to get are additionality. So

24:12

clean energy resources have

24:14

to begin operation within three years

24:16

of the hydrogen plant being

24:19

operational so that you're actually

24:21

incenting new generation and not

24:23

just using the renewables that are

24:25

already built and maybe taking it away from a

24:27

data center. The

24:29

second pillar is deliverability. So the clean

24:32

energy resource has to be in the

24:34

same region as the

24:37

green hydrogen project. And that's to prevent

24:41

actors from just buying, overbuying in one

24:43

market and then kind of spilling that

24:45

power on the grid where it isn't

24:47

really used and then using dirty grid

24:49

power where their project is located. So that's

24:51

the logic. The third one

24:54

is hourly matching and that requires

24:56

that an hour of electrolyzer

25:01

use, production of hydrogen, that

25:03

hour, specific hour must be matched

25:06

with an hour of green power

25:08

production. You can't just

25:10

say that, you know, on

25:12

the aggregate over a year with annual

25:14

matching, you can say, look, we purchased

25:16

as much green power, using as much

25:18

green power in the aggregate annually as

25:21

we did overall. This is

25:23

really holding to a tighter standard, which

25:25

is you have to match it per

25:27

hour. Okay. So there were a coalition

25:29

of folks who were pushing for these

25:33

more stringent requirements. Catherine, did they

25:35

get what they were asking? Why

25:37

does this matter? Explain

25:39

like the controversy and

25:41

lobbying leading up to this and then what the

25:43

outcome was relative to what folks wanted.

25:46

Yeah. So the three pillars were not in

25:48

the law. The law just stipulated that it

25:50

had to be, you know, very, very low

25:52

emission, but this was how they thought this

25:54

is the best way to implement this. This

25:57

is the, you know, Jesse Jenkins has spent

25:59

a lot of time I'm thinking about this, other folks

26:01

have looked at, what would this

26:03

look like? What would those three pillars look

26:05

like? And so in that regard, yes, they

26:08

won. I mean, this is gonna make sure

26:10

that you're not getting blue hydrogen qualifying

26:14

for $3 a kilogram credit when

26:17

it costs only $1 to $2

26:19

a kilogram to produce it. So

26:21

that's a good thing for really

26:24

spurring new renewables, for spurring clean

26:26

electrolysis, for making sure that this

26:28

doesn't just keep natural

26:31

gas from continuing

26:33

to produce hydrogen. So

26:35

the hydrogen producers are really glad

26:37

for this. So electric two, air

26:39

products, EDP Renew

26:41

was on board with this,

26:43

steel producers, MERSC. I mean,

26:45

a lot of folks who are trying to get to

26:47

net zero are really happy about this. On

26:50

the other hand, there were a lot of folks that are not

26:52

happy about it. And I would say, NEXTERRA,

26:55

Constellation, BP, Exxon,

26:58

Plug Power, which is an electrolysis

27:00

manufacturer. A lot of those folks

27:02

are not happy with these rules

27:04

for a bunch of different reasons. But

27:06

part of which is what this

27:09

would do is it would not

27:11

allow for existing renewable facilities. And

27:13

I would say, especially something like

27:15

hydropower that would

27:17

be able to be used more effectively, or

27:19

there may even be other ones that are not

27:21

at their full capacity factor that you'd be

27:23

able to still allow

27:25

the electrolyzer production to

27:28

be clean

27:30

that isn't

27:32

stipulated in these three pillars. That said, it

27:34

does look like there could be a 5%

27:37

carve out potential for existing resources. So we'll

27:39

kind of see how that turns out. They

27:41

are taking comments now, the Treasury Department

27:43

is taking comments until the end of February.

27:46

And I'm guessing they're gonna get a

27:48

lot of comments. And then

27:50

they will have to decide, well, what does this

27:52

mean? Are we gonna keep the three pillars as

27:54

they are? I suspect they will. I

27:56

suspect that they will simply come up with ways in

27:59

which you can use. existing resources at

28:01

certain times to be able to

28:03

qualify so that you

28:05

really are getting clean green hydrogen

28:07

and you're not

28:09

leaving plants that are that aren't really

28:11

at their full capacity out there on

28:14

the grid you know being

28:16

less than useful. Well, Shalini,

28:18

there's no better person to ask than you about

28:20

what the potential impact out in

28:22

the market could be. I know

28:24

you're evaluating a lot of deals and

28:27

this guidance potentially freezes some of them

28:29

or makes them more complicated. So tell

28:31

me about how this could play into

28:33

the numbers behind some of the hydrogen

28:35

projects you're evaluating. Yeah, as

28:37

Catherine described, this is a topic

28:40

that people have many, you know,

28:43

lots of different views on including with my

28:45

colleagues, right? It's not like we all have

28:47

the same perspective on it.

28:49

So I'll give you my view, which is

28:51

most of the projects that I have looked

28:53

at have assumed grid power

28:56

plus REX for,

28:58

you know, for the first wave of projects

29:00

and everyone wants to do better but the

29:02

projects have said, look, in order to

29:05

achieve a decent rate of

29:08

return, this is what we can

29:10

do. And I will point out that

29:12

data centers and tech companies, there are

29:14

now some tech companies that very prominently

29:17

are focused on hourly matching,

29:19

right? Every hour that data

29:22

center use is matched to an hour

29:25

of green production. They weren't doing that

29:27

at the beginning. When we first started

29:29

working on corporate PPAs, it was much

29:31

more, you know, just annual matching. You

29:33

know, you use this much power, you're

29:35

offsetting it by signing PPAs

29:37

for a similar amount. So from

29:39

my perspective, and again, you

29:42

know, even my colleagues may have

29:44

different views, from my perspective, what

29:46

we're doing is increasing the bar

29:48

for hydrogen to be clean

29:50

in a way that data centers and electric

29:53

vehicles, right? It's not like when I bought

29:55

my EV, I could, I mean,

29:57

I do charge it overnight with, you know, Texas wind

29:59

power. But it's not like I was

30:01

limited to doing that in a way that

30:03

affected the EBS utility. So

30:08

I think it is going to be challenging for

30:10

a lot of projects. There are going to be

30:12

some people who can absolutely

30:15

achieve those goals. And

30:17

I think you can see how

30:20

the market is divided by the

30:22

kind of power plans, the green power

30:25

strategies that companies have. But

30:27

I do worry that it will make

30:30

a lot of the

30:32

projects that I'm looking at that are not necessarily associated

30:35

with a large renewables IPP,

30:37

hard to move forward. It's

30:41

going to make a lot of those projects that I'm looking at tough

30:44

to pencil. I'll point out one other thing

30:46

about green hydrogen, which is there's

30:48

been a lot of hype around it. And

30:50

the incentives in the inflation reduction act

30:53

are supply side. They

30:55

are not stimulating demand. They

30:57

are providing tools in the IRA to

30:59

reduce the price of green hydrogen, which

31:01

we've just been talking about. But

31:03

they haven't said that they

31:06

hadn't in any way pushed anyone

31:08

to use this product with

31:11

a lower environmental impact.

31:14

And a lot of the domestic

31:16

users of green hydrogen are companies

31:18

like chemical refineries, oil and

31:21

gas companies. And that

31:23

is a big one because you can make green ammonia

31:25

with green hydrogen. And ammonia

31:27

is a key part of fertilizer production. And

31:30

so the challenge there is those are industries

31:33

that maybe are not as

31:35

focused on decarbonization as more

31:37

consumer facing industries. And

31:40

so how are you going to convince a

31:45

client, a customer to pay an

31:47

even greater premium than you had

31:49

to before the guidance came out.

31:52

So lots of different perspectives. And I

31:54

certainly agree with the goal of cleaning

31:57

the production of hydrogen that I was

31:59

hoping for maybe a more nuanced

32:01

baby step approach. I'll also point out

32:03

one more thing, that the demand

32:05

for green power, for which we started

32:07

talking about, the demand for power period,

32:10

also hurts the cause of green hydrogen

32:12

because if you are a wind

32:15

developer, who are

32:17

you gonna sign a power purchase agreement

32:20

with? A tech company that wants it

32:22

for a data center or a new

32:24

industry like green hydrogen. So it's another

32:26

barrier that I think has been put in

32:28

green hydrogen's path. Yeah, so

32:30

comments are due in February from

32:33

any stakeholder who wants to submit

32:35

comments and then they'll take

32:37

some period of time to, come

32:39

up with the final rulemaking and then it'll

32:42

move forward. They'll create the tax

32:44

forms and we'll move ahead. Okay, well,

32:47

we'll follow up on that when we get more details. And

32:49

let's turn now to this bigger shift in tax

32:51

financing on why transferable tax credits

32:54

matter. Shalini, over to you. I

32:56

know you're not specifically working on tax

32:58

finance, but you have a team that

33:01

does. And are you seeing any shift

33:03

in the way deals are getting done

33:05

or evaluated because of the way tax

33:07

credits are now structured? So

33:10

we're, I think everyone, this is across

33:12

the industry. I think we're all excited

33:15

that the market has

33:17

come together, transferable tax credits are

33:19

new. And it

33:22

was just really impossible to know how

33:24

long it was gonna take for companies

33:26

beyond the current pool to

33:29

decide they wanted to play in

33:31

this new area. So it's really very

33:34

encouraging that there is demand for tax

33:36

credits and there are companies willing to

33:38

get involved that previously hadn't done it. Having

33:41

said that, the mechanism

33:43

is still the same, which is there's still

33:45

a lot of due diligence on projects. And

33:48

I do think that, and

33:50

this is very early days it's

33:53

been very encouraging in these early days, but

33:55

we do have to get these big

33:58

renewables projects financed. And. And

34:00

it seems like right now it's

34:03

easier to move forward with smaller projects. Just

34:05

the risk is less, you need fewer entities

34:09

involved. So I'll be curious to see if the

34:12

market continues to develop. But look,

34:15

the demand is encouraging, the

34:17

deals that have been announced are encouraging, and

34:19

frankly, the amount of value that

34:22

projects are getting to keep, which is really a

34:24

sign of how much demand

34:26

there is. Everyone's not chasing

34:28

one new tax equity provider.

34:32

That value has been high. So it's

34:35

a good moment. Catherine,

34:38

you have lived in the

34:40

tax code for a long time. I felt like

34:42

every couple of years we would have a big

34:44

show at the end of the year and say,

34:46

ah, we've got a tax package done. And so

34:48

you have seen the

34:51

boom and bust cycles on the policy side

34:53

and on the market side as tax

34:57

credits have phased out, and then we've

34:59

passed extensions. And then the creation of

35:01

these 10-year tax credits that are now

35:03

transferable and sellable for cash is a

35:05

really big deal. What

35:07

did you expect to come out of this shift?

35:11

And did you expect it to ramp up as quickly as it did?

35:13

Yeah. So everybody

35:16

wanted it to ramp up, and everybody

35:18

just started investing like crazy, right? That's

35:20

why we're getting all of these demand

35:22

scenarios with all this manufacturing. Everybody's

35:25

like, yeah, let's do it. The issue is

35:27

you still need a lot of guidance written

35:29

because a lot of this has never had

35:31

tax credits before, and they're also structured differently.

35:34

So you had domestic content that

35:37

they had to figure out. They

35:39

have a bonus credit

35:41

for wages and apprenticeships, and

35:43

that's a little bit gnarly. Some

35:46

of these are self-reporting. So

35:49

that will be helpful that companies will be able

35:51

to self-report. Other

35:53

of these credits have platforms

35:55

that you have to apply for, one

35:58

of which is the low-income ad. So

36:00

that's for low-income rooftop community solar,

36:02

multi-family solar and tribal projects. And

36:05

you have to apply. There's a,

36:07

you know, it's only a 1.8

36:11

gigawatt limit for these projects. And those are,

36:13

a lot of them are already

36:15

claimed. They've already had all of

36:17

the applications filled. So there

36:19

is just a huge amount of pent-up

36:21

interest. And so yes, it is going

36:24

like gangbusters. One thing to keep in

36:26

mind, at the end of 2024, that would be this year. There

36:30

are a few credits that do

36:32

not continue, including the microgrid tax

36:34

credit, the constituting solar tax credit.

36:36

Now storage continues, solar

36:38

and wind continue, most of the renewables continue.

36:40

But some of them don't, because what they

36:42

ended up doing was only having credits through

36:44

the end of 2024. And

36:47

then in 2025, they become what's called

36:49

tech neutral. It's not really tech neutral.

36:51

It just means that it's pegged to

36:54

emission reduction rather

36:56

than being technology specific. But some of those

36:58

technologies didn't make it into the mix. And

37:01

so there are a lot of things that we're going

37:03

to need to do this year. One

37:05

is to figure out how do you get some of those to continue?

37:08

Because they haven't even finalized the

37:10

microgrid credit rules. You can't even

37:12

start putting any equipment into, or

37:14

projects into safe harbor before this

37:16

thing is going to expire. And

37:19

then in 2025, they have to set

37:22

up a totally different system for the

37:24

tax credit to be able to be

37:26

administered. So Treasury is trying

37:28

to get all those final guidance out

37:30

for all the different technologies that are going to

37:32

expire pretty quickly. And then they also

37:35

need to set up for 2025 to

37:37

make sure that when we flip the switch and

37:39

the new year comes, that you'll be able to

37:41

take advantage of a different tax structure. So I

37:43

am very focused on what does all that look

37:45

like? How do we get some of these things

37:48

over the finish line? How do you get something

37:50

like the transmission credit over the finish line that

37:52

wasn't ever there? And

37:55

so that's, and other little fixes

37:58

in the code that the inflation reduction... act,

38:01

put in a place that, you know, there were

38:03

just some things that technically weren't quite right. Like,

38:05

how do you get those little fixes done? So

38:07

that's going to take some work over the next

38:09

year to make sure we're all set up to

38:11

go because there's still a lot out there that

38:14

is a little bit uncertain. The

38:17

45Z in the IRA is, includes

38:19

sustainable aviation fuel, and that expires

38:21

in 2027, which is

38:24

just not very far away, especially given that that

38:26

is a new product

38:28

that we're still trying, you

38:31

know, the industry is still trying to figure out. So the second

38:34

thing, Catherine's comment that, you know,

38:36

this is, there's a lot of

38:38

short timelines and long processes.

38:41

Yeah, I'm really glad you mentioned that one too. That's another one we'll

38:43

have to put into the mix of things we have

38:45

to get done in the next year or two. Yeah,

38:48

so along with some of that policy

38:50

uncertainty and additional guidance, there's also a

38:53

little bit of uncertainty in the market

38:55

too. So you have buyers,

38:57

new buyers of tax credits that

39:00

are coming in and a little

39:02

bit nervous about the diligence process,

39:04

about how much they have to

39:06

pay for insurance. And

39:08

so it makes, you know, intermediaries pretty

39:10

important in the market. And then, you

39:12

know, sellers are obviously worried about pricing.

39:16

They want to make sure that they're getting good pricing and

39:18

have price transparency on the platforms that are

39:20

selling these credits. And so, you know, you

39:22

still have a lot of buyers

39:24

that are sitting on the sidelines and obviously

39:27

more sellers participating in the market because they

39:29

want to sell their credits and

39:31

expand their facilities. So with

39:33

that said, we are seeing some

39:35

new interesting deals. Just

39:38

recently, there was this $700 million sale of 45X tax credits by

39:40

First Solar. And

39:46

our team at Latitude Media has been digging

39:48

into this a little bit. And we just

39:51

released a recent story. We went around and

39:53

talked to some manufacturers. And many of them

39:55

are saying that they're thinking about expanding because

39:57

of the prospect of being able to sell

39:59

these credits. One

40:01

Canadian solar manufacturer, Halene,

40:04

said it's committed to 800 megawatts

40:06

of manufacturing capacity to the U.S.

40:08

and 500 more megawatts in Minnesota

40:10

in 2024, and that specific

40:13

investment was motivated by the ability

40:16

to sell 45X tax credits.

40:18

So this is having an

40:21

impact on new kinds of investment in

40:23

facilities. In that report

40:25

that I mentioned written by Crocs

40:28

where they interviewed 150 market participants, buyer-sellers,

40:32

intermediaries, they

40:34

did find that deal sizes were

40:36

much, much lower than traditional tax

40:39

equity, and although

40:41

they were mostly wind and solar deals, you

40:43

do see them across bioenergy

40:46

and in manufacturing, advanced manufacturing,

40:48

and so the market is

40:51

starting to diversify in terms

40:53

of deal type and deal

40:56

size. So some really

40:58

interesting changes there. You know,

41:00

you make a really good point that the

41:02

differentiation in the market might mean there's some

41:05

technologies, some kinds of projects

41:07

that maybe seem too

41:09

complicated to understand or the RIC

41:11

profile isn't what new tax equity

41:14

providers are comfortable with, so that's a

41:16

new element, right, because we do have

41:18

all these, as Catherine

41:21

laid out, all the different kinds of

41:23

credits, manufacturing credits and the domestic content

41:25

and all that, and

41:28

yet if the

41:30

market isn't there

41:32

to invest in

41:34

that from a tax equity perspective, then the

41:37

value of those credits is diminished, so TBD.

41:40

Yeah, so we're going to be reporting on how

41:43

these deals are structured. There's certainly going

41:45

to be hybrid deals as well with

41:47

traditional tax equity players that are combining

41:51

some of these transferable credits with traditional

41:54

tax equity deals, and

41:57

you will see lots of that. And

42:00

we're going to be covering how that's

42:02

evolving at Latitude. And actually, we're recording

42:04

this on a Tuesday. On

42:07

Wednesday, I'll actually be sitting down

42:09

with Crux CEO Alfred Johnson, and we're going to

42:11

walk through that report. And

42:15

we'll talk about pricing and why

42:18

some of the hesitations among buyers and

42:20

sellers, what's to come in 2024. So

42:22

that'll be an interesting conversation. It'll probably

42:24

already be done by the time this

42:27

episode comes out, but we will be

42:29

distributing it on the pod afterwards. So

42:31

stay tuned for that conversation. We're going

42:33

to dig into a bunch of different

42:35

market forces. And

42:38

with that, we're going to end with the forecast. This

42:40

is where we briefly talk about a story or an

42:42

observation that tells us something about the

42:44

near or distant future. Katherine, what

42:46

do you have? Yeah, so how many

42:48

TV streaming services do you think

42:50

you have? Do you

42:53

know, Stephen, how many you have? Well, I'm constantly

42:55

kind of cycling them through, canceling them, deciding

42:57

that I don't use it, then seeing a

42:59

show I like, and then

43:01

resubscribing. I would say five.

43:05

Oh, that's good. Show me how about

43:07

you? I think between four to five,

43:09

I'm going through them in my head. At

43:12

various points, the high tide has been like, you

43:14

know, like seven. Yeah, yeah, I

43:16

feel like it's infinite. It's like, oh, I'll have to

43:18

see Project One Runway, so that means I have to

43:20

subscribe to Hulu. It's like, that's the kind of thing

43:22

we're in. Well, I just, I'm saying

43:24

this because, you know, we sign up for

43:26

streaming services, it kind of willy-nilly, I would

43:28

say, because we want to see something, or

43:30

at least, you know, I find myself doing

43:32

that. But reporting is

43:34

really different, and I'm just

43:36

really saddened by a lot

43:39

of the stories about media

43:42

outlets, press news outlets, laying

43:45

off reporters. The LA Times laid

43:47

off 20% of its newsroom. Certainly

43:51

the Post had like 240 reporters

43:53

that took buyouts before the end

43:55

of the new year. The

43:58

Baltimore Sun was bought by kind of this

44:00

right-wing Sinclair guy who's going to kind of

44:02

change the tone. So I'm

44:05

just heartened by the fact that

44:07

a lot of these newsrooms are really having trouble.

44:10

A lot of community papers, it's something like five

44:12

local newspapers shut down every two weeks. I

44:14

mean, it's just crazy. And that's where a lot

44:16

of people get their news and get really

44:18

good stories. I mean, Sammy

44:21

Roth at the LA Times, luckily, is still

44:23

there. He's amazing. He's a great climate reporter.

44:26

And I'm glad to see that there

44:28

are so many other folks out there

44:30

reporting Bloomberg, E&E News, David

44:33

Roberts, of course, with Volts, and

44:36

of course, Latitude, which I call El

44:39

Apostrophe Attitude. Latitude

44:42

has great reporters. I mean, you guys are

44:44

doing great. But I look

44:47

at these papers and all the trouble they're

44:49

having, and I just hope that people still

44:51

invest. The way that you get streaming services

44:54

for TV, continue to invest in

44:56

our good reporting, because we desperately need that

44:58

to be able to tell stories about climate

45:00

and to tell stories about clean tech and

45:02

investment and all the things we talk about

45:04

and you talk about every day, Shalini

45:06

and Stephen. So I wanted to just raise that

45:08

up as something we need to pay attention to.

45:11

Oh, definitely. I mean, as a media professional,

45:13

this is certainly something I'm thinking

45:15

about a lot. And as someone who has recently

45:19

co-founded Media Brand,

45:22

we made an explicit choice to be really

45:25

strict, niche B2B journalism,

45:27

because you have a much closer

45:29

connection with your audience. You

45:31

can create research and live events that

45:33

get people to interact with what you're

45:35

doing. And some of these sort of

45:38

mid-sized news organizations have been hollowed out

45:40

because they don't have a close connection

45:42

with their listeners,

45:44

readers, viewers, and they've seen

45:47

advertising move over

45:49

to social media platforms. And so

45:51

there's this barbell effect in media

45:54

right now where you have a few very

45:57

large news organizations that

46:01

really good digital offerings, really good subscription

46:03

services like the New York Times that

46:06

invested heavily in digital offerings pretty

46:08

early on and are succeeding wildly. And

46:10

then at the other end, you

46:12

have individuals who are doing really well

46:14

on sub-stack, niche media

46:17

brands where people have a really

46:19

close connection with the

46:21

journalists and the folks that are running those

46:23

media groups. And the media

46:27

organizations in the middle are doing

46:29

really, really poorly. And

46:32

just to borrow from some of the analysis

46:34

that's been out there about this recent bloodbath

46:36

in the media ecosystem, I mean, it's sort

46:38

of started with the air of

46:40

the internet when a lot of publications actually

46:42

put their news online for free, not realizing

46:45

that many people were going to consume it. And

46:47

then people got used to not actually

46:49

paying for news. And

46:52

then social media came along and

46:54

sucked up all the classified ads.

46:57

They sucked up all the advertising,

46:59

local advertising that newspapers

47:02

and radio stations relied on. And

47:05

so they lost that massive revenue

47:07

stream. And then once

47:10

a lot of those media organizations

47:12

were struggling, you had a lot of

47:14

private equity firms that came in and

47:16

bought up a bunch of local newspapers

47:19

and hollowed them out because they didn't

47:21

see good journalists. What they saw were

47:23

printing presses, real estate, things

47:26

that they could sell off.

47:29

And then when the organization was completely

47:31

hollowed out, they could declare bankruptcy and they'd already

47:33

made their money back. And so private equity's role

47:35

in the news business has actually been a really

47:37

big story in causing some of these problems. And

47:39

then of course you have some of the billionaires

47:41

who've bought newspapers that don't know how to run

47:43

them and they do it for prestige. And so

47:46

it's a really complicated problem with a deep history

47:48

over the last two decades. But I mean,

47:50

I'm so glad you brought it up because it's something I think about

47:52

every day. Wow, Stephen, I'm glad you

47:55

could explain it back to me. That

47:57

wasn't man's flinging, was it? No, no, that was not.

48:00

That was great. That was great.

48:02

Shalini, any thoughts, given that your

48:04

husband is in the news business? I think

48:06

you described it perfectly. What's

48:09

ironic to me is that all of

48:11

us, I think, consume more

48:13

news than ever before. It's not like the

48:15

consumption or interest in the news

48:17

has dropped off. Sometimes

48:21

it can take a little discipline to read

48:23

about the war in Ukraine when it isn't

48:25

going well, which is right now. But

48:28

at the same time, on the whole, I feel

48:30

like people care about the news and

48:32

are engaged, but we don't think

48:34

about the fact that it takes people

48:36

with mortgages and kids and all

48:38

that to go gather the news.

48:42

I'm amazed at the

48:45

role of local newspapers, where

48:47

my husband works at the Houston Chronicle, the

48:50

role of newspapers in gathering the

48:53

info that then you

48:55

hear about on talk shows and

48:57

on social media and all of

48:59

that. But

49:01

the original reporting is

49:03

done by entities that were

49:05

not supporting. Absolutely.

49:09

Most of the content that is

49:11

out there is borrowed from a

49:13

small number of rigorous journalistic outfits

49:15

that are often not getting the

49:17

funding they need. So it's a real problem. Okay.

49:21

Well, I could go on and on about this. Let's

49:25

turn to your story, Shalini. What

49:28

is your forecast? So

49:30

my forecast is that I

49:32

think we're having good and

49:34

useful discussions about EVs,

49:37

electric vehicles. There was

49:39

a cold snap earlier this month, and there were a lot

49:41

of news stories about Tesla

49:46

chargers not working and people waiting in

49:48

line to charge their cars or having to charge

49:51

much more often than they had planned on. It

49:54

felt like it was not

49:56

a great moment for the EV industry.

50:00

I'm seeing more discussion around, you know, how do

50:02

you prepare for this? Like the same way that

50:04

if you know a Cold front is

50:06

coming if you know a storm is coming, you know,

50:09

you get water You have some food

50:11

in case the power goes out, you know There's some

50:13

practical preparation cover your faucets of course and

50:15

make sure your pets and plants are safe

50:17

There's also some things you can do, you

50:20

know with your EV you can before you

50:22

start driving You can turn on the heat

50:24

and like having a warm car You

50:26

know helps the battery perform better. You

50:28

obviously will need to charge more often

50:31

And so maybe planning for that, you

50:33

know, it is good and we're building

50:35

out more charging networks So I think

50:37

that's encouraging as well And

50:39

you know making sure that when you're done driving

50:41

that you're not leaving it with a low battery

50:44

because it drains down very quickly So

50:46

there are some there's some things that we can do

50:49

To cope with cold weather and I

50:51

just want to point out that extreme

50:53

weather causes interruption and all kinds of

50:56

infrastructure You know, we've had disruptions

50:58

where you know, they're long lines

51:00

of gas stations, you know Because

51:02

there was a you know a flood or or a storm

51:05

So I think that just I'm glad

51:08

to see that the discussion around, you

51:10

know, EV winter preparedness is is now

51:12

a thing Oh, I'm so

51:14

glad you mentioned that I I've been getting in We

51:17

we leased another EV over

51:20

the new year and You know, I

51:22

got in it was like yo, you're not getting as

51:24

far as you think you are because it's cold Okay,

51:28

but this is good good to know these are really

51:30

good tips and I'm glad you brought it up well,

51:33

I have a quick update to a major story

51:35

that got a lot of attention into the end

51:37

of last year and that is the impact

51:41

of America's liquefied natural gas exports

51:43

and what the Biden administration is

51:45

going to do about them. So

51:49

Under the Biden administration. We saw

51:51

massive build out and approval of

51:54

LNG facilities to send more gas

51:57

over to Europe in particular

52:00

particular. And environmentalists

52:02

started taking a look at this

52:04

and saying, wait a second, are we

52:06

just exporting our emissions now

52:09

to Europe? And there were a

52:11

couple of studies –

52:14

they were not peer-reviewed studies, but there were a

52:16

couple of studies looking at the potential emissions

52:19

impact. One of them came from Bob

52:21

Holworth from Cornell who has done

52:24

a bunch of peer-reviewed research comparing

52:26

the emissions impact of gas when

52:28

factoring in methane leakage to coal

52:31

and found that gas

52:33

was in fact not cleaner than coal and

52:35

in fact potentially dirtier than coal. And so

52:37

he took a look at what it

52:39

takes to store and

52:41

ship gas and found

52:43

that if all terminals that are being

52:45

proposed by companies in the US are

52:48

built, we could be adding the emissions

52:50

equivalent of Europe. It's a big deal.

52:52

Environmentalists rallied around it and put pressure

52:55

on the Biden administration to pause many

52:57

of these new terminals that are

53:00

being proposed, particularly one called

53:02

CP2, which would be the second

53:04

biggest LNG export terminal

53:07

on the Gulf Coast. And there

53:09

are two bodies that approve permits

53:12

for liquefied natural gas under the Federal

53:14

Energy Regulatory Commission and under the Department

53:16

of Energy. If FERC approves a facility,

53:18

a company can build

53:20

a terminal and then sell that gas

53:23

to free trade partners. But the Department

53:25

of Energy can give authority

53:27

for broader sales of that liquefied natural

53:29

gas, but it has to evaluate national

53:31

security concerns, potential economic

53:34

impact, and environmentalists are saying you should

53:36

be evaluating environmental impact. And so the

53:38

Biden administration this month said we are

53:41

going to put a pause on these

53:43

new facilities and take a look at

53:45

the impact on pricing and the impact

53:47

on the climate. So that's a big

53:49

deal. It's the first time the DOE

53:51

has ever done this. And definitely

53:54

a big win for those

53:56

concerned about these LNG facilities.

54:00

And who knows what's going to

54:02

come next because this is going to be like a

54:04

three month pause, I think. Catherine, any thoughts on how

54:06

this is playing out in Washington and what the pause

54:08

could look like? I know there

54:10

are a lot of people going to be very angry about that,

54:14

including Chairman Manchin of the Senate Energy

54:16

and Natural Resources Committee. I

54:19

think the initial push for

54:21

it was so predicated on

54:24

trying to get the EU off of Russian

54:26

gas. I mean, that is a real issue,

54:28

right? So part of it was, let's get

54:30

the gas from the US rather than from

54:33

Russia. So that's been, it's been a

54:35

national security argument for

54:37

a little while now. And I think that's

54:40

what people are continuing to hang their hats

54:42

on. But honestly, the emissions

54:44

piece is huge. And we have to take

54:46

that into consideration. So I'm glad you brought this up.

54:48

I mean, certainly in the aftermath of

54:50

Russia's invasion of Ukraine, when gas supplies

54:52

were really tight and Europe was in

54:54

a genuine crisis, this made sense. But

54:57

when people stepped back, when we

54:59

saw that Europe had enough gas,

55:02

suddenly the emissions impact became really

55:04

critical. And one study, again, not

55:06

a peer reviewed study, found that

55:08

if all these terminals were built,

55:10

we could wipe out all US

55:13

emissions gains from the last couple of decades.

55:15

So this is a big

55:17

deal and certainly a big deal politically as well.

55:19

So we'll see what the DOE does. I

55:22

think that's gonna close it out. Shalini Ramanathan

55:24

of Quinn Brook Infrastructure Partners. Thank you. Thank

55:26

you. This was fun. You want to come

55:28

back and do it monthly? I do. All

55:31

right. We're in. Catherine Hamilton of

55:33

38 North. Thank you. Thank you. I

55:35

can't wait to see you all next month. I

55:38

promise not

55:41

to AI

55:43

clone your

55:46

voice. And

55:48

that's it for the show. The

55:50

Carbon Copy is a production of

55:52

Latitude Media. The show is produced

55:54

by me and Sean Marquand, who

55:56

is also our technical director. He

55:58

mixes the show. and

56:00

he wrote our theme song. You can

56:02

get all our stories, show notes, and

56:04

transcripts at latitudemedia.com. And Latitude

56:06

is supported by Prelude Ventures. Prelude

56:09

backs visionaries accelerating climate innovation that

56:11

will reshape the global economy. Learn

56:13

more about their portfolio and investment

56:16

strategy at preludeventures.com. And

56:18

give us a shout out on X

56:20

if you have thoughts about what we

56:22

talked about here. We have some takes.

56:24

We want your takes and you can

56:26

also connect with us on LinkedIn or

56:28

wherever you're active on these issues.

56:30

Thanks for listening. We really appreciate it.

56:32

We'll catch you next week. I'm Stephen

56:34

Lacy and this is The Carving Club.