Jennifer Granholm on What Will Survive of Biden's Energy Legacy

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1:25Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Allaway. Tracy, obviously, new administration coming in. One of the stories that we covered a lot with this administration was there has been a lot happening in the energy world. Yes. So obviously clean energy was a big part of things like the IRA. But we also had the Department of Energy's Loan Programs office headed by Jigar Shah, who we've had on the podcast a number of times, deploying billions of dollars across new clean energy. And the question that everyone is asking now is how much of that is durable in the face of a new administration, which has said various, let's just say, unflattering things maybe about Biden's clean energy tendencies.

2:12No, there's so much. Like we probably, I mean, if we like went back and looked at all of the episodes we've done and categorized them over the last four years, because we've done lots of episodes about the specific technologies. We've done episodes on nuclear. We've done numerous episodes on oil and the use of the strategic petroleum reserve. And we've done episodes on geothermal and then the return of load growth in America between data centers and economic growth, et cetera. We've probably done more energy episodes than any other topic or at least close. And we're at a crossroads probably in multiple ways.

2:50The changing the administration is the obvious one. But then there are really just big questions about what's working and what's the future of natural gas and how, you know, like there are just so many ongoing energy questions that feel very unresolved to me. Yes. And we have another four years to look forward to, to ask more questions. And then another four years after that. But I am pleased to say - It's energy questions forever. I think it is. You know what? It's because this is the human question, right? No, for real. If we could get a little philosophical here. It's energy questions forever because human progress is the story of getting more energy out of input.

3:31I forget the name. Do you know that guy? I can't think of his name. There's this energy historian. I thought you were going to say philosopher. He almost is. I'm blanking on his name. People will remember. Anarchy historian. It's not Juergen, is it? No, not Juergen. He goes back deeper and he has these books where he literally calculates the amount of human calories that someone would have had to expend 5 ,000 years ago to grow a plant or hunt an animal. And how many calories are expended in that process versus how many calories you get out of the animal that you hunt or whatever. and then does the subtraction.

4:07And human progress is essentially the history of expanding the gap between how much energy you put in and how much energy you get out. So it really will be energy questions forever. Okay, now that we've set the scene, we've gone all the way in prehistory to set the scene for a discussion about the next four years and the previous four years, I should say as well. Well, in the meantime, in a slightly shorter scale, we do have absolutely the perfect guest today. we are going to be speaking with Energy Secretary Jennifer Granholm about everything that's happened in the last four years and the political durability questions and what she's done with the DOE during her tenure.

4:46So, Secretary Granholm, thank you so much for coming on AdLots. Yeah, love it. Thanks so much for having me. Absolutely. You know, I want to start with sort of a big picture question, maybe something that's been on my mind for a while, actually. We saw an incredible boom under this administration in domestic oil production, also domestic gas production. And I don't think it got a ton of attention for various reasons, but also one of the reasons was it didn't seem like it was something that at least on the trail that the administration bragged about during the election season. Is this something, when you look back on the last four years, and we'll get into some of the new energy investments in the long term, is this something that you are proud of or that Democratic administration should be proud of the success of our domestic hydrocarbons?

5:32Well, we certainly have achieved energy dominance, that is for sure, under this administration. And much of that was due to the fact, of course, that there was the invasion of Ukraine and it pulled, you know, a lot of Russian oil off the global market. And so that really compelled us to step up. And part of that stepping up was releasing from the Strategic Petroleum Reserve enough to stabilize markets. And so as a result of that and the price signal that was set, the demand signal that was set, I think we were able to do that. And that's why gasoline today is hovering just a little above$3 a gallon is because there is supply on the market.

6:14But all of that is true at the same time as we were expanding the energy pie significantly and saw obviously a huge investment in both the manufacturing of products to bring us clean energy as well as the deployment and the generation of that energy. Well, let's talk about that clean energy expansion then. And I realize, you know, a lot of things have happened over the past four years. U.S. oil production has boomed, as Joe just pointed out. But the Department of Energy, the DOE itself, has changed in terms of its role in, you know, not just energy security, but also in the broader U.S. economy.

6:53When you look at the DOE now at the tail end of 2024 versus the DOE that you took over, what are the key differences? How has it evolved? It is such a great, such a great story because, you know, the DOE historically has been a research and development agency with also a large focus on national security through our nuclear deterrent. And so we have 17 national labs and we were focused on early stage research, maybe some small scale demonstration, but really focused on the earlier side of these technologies in addition to our nuclear weapons responsibilities. So when we came in, we said, look, there is a huge role here, an important role for deployment and for focusing on the building out and the reshoring of manufacturing of the products that would get us to that deployment.

7:48So we reorganized the entire department. We added a whole new vertical that was focused on deployment. It is called the Undersecretary for Infrastructure, Clean Energy Infrastructure, recruited from the private sector, David Crane, to come in and head that up. And he brought in a number of other people from both the finance industry as well as the clean energy industry so that we could match both our great research portfolio with marketing, making sure that these products would be successful in the marketplace. And, you know, when the Inflation Reduction Act was passed and the bipartisan infrastructure law, the Department of Energy got 60 new programs that we were to execute on over$100 billion.

8:32dollars. And so that reorganization of the department has enabled us to get that funding out the door. I'm proud to say that as we're speaking right now, 99 % of the programs that we were given have issued at least one round of funding. And the reason why not all rounds of funding have been issued is because they're multi-year commitments, multi-year funding opportunity announcements. So we've really reorganized and the result and the proof is not not just inside of DOE, but really across the country. And I hope we get a chance to talk about that incredible manufacturing boom that's happened as a result of the Inflation Reduction Act in energy.

9:10I definitely want to talk about that. By the time this episode comes out, this question may not even be germane anymore, but we are recording this on December 20th. And last night, the House failed to pass a bill that would have kept the government open. And just from your perspective right now, if the government shuts down, what does that mean for various things where the money has not been sent out the door? What happens to those plans? Yeah, I mean, some of that depends on how long the shutdown is for. And we are able to manage our loan program office and our deployment arm through a shutdown, through some bits of a shutdown.

9:51We are proceeding ahead and our teams are proceeding ahead. We're preparing for a lapse, but we think we have the ability to get the rest of the loan portfolio commitments that are teed up out the door. Maybe we can talk about the durability of the loans more broadly, because, you know, regardless of what happens with the shutdown, there is the new administration coming in. Both Joe and I were at the Deploy 2024 event in D.C. recently, and you gave a great speech there. But I got to say, like, it felt a little bit like a therapy session for people that were there. Like the message was very much don't panic, keep calm and carry on.

10:32I think you even flashed that old wartime poster up. Yeah. And there is like a sense of unease or uncertainty about how much of all of this is going to continue into the new administration. Like, give us a sense of your gut feeling about it at the moment and what you're doing to ensure that some of this work will continue. As I mentioned, we're really focused on getting the remaining funds out the door that we can in this year and up to January 20th. So that's one way. Once you have those commitments and obligations and contracts are signed, it's much more difficult to undo. But also, as I mentioned at Deploy24, really, perhaps, I don't think I'm being irrationally exuberant, but I do think that the Inflation Reduction Act and the fact that there are, for example, 18 House Republicans who sent a letter saying, please don't touch the Inflation Reduction Act because it's benefiting their districts and their states.

11:29The fact that 85 percent of the funding is going to red states and red districts gives me some hope that those members of Congress are not going to want to undo the opportunities now that their citizens have to build these products of the future and future facing jobs. I mean, it is astonishing that five over now, 500 million, half a trillion dollars has been invested in this clean energy economy in the United States since the passage of the bipartisan infrastructure law, that and the Reinflation Reduction Act. That is astonishing. And for every$1 of public money, there are$6 of private money.

12:10So the private sector is going to have something to say about this as well. And they don't want to obviously see this undone. We've And honestly, just from a, if you step back from a policy point of view, Democrats and Republicans agree that we should be reshoring these manufacturing jobs that were lost because of poor trade deals or trade deals that were unenforced. We should be getting those back. Why would we be ceding the territory to China or any other country? And so the fact that that's happening, the fact that over 900, almost 950 factories have been announced across this country is astonishing.

12:47And they're happening in all these communities that have been often left behind in the past. And so I think it would be political malpractice to undo that. So I have great optimism that it will continue. Plus, the margins in the House are so narrow that 18 Republicans, and again, that was a month or more ago, signed a letter saying, don't undo this. I think it's very unlikely to be undone. Now, will there be components of things that folks have been talking about? Will they try to block additional funding for EV chargers, for example? Perhaps some of that around the edges. But I don't think the manufacturing side and the supply chains and the critical minerals that are being incentivized to be produced inside the United States, I don't think that's going to go away.

13:37Just to push back on this a second, thinking of trade deals in the past that have hollowed out certain manufacturing capacity in the US, which many people might agree with. On the other hand, if others would say, well, if the actual imperative for a lot of this stuff is climate specifically, why not import more from the lowest cost, largest scale producer of climate tech, cheap solar, cheap batteries? We've put up pretty big tariffs on EV tech in the U.S. We want to bring solar back. From a job standpoint, I get it. But reconcile that with the sort of urgency that the administration has talked about with climate.

14:18Well, I think we can achieve that urgency and we can build at home. But let's just say this. It would be really foolish to trade our reliance upon oil from OPEC for a reliance upon technology from China if we want to be energy secure. if we want to be strong as a nation. A nation that doesn't manufacture the means for its own energy security is a weak nation. And we are not going to be a weak nation. This is why we have, you know, other countries have engaged in industrial strategy, industrial policy, and we have not. And our failure to do so had left us without a manufacturing sector. And part of that is for our national defense as well.

14:58And so just letting it go overseas is a terrible strategy for national security and for energy security. And so I think that I totally understand we want these products to be cheap. We want them to be less expensive, affordable for our people. And we continue to drive down that cost. It's the United States and our technology, our research and development that has brought down the price of batteries by 80, 85 percent now. I mean, and the same with solar technologies. And it's true that China came in and had a strategy to Bigfoot us and to take that technology and to develop that technology and deploy it in China.

15:34And we're saying no more. We're not going to sit by and watch that happen. We are going to get in the game. We're going to fight. And so I'm excited that that's actually happening. As the former governor of Michigan, who was governor during the time of the auto bankruptcies and before, and who saw so many factories leaving our state and the devastation that's left behind from communities that saw those factories leave, I'm telling you, this is a whole new ballgame. It's like we are repairing the mistakes of the past. We are bringing it back home, providing opportunity for folks here, as well as creating the products that we can stamp made in America and export around the world.

16:27your best restaurant location gets five-star reviews how do you make every location like your best location your best paper mill has been operating at peak productivity How do you make every mill like your best mill? Your best data center has optimized every drop of water. How do you make every data center like your best data center? The answer is Ecolab. Better performance, better outcomes, better impact. Ecolab. Now every location is your best location. For enterprise organizations, managing all your food needs is a tall order. But with Easy Cater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform, all while consolidating your corporate food spend so you can control costs, streamline billing and payment, and simplify reporting.

17:23Easy Cater, your business tool for food. To learn more, visit easycater.com slash podcast. I have a sort of D.C. process question. You're sort of pointing out that there might be some areas of overlap in terms of interests of the outgoing and the incoming administrations. For instance, Trump seems to like nuclear energy and Chris Wright certainly seems to like geothermal. normal. When this transition is actually happening, like during this time period, how much dialogue is there between you and, you know, your incoming successor? And how do you sort of like hash out the new priorities? Or is there like a handoff note that you leave for your successor?

18:07How does it all work? What's the comms actually like? Well, so actually, he and I have been trading phone calls, and I fully expect I'll be sitting down with him. Of course, it's going to be a new administration and they're going to have different priorities. But they also have a landing team, transition leaders who are going to be advising the incoming secretary who hasn't had the experience at DOE, but his landing team all have been part of DOE in various ways in the past. So there's a great familiarity there. So those conversations are happening even as we speak right now. Their landing team is interviewing our various offices around the department to see what has changed, what they want to keep, et cetera.

18:51To your point, though, I just think it is critical that people understand the bipartisan support for so many of these technologies. You mentioned geothermal, you mentioned nuclear. We've been hugely bullish on both of those, but there's also the support for critical minerals and critical materials that build the battery. That's happening through our Manufacturing and Energy Supply Chains office. There's bipartisan support for, you know, hydroelectric power, for water power. You know, there's bipartisan support for hydrogen. And we're working on all of those. And truly, so many of the Republicans have said that they support an all-of-the-above strategy.

19:33And if it's all-of-the-above and we build out this clean energy, this energy pie, you can't ignore the clean side. And many of those in Congress who have been all of the above understand that fully. When you think about the scale of the energy challenge or planning, and these are multi-year, multi-decade ideas and these dials shift very slowly. I'm curious when you think about the U.S. political system and the fact that who has power can change certainly every four years and actually every two years in many cases. Does this impair us when you look at, you know, you talked about industrial strategy around the world, and obviously China comes to mind.

20:15I'm curious about how you sort of reconcile what I see as a time duration mismatch between the scale of these challenges versus the reality of the political clock. Well, there's no doubt that the climate imperative is upon us. I mean, we see every year all of these records being broken. So we have a sense of, we should all have a sense of urgency about that. Some don't see that as big of a challenge, but they do see the global competition as a huge challenge to be surmounted. And they don't want to miss out on the$23 trillion global market that these clean energy products represent. If we're not building them, someone else is going to be building them.

20:55And why would we see the territory? So one way or the other, there's a sense of urgency. What the urgency bumps up against is old process and old mindsets in some areas. I mean, you know, one example I think of, if we had had the opportunity to have another term, I would definitely have been pushing further on supporting the grid and upgrading the grid. The grid is, you know, 70 % of the grid is over 25 years old. A lot of it built on wooden poles. We've got all these extreme weather events. We need a resilient grid and we don't have enough funding. And we don't even think about it, honestly, in the way that we should.

21:34We don't think about a national grid, you know, because it's been pocketed in these silos all across the country. And there's so much state by state, you know, impact on that. But we should be thinking about it like we do our national highway system. Honestly, we've got a highway trust fund. You've got state and federal participation. That's how we should be looking at our energy grid. if we were to move this forward. And then the other thing I would really focus on is the fact that there's so much queued up in the interconnection queues. You know, we've got 3.7 terawatts of power queued up, of clean power queued up.

22:09We need to overbuild. And that blockage is a huge problem that I hope the next administration addresses as well. Wait, say more about the grid, because I wanted to ask you about this. To some extent, it doesn't matter how much clean energy we generate if we don't have the grid that's like actually able to handle that in an efficient way. What would you do if you were going to mount, you know, some sort of project? Would you try to be as ambitious as a national grid of some sort? Or would you have to kind of be more realistic and tinker at the edges? Yeah, I think you have to have both national as well as local components, like you do your federal highway system.

22:50And we have been in the process over the past four years of planning out what are those national interest electric corridors and where can we better make sure that the grid, there's a handshake between one region and another. So, for example, you know, if you've got lots of wind being generated in low population centers of the country, but you don't have a grid to be able to connect that to where population centers are, you're missing the boat. And of course, you want to make sure that those communities are compensated for giving, you know, that power over. And that's what's happening in many places, but we need more of it.

23:27We have a dearth of connection between regions, and that needs to be invested in. And I will say, you know, one of the great things about working with our labs is that they are always coming up with innovative solutions for how to get around, for example, NIMBY problems of transmission, not in my backyard problems. And so a lot of technology now that's available to reconductor existing lines so you can put twice the power on existing transmission lines that you don't have so you don't have to get re-permitted, etc. etc. There's new technologies about moving power, grid enhancing technologies, you know, dynamic line rating that can move power much more efficiently.

24:10Those technologies can also really add a lot of generation capacity to the grid, like about 100 gigawatts of that just by enhancing technologies on the existing grid. You know, you said something earlier in the conversation that stuck with me and I wanted to go back to it before I forget. You said it doesn't make sense for the US to trade dependence on energy from OPEC for technology from China, which intuitively makes sense to me. On the other hand, the US is not really so OPEC dependent anymore. And as we talked about in the beginning, the US has just an extraordinary amount of carbon resources here in the US, both between oil and gas, and there's more and more of it being produced all the time.

24:54Is there a sense from a sort of macro standpoint in the US that the transition from carbons to more electrified renewables, et cetera. Are we playing to our strengths here or are we leaning against some of our natural endowments that we have in the U.S.? Well, I think we've got endowments on both the molecule side as well as the electron side. And we've got, for example, these hydrogen hubs that we have announced, one in the Gulf Coast. A lot of the oil and gas majors are very interested in clean hydrogen. They would derive it from natural gas. It would be called blue hydrogen. But they would agree to sequester the CO2 and make sure there's no methane leaks along the way.

25:38So, you know, when I say the trading OPEC, what I really mean is that we don't want to rely on anyone else for our own energy, whether it is from molecules or from electrons. And we want to be able to supply cleaner fuels, whether it's fossil fuels or electricity, to the world. We want us to be able to export. And in order to do that, we have got to build up our capacity. I will say this, though. The Department of Energy does not regulate how much the oil and gas companies drill. That's not in our purview. And because there has been such an increase, there was such an increase in drilling and improved techniques to be able to drill both oil and gas.

26:24We saw this great increase in production and export. But we also know that at some point, a number of international entities and modelers are saying that we're going to reach peak oil, peak gas. So we have to really think - Would you say that you mean demand or supply? Yeah, well, I mean demand and therefore supply will follow, right? So I think it's really important to have a long view. Of course, our goal is to get to net zero by 2050, but it is net zero. So that suggests that there will be some fossil fuels, but there will be also technologies to reduce the greenhouse gas emissions, which is one of the reasons why the Department of Energy and our labs, we've been focused on what are those carbon management strategies that will enable us to get to net zero.

27:14You know, we have this other big, hairy, audacious goal, which is to have a 100 % clean electric grid by 2035. And we're on track to get there. We'll be 80 % clean, at least per the modelers, by 2030. and on our way to that last 20%, which is the hard to decarbonize portions. But nonetheless, we feel like you have to do both. You've got to make sure the world is supplied, make sure prices don't go up on the fossil side while we use technologies that reduce greenhouse gas emissions and we use technologies that generate clean.