hey it is Ezra so I'm taking a bit of

time off this month and we're going to

have a few friends of the show onto host

guest episodes today's host is Robinson

Meyer Rob is contributing writer for New

York Times opinion and the founding

executive editor of heat map news which

is the go-to source reporting on the

decarbonization roll out I'll let him

take it from

here from New York Times opinion this is

the Ezra Klein show

[Music]

two years ago Joe Biden signed the

inflation reduction act the biggest

climate law in US history its goal was

to R vitalize manufacturing jobs and

make us industry competitive with China

and by one measure there's been nearly

half a trillion dollar in investment in

green energy and Manufacturing since the

law was passed but then Democrats lost

the election and the future of

decarbonization is far more uncertain so

where does the clean energy industry Go

From Here jiggers Shaw is one of the

best people position to answer that

question he spent years working in the

private sector leading companies that

invented new ways of financing green

infrastructure and he's now the director

of the loan programs office at the

department of energy you're going to be

hearing a lot about the loan programs

office or lpo in this episode The lpo is

supposed to help fund renewable energy

projects that private sector lenders

find too risky or meager to invest in

its experts are supposed to identify

promising new clean tech and turn it

into something that can scale up

something you can actually buy and use

every day and because of the inflation

reduction act its lending Authority Grew

From $40 billion a few years ago to over

$400 billion today Ezra has talked a lot

on this show about what it takes for the

government to help America build

abundance to build new power plants new

power lines new housing and I think the

Biden Administration got closest to that

aspiration through the team Shaw

leads so I wanted to talk to

about what lessons he's learned from the

bid administration's economic experiment

what worked what are the tradeoffs the

lpo made how does think about

turning policy into products and since

this experiment is not over where does

clean energy go in a second Trump era as

always you can email the show at Ezra

kleinow NY times.com

[Music]

Jer shot welcome to the show oh my

goodness it's so great to be

here so I want to start here

um before we get into policy Donald

Trump has won the

election how screwed is the clean energy

industry well when you look at Trump's

first term the clean energy industry

really found its own during Trump 1

right and so you know my sense is is

that the deployment of clean tech

technology is going to keep going I

think the real question is around what

our leadership looks like around the

world and even there I would say that

people are continuing to clamor for

American Technology in geothermal in

nuclear in you know some of these other

areas and so you know I think that the

pace may change a little bit and there's

always ups and downs but um clean

technology companies are crushing it

right now I think that gets it one of

these core tensions in B Administration

policy so when people hear about what

the B Administration has tried to do

around clean energy deployment clean

technology deployment there's an

assumption that it's part of their

climate environmental goals which it is

but you often as you just did frame

things differently so what do you see as

the main drivers of decarbonization or

of of clean energy deployment yeah look

I think that when you think about what

we've done to produce a modern lifestyle

we have burned things for hundreds of

years whether it was wood and then coal

and then you know oil and natural gas we

have burned our way to a modern

lifestyle and I think you know then you

had the Environmental Protection Agency

and folks said we don't want to live in

smog anymore and we developed a whole

new set of Technologies coming out of

the 1970s and today these Technologies

are truly Superior in many ways so when

you think about what is driving people

it is superior solutions that help solve

other problems it's not climate how

large a role do you think climate and

the global effort to bring down

greenhouse gas emissions plays in to the

ongoing Global deployment of these clean

Technologies like are the clean

Technologies going to deploy kind of

anyway because they're superiors you

were saying or is this something where

people want to solve climate change and

they want to develop and so they're

going to uptake these green technologies

well I think of course it's all of it if

you talk to entrepreneurs like me and

others we are driven by solving problems

for people we were not driven by

regulatory Arbitrage or by figuring out

how to mine tax credits within the

inflation reduction act we're driven by

the fact that we believe that these

Solutions are superior to what they're

replacing and yes those climate

objectives helped pass the laws

necessary to make the first of aind

projects happen so look it's all part of

a whole right but I want to make sure

that we're crystal clear about where

we're headed and I think the president

has been quite clear about this having

to relate to jobs in everyday lives and

the secretary has been very clear about

the fact that this has to make people's

lives better and I do think it makes

people's lives better and that's what

entrepreneurs thrive on right is like

you know Elon Musk what a car that goes

0 to 60 in like 1.9 seconds and he

created that car and people want that

car and that's awesome I want to follow

like three different threads there but I

think at this point let's introduce

people to what your job is so you run

the loan programs office at the

department of energy what does that

office do so in 2005 Senator Pete to

minichi and others said hey why do we

invent everything here in the United

States but then send our awesome

technology

overseas and people realize well when

you look at the industrial strategy of

Germany or Canada or China or other

places they actually support the

commercialization of those Technologies

and so the loan programs office was born

we're basically a bank within the US

Department of energy and it is supposed

to take that risk of building that first

project when commercial banks are not

not comfortable with putting the loan

out the door for that first project CU

remember these projects don't have

Venture Capital like returns you can't

put in a billion dollars of venture

capital into something and get you know

a 10x return on that these are

infrastructure projects that generate

10% returns and so you need to have

lowcost affordable debt but you also

need to recognize that most of these

Banks do not have the expertise to

evaluate the technology that people are

bringing to them whereas Department of

energy has 10,000 plus scientists

experts and Engineers on the platform

many of whom invented the Technologies

and probably provided some of the money

for demonstrations Etc and so the loan

programs office operates like a

commercial bank but has this mandate to

lose money to make sure that we are

commercializing Technologies here in the

United States and oh along the way we

haven't actually lost money we've made

money for the federal government the IRA

expanded LP's Authority by 10 times from

I think $40 billion before the IRA

passed to now more than 400 billion how

has that changed the way you do your job

and also how does lpo fit into the B

administration's decarbonization policy

RIT large well remember I think starting

in around

2018 there were huge

funds that were created to support the

next generation of climate companies and

then that number continued to expand

exponentially right in 2019 2020 2021

and there were thousands of companies

that got investment from the private

sector and so part of I think what the

Biden Administration realized was that

we had this moment again where those

companies could either build things here

in the United States or they could go

over

and a lot of those companies were

starting to become ready to

commercialize here and I think that at

the core of this there was a recognition

that these projects were going to be big

so when you think about for instance the

three biggest automakers and the battery

manufacturing plants that they're

building each one of those plants were

multi-billion Endeavors and so I think

it was very clear by the time we got

into 2022

and the legislative session that the

loan programs office needed to be beefed

up and so we were seeing so much

interest in using the loan programs

office and there were tons of you know

libertarian folks who were like wait a

second I don't think I'm going to be

able to you know get this company to

scale an exit unless we figure out a

beefed up loan program's office what

kind of companies are applying for loans

from LP you you mentioned that car

companies have these giant factories

that will eventually be profitable but

it takes a very long time for them to

turn a profit I think lots of

manufacturing companies find themselves

in that position but like what other

companies what other kinds of startups

or longlasting industrial companies are

applying to you for loans yeah I mean so

the identities of the actual loan

applicants are confidential but I can

maybe talk about it from a sector

perspective you can talk about who's

been approved for loans a conditional

yeah yeah I can certainly do that I

think so there's some broad category

right clearly battery manufacturing has

been a huge highlight of our four years

in office and so you've got 400 gaw

hours with a battery manufacturing but

then you've got critical minerals uh

production facilities here in the United

States that are going to feed those

battery manufacturing facilities and

remember you know auto companies are

some of the most sophisticated companies

in the world from a supply chain

standpoint they have to you know buy

stuff from many many countries and

assemble it all into one place and and

so they're also very nervous

about 90% of critical minerals coming

you know processed critical minerals

coming from China and so we're now on

track with the lithium loans that we

provide to ther pass the conditional

commitment to riight Ridge ioner in

Nevada the graphite processing facility

in videlia Louisiana we have a number of

grants that the manufacturing supply

chain office provided to uh folks we're

now on track to fully meeting our

lithium needs by either the end of this

decade or the early part of the next

decade but and so that's that's mines

and like industrial mineral refining

facilities in other words totally and

it's next Generation technology so we're

not just taking stuff that's already

being done and deploying it here this is

all Next Generation technology that we

have proprietary access to because we

invented it here at the US Department of

energy and other National Labs and we're

going to make sure that we scale that up

here I think people just don't

understand that we're not competing with

China

what we're saying is is that there's a

number of technologies that are the Next

Generation beyond what China is doing

now and so when you look at the Next

Generation anode and cathode materials

the Next Generation battery separator

materials all of that stuff are things

that came out of the loan programs

office and or you know some of the other

offices within the under secretary for

infrastructure and I have no doubt in my

mind that the very best long range

batteries in the world will come out of

the US by the end of the decade and that

is not something I could confidently say

four years ago and that doesn't even get

to some of the other sectors like uh

modernizing our grid or uh virtual power

plants or or other things and so you

know today we have 212 loan applications

across about 13 sectors seeking you know

a $324 billion can you just lay out

where you see lpo fitting into the

bigger scheme of things in terms of the

politics of Biden's agenda and and where

they intersect sex with Private Industry

yeah well I think first we have to

recognize that it's a team effort when

President Biden was on the campaign

Trail his promise was that America was

going to do big things again this

industrial strategy was part of his

campaign right he went to people on Wall

Street went to entrepreneurs and said to

them I'm going to make it possible for

you to do things in this country and

frankly I would say the vast majority of

people didn't believe him because you

know those promises have been made

before and they were not kept and he

went to the unions and said look you are

going to have to play a productive role

here right I get the fact that change is

hard but you're going to have to figure

out how to embrace change and you're

going to have to be fervent supporters

of this and I'll also be a fervent

supporter of you but then separately he

went to the environmental groups and

said look you're going to have to

understand that like in order for us to

get solar panel

to be you know something that we want to

deploy at 100 gaw a year scale Americans

want them made here and so you're going

to have to understand what it takes to

be able to deploy things at scale and

then he went to the Justice groups and

so look I get it right you were promised

a whole bunch of stuff and none of it

came true and so you do not trust the

government you do not trust these large

industrial deployments but let us come

up with a process to earn your trust

right and we have done that with all of

our loans and so while the private

sector is essential to this and then the

loan programs office you know receives a

loan application and then actually just

provides a loan right after uh you know

a lot of due diligence Etc the

ingredients for Americans thinking that

we could do big things again was a team

effort and you see that in states around

the country who are now competing

ferociously to attract these Pro s to

their states right and it's not an

economic development story in terms of

like who's giving you the biggest

package it's how do we get trained

workers how do we make sure that the

infrastructure is there how do we build

up new electricity transmission lines

and new facilities to be able to

accommodate all this load growth right

you know so that is something that's

more of an art than a science right

which politicians are better at than I

am but today I'm getting people calling

me saying like I would have never

in a million years thought that we could

do big things in this country but I

think we can can we get more specific

with this like what can lpo do that

others in the industry or others in the

private sector cannot so if we look at

ther pass which is a big uh lithium

production facility in Nevada they had

to go through permitting they had to go

through NEPA um we made their process as

smooth as we could and frankly my team

did an extraordinary job there but the

big thing is that remember when we came

into office lithium was very high priced

because uh there was a shortage but

there's no shortage of lithium in the

world it was just the processing

facilities were short since the Market's

been flooded with lithium lithium prices

have come down and so the private seor

does not want to fund a lithium

production facility because lithium has

very volatile pricing and so they're

saying not only do we not trust the

technology because daker pass is using

Next Generation novel technology that is

far more environmentally friendly than

what they do in China but we also don't

like this volatility so there is no

place for them to go to get debt but you

know when you talk to the big mining

companies they were like well we don't

want to buy these guys we don't want to

use Next Generation technology we want

to use technology that's already been

used for 10 years in the field and so

the loan programs office was the only

place where we could actually look at

the forward price curve for lithium and

look at supply and demand and figure out

where is this going to go from you know

we had third party providers that helped

us with this and How likely is this

technology to work oh very likely CU

we've actually been piloting it for over

10 years okay fantastic right and so the

only place for them to get a fair

hearing was going to be the loan

programs office and so the moral of that

story it seems to me is that LP's job

the thing that makes it different from

the rest of the private sector is that

it can lose money and it can lose money

on worthwhile projects or it can it can

decide that basically it doesn't need to

make make money in a short period of

time it doesn't need to respond to the

conditions of the spot Market at any one

moment you mentioned earlier that lpo

has made money that it's been making

money there's like two famous stories

about lpo which is that in 2010 it made

a $465 million loan to Tesla but also

around the same time it made a $535

million loan to this company cylindra

which went bankrupt relatively quickly

and became a big issue in the 2012

campaign one question I've had about lpo

for the past few years is like you know

the Tesla story is great the cylindra

story is obviously haunt the office not

anymore did we overlearn the lesson of

cylindra like is the fact that lpo is

making money that's great right it's

it's good that it's making money we're

running the government like a business

but like LP's job is not to run the

government like a business

so did we overlearn the lesson of cindra

like should lpo if it is doing exactly

what it's supposed to be doing should it

be losing

money well look I think that right now

there are so many companies who are

deserving of an lpo loan they have done

their homework they have made sure that

they're meeting our threshold which is

that reasonable Prospect of repayment

that we don't have to lose money right

that the companies that come in are just

so overprepared and so amazing that we

were able to make smart choices I think

there were two big challenges with

cylindra and both things we don't do

anymore the first is that the loan

programs office put our money in first

before the private sector folks put

their money in and that never happens

now and so we make the private sector

money put their money in first and then

we match it with our debt second and so

that makes sure that the project

actually has enough money to be

completed the second is that cindra had

real technology risk and we don't take

real technology risk anymore at the loan

programs office if we think there's real

technology risk we have our partners at

the department of energy demonstration

programs give them a grant to

demonstrate their technology first and

so those two things we do not do anymore

at the loan programs office so we

learned our lesson we got a bunch of

unsolicited advice and we followed it

which is great

in terms of the way that lpo should work

and does work today we estimate what our

chances of losing money on every loan is

we reserve that amount of money into uh

an account right which is held by the US

Treasury every year we estimate whether

that loan has gone up in risk or down in

Risk the goal is to be accurate the goal

is not to over allocate money for losses

and then not need it right because

that's sort of of just you know money

that could have been used to help other

people and I think we're really good at

that today in terms of the lesson

learned look I would suggest to you that

today both Republicans and Democrats

have never been more bullish on

America's ability to do big things when

you look at just how aggressive Governor

Lee is in Tennessee around pushing for

nuclear supply chain and more nuclear

plants it's amazing or Governor Kemp in

Georgia and all the wonderful stuff

that's happening there right Governors

around the country recognize that this

is something that is essential to take

their best and brightest people that

have decided to you know scale up a

company in their state this is the tool

that they need and it is so prudent

because it doesn't really cost the

federal government much compared to

amount of Loan Authority and how much

Economic Development it

Spurs so Biden into office promising to

do big things this is like a theme you

keep returning to and as you were saying

he went to the climate people and he

made a set of promises to them and he

went to labor unions and made a set of

promises to them and said we're going to

bring back jobs he said we went to the

Justice people and said we're going to

get pollution out of your

communities and the inflation reduction

act which is like the the signature

partisan bill of his administration

tries to do a lot of these things at the

same time right it's a decarbonization

an environmental bill it's a Justice

bill it's also a man manufacturing Bill

how do you see all of those impulses

brushing it up against each other in the

bill in in the B administration's policy

you know r large well remember it really

is only an industrial strategy bill it

is not the rest of those things right

the rest of those things are things that

incentivize the private sector to do

things it has grants for environmental

justice organiz it does a few different

I think I think if if we were talking

maybe two years ago Biden would be

describing a little differently maybe

but I look I think that what matters is

that these projects succeed if we build

a manufacturing facility and that

manufacturing facility fails well then

all the benefits that it provides to

workers or to communities or other

things go away right and so the central

tenant to all of this has to be that

these projects succeed right I mean

that's how it provides the benefits to

all of the other folks and so that has

to be the thing that is the thing that

we're most focused on is that is this

company going to succeed are the

products that it's making in demand is

the expertise required to stay ahead of

its competitors something that Doe is

working on and so I would suggest to you

that that has been the central tenant

and when you think about the loan

programs offices approach our approach

and our due diligence has been the

golden ticket for all the companies that

have gotten conditional commitments

every one of them to date has been able

to raise the equity necessary to

complete their projects that is because

people are like wow you guys are hard on

these companies you guys are tough on

these companies you guys do ask them the

right questions and therefore these are

really good companies that are able to

succeed and what we've told people is

you have to make sure that labor is not

something that is going to make your

project fail like you need to hire

people who are experts at their craft

you need to make sure that those people

do the job right the first time and

people have done that because it has

deris their project and we've said hey

it's great for you to talk to the

community we're not giving them a veto

but we are saying that like if you don't

have a good relationship with the

community we're not really sure how

you're going to get the you know changes

to your permit that you're going to need

in 5 years or the expansion plans you

want to do in 5 years Etc so like you

should talk to them and when it's been

scary we've facilitated the conversation

so people are like oh we were scared for

no reason these people actually do want

jobs at this plant they actually do want

to have this plant in our community this

is not as scary as we imagined it would

be and so we have facilitated better

conversations but I want to be crystal

clear right that none of these benefits

remain unless these companies succeed

[Music]

[Music]

I think looking back on the past 3 years

of lpo and on what's followed the

inflation reduction act there's

obviously been this boom in clean energy

and clean manufacturing that's happened

across the us but when you look at the

numbers from lpo

specifically they suggest that there's a

lot of dry powder sitting in I in lpo so

lpo has $400 billion of Loan Authority I

think it's issued $54 billion of loans I

think 19 billion of that has come after

the election and you should correct me

if any of this is wrong and I believe

there are 200 applications with over

$300 billion of loans waiting to get

first waiting at your office so what has

gone into that hold up why haven't there

been as many loans issued from their

office as there could be why is there so

much dry powder at the end of the B

Administration in this very important

program yeah it's a good question right

I think we all first have to acknowledge

where we were as a country when

President Biden came into office right

America was really doubting itself and

doubting its ability to do these big

things most investors were saying to

their

CEOs I know you want to do things in

America but that's just too risky so now

we had to go to the CEOs and say how do

we arm you with the information that you

need to convince your investors that

this is the place that we can do

business and along the way people are

like well you know don't have a great

track record on Mega projects here in

the United States a lot of projects are

over budget and take longer and so we

had to say well what are the best

practices on Mega projects oh you should

be spending 10% of your entire budget

upfront on planning before you start

construction right oh you should have

higher quality Workforce right and all

these things and so a lot of the

companies were like wait this isn't free

money this is not a grant and I was like

no it's not a grant and even if we were

to give you a grant which the loan

programs office doesn't do we still want

you to succeed we don't want to just

give you money and then have you fail

and then for Chinese companies to buy

all of your IP in bankruptcy let me just

say like uh voice the other side of that

argument though which is something I've

heard from companies that are applying

for lpo is that the process is really

arduous it's much more arduous than the

private Banks which on the one hand is

good right like that's that is making

use of the Department of Energy's

experts it's making use of its ability

to kind of put it stamp of approval on

certain big projects but something I've

heard that's related to that is like if

you go to a bank and you ask for a loan

you can usually get a sense in a few

months of whether you're going to get

that loan but when you go to lpo it can

take a few years to even get a sense of

whether of how far you are in the

pipeline of whether you're going to be

approved and those years represent

millions of dollars of planning

investment they represent burned Runway

they represent a lot of lost executive

salaries was there too much process here

to make sure that all of these loans

were airtight which is it too much

process or is like pushing money

out the door too fast I think that when

you do these billion dollar projects

there has to be a level of sobriety

around how hard it is to do these things

and I think that a lot of the people

that came into the loan programs office

did not have that level of sobriety now

it's not my job to like impose that on

them but it is my job to make them

actually go through the checklist and

remember if they thought that they could

get private sector Capital they should

it is not the loan programs office's job

to compete with the private sector so

the only reason that they're going

through the loan programs office is

because they can't get a loan from the

private sector right and so let's be

clear about the risk profile that the

loan programs office is expecting to

take on right and so we want to make

sure these things are successful now

what I would suggest to you is that the

amount of time it took to get people

through the loan programs office in 2021

was a lot longer than today today there

are some people who come into loan

programs office and are leaving with a

conditional commitment within 7 months

and so it is a lot faster why because

they're amazingly better prepared they

listened to some of the guidance that

we've given people they're like oh we

can't just phone this in we have to do

real homework oh okay I guess we'll do

that work and now things are moving much

faster than loan programs office I'm not

going to apologize for the fact that

we've taught American entrepreneurs

innovators and investors how to do big

things and they're finally listening and

figuring out how to do that the lpo

isn't only just teaching them how to do

big things they're actually doing

something else which is that I think the

office and the department of energy more

broadly have followed through on a set

of promises made by the Biden

administration at the beginning of its

term right that this wasn't only about

doing big things in America this isn't

only about big manufacturing projects

this is also about making good on

pledges to labor this is about making

good on pledges to communities that have

suffered under pollution for so long and

something that lpo has done a lot of is

to make sure that communities benefit

from

projects there's a critique from Ezra

and others that when you add all those

other pledges all those other

requirements to these big projects you

know you you require labor standards you

requireed community input is not that

those things are like not worthwhile but

they slow the projects down and it takes

time to do the planning for all these

different aspects of a project when what

the ultimate end goal is making sure

there's a battery

plan after running lpo for 3 years what

is your sense of it and should we have

the same requirement should we try to

make all the same pledges next time well

to be clear right there were no

requirements I mean the requirements for

the loan programs office is you have to

pay Davis bacon wages during

construction and you've got to you know

uh meet some of the other statutory

requirements around the cargo preference

act and some of that stuff right and so

our projects were not required to use

Union what we said to people is show us

that the people that you're hiring

actually have experience on building

what you are building and it turned out

that most of those were Union

contractors right we also by the way

like if you talk to the unions like they

didn't love me either because I was like

where's your marketing materials like

what are you doing to like promote the

fact that you're reducing risk right you

know we had a lot of tough conversations

with the unions and I think the unions

are more competitive today than they

were for years ago around how they win

business because we held them

accountable too right and so you know

this is not something where this was a

requirement this is something where we

said we have low unemployment rates

right this project is going to fail if

the people you hire are not people who

can actually do the skilled work

that you are suggesting that you need in

the loan application to loan programs

office so this is a source of risk for

us right on the community side I'd say a

lot of the times our companies were led

by extraordinary CEOs who were not

focused on communities not because

they're bad people but because they're

focused on their technology succeeding

so they would Outsource this work to

their head of HR but the head of HR

would be like well let's put in a

playground and I was like seriously

that's what you think the community

needs and so we would hold a listening

session with the community and say what

do you need and we would make the CEO

and CFO come there and it was clear that

they had never met the community leaders

before they had outsourced this to the

HR people and when they met the

community leaders the community leaders

are like we have all these people in

this neighborhood that are extremely

impoverished that want to work at your

factory but there's no public

transportation to get there would you

put in a bus service to do that and the

CEO is like hell yeah of course we would

do that why is this the first time I'm

hearing about this and then you we look

at the HR person and say why didn't you

bring that idea to them and so we

facilitated the conversation we didn't

mandate anything but once the CEOs and

CFOs heard the request they were like

these are eminently reasonable and this

reduces the risk of running my facility

like I look I get where Ezra is coming

from and it was like I think it was like

some article he wrote about a homeless

shelter in San Francisco or something

but when you think about what we're

doing here these are infrastructure

projects that have to last for decades

decades and decades and decades I just

think that the notion that you would do

all this stuff without being thoughtful

is ridiculous well I think that this is

exactly the question right is where does

thoughtfulness and and process begin

because you're describing things that

are not requirements per se however I

think if you go to a company and you're

like you know you should really have a

community meeting to figure out what

what the community wants that's going to

read to a much more like requirement

than maybe a they're going to feel like

they're being volun told I mean I don't

know like do you think that if you're

going to make a multi-decade commitment

to a community that you should like have

the CEO and CFO actually meet the

community once before like you sign on

the dotted line I don't know that this

is a requirement here I think we're

talking about best

practices how would you get the dollars

out the door faster next time then

I think today American entrepreneurs and

innovators are more prepared to do big

things in our country today and their

investors are more prepared than they

ever have been right this has never been

about the loan programs office and I

love the fact that we're being told on

the one hand that we're rushing money

out the door and on the other hand we're

being told we're being too thoughtful

but this has been about applicants we

have an absolute threshold the Congress

reconfirmed in the 2020 bipartisan

energy act that that passed saying you

have to make these applicants meet this

threshold right and so we have been

working to get everyone to meet that

threshold now we can do a lot of

mentorship but we can't drop our

standards we can't cut Corners we can't

do any of those things I think today

people are more prepared and people are

more sober about what it takes to do big

things than they ever have been and as a

result I'm very proud of every loan that

we've made I think that they are going

to be pretty successful but more

importantly I'm really proud of what

they're catalyzing it took about 15

years from our first loans and and the

utilities signing their first Power

purchase agreements with the solar farms

for there to be full Market acceptance

of solar within you know the big money

centers from Pension funds to others

right I think we can cut that in half I

think we can do that in s and A2 years

and you know for all of the executive

salaries that we're burning by asking

tough questions I think if we cut their

time to trillion dollar scale in half

that makes their compan is more likely

to become hugely successful and

profitable but it also means that the

climate benefits faster from that scale

and so I'm proud of the formula that we

put in place and I really think that

it's going to last a test of time

regardless of the president regardless

of administrations I think this is

something that American innovators and

entrepreneurs recognize that they have

to do if they want to be

successful let's talk about some

specific Industries I I I want to go

back to this question in the context of

the Trump Administration but for now

let's talk about some specific

challenges we're facing in

decarbonization so more than half of

alpio's deals since 2021 have gone

toward EV or battery companies and just

last month you announced a conditional

loan to rivian to build their giant mega

Factory in

Georgia what's the state of the EV

Market in America

broadly look I think that these are

superior cars right let's be crystal

clear right if you want a performance

car at an affordable price that's an EV

right and so so I think we entered

office with maybe what like 500,000

vehicles or so sold in um 2020 and today

I think we're four to 5x above that

number so it's been a remarkable period

of growth over the last four years I

think that today uh we are now at escape

velocity on EVs and people now believe

that it's only a matter of time before

this happens I mean both my in-laws and

my uh parents just bought a plug-in

hybrid and they never drive over 34

miles a day and so they are basically

fully electric and they love it and I

think that when you think about where

American innovation is headed right now

I think think we're on track to meeting

the goal of 50% EV sales by 2030 with

EVS that were plug in hybrid vehicles

the EV supply chain is so different from

the conventional you know internal

combustion vehicle supply chain and I

think lpo has invested in nearly every

part of it so can you like talk me

through just the different parts of that

supply chain the battery section the car

the charging Network where do we stand

on on each of those each of those

sections yeah so I think that we're not

done yet but I'd say that you know we

got battery manufacturing right and now

you've got the 30d tax credit and so the

30d tax credit says buy your components

to make those batteries from the United

States right and so lithium processing

graphite processing nickel manganes when

you think about the battery

manufacturing facilities that we're

building now all of them have already

been future proofed so that when those

Next Generation Technologies come in

they can immediately be inserted into

the existing manufactur process there

was a Bloomberg report earlier this

month that China has gotten its EV

battery costs below $100 per kilowatt

hour and that in climate Tech and in the

clean energy World we've been talking

about this $100 per kilowatt hour

Benchmark for a long time as the place

where uh EVs and electric vehicles will

out compete internal combustion cars on

price like this is the mythical

Benchmark that we need to hit it seems

that China has now hit that Mark and if

you look at their EV adoption figures

nearly half more than half half of

vehicles sold every month now are either

plug-in hybrids or or battery electric

vehicles under Biden the Administration

has made a lot of efforts to onshore the

supply chain but how are we going to

compete with the Chinese EV

manufacturing complex that seems to have

achieved all these cost reductions that

like we're not close to yet that's a

complicated question right I think that

we just talked about all of the

technology breakthroughs that we have in

our pipeline that we're not going to be

sharing with China this time around and

that we're going to be manufacturing and

deploying Here China has hit that price

point by bankrupting their lithium

suppliers right and so every lithium

supplier in China is losing money and

they have started shutting in capacity

so like do I love the fact that the cost

of batteries are lower yes of course I

do but do I love the fact that everyone

in their supply chain is losing money

right now not really it doesn't make me

feel like this is a very stable supply

chain that is going to be able to be

trusted to build our next Generation

grid on top of right and so I think it's

important for us to recognize that when

we think about diversification we think

about National Security we think about

global competitiveness but we also think

about like figuring out how to make sure

we have stable companies that can

actually like participate in the private

markets raise Capital do the things that

they need to do to honor warranty claims

to honor all of the other things that we

care about right and I just just I

sometimes think that the solar industry

is the same that we just Champion these

price points without thinking through is

this a price point at which we can

actually build our entire electricity

future maybe but in some cases I would

say no we need to make sure that these

are stable companies that can provide

the maintenance provide the warranties

provide all these things so that you

know we can actually build our entire

modern energy infrastru structure on top

of it what would happen to the

Investments that the B Administration

has made in battery chemistry and

Battery manufacturing and EVS themselves

like the big rivian project in Georgia

if some of these policy supports either

on the manufacturing side or on the

consumer side the $7,500 EV tax credit

were to drop out well look I think that

if you remove any of those policy

supports the question is what do you

replace it with right and so you can

replace it with tariffs you can replace

it with other things

now that is a recipe for making things

more expensive not less expensive but

those are all policy choices people can

make those policy choices but in the end

if these companies go bankrupt what

happened last time is that those

Technologies made their way to China and

so I hope that that doesn't happen this

time around I hope that people recognize

that these are American technologies

that we invented them and that we now

need to make sure that they are

supported so that we can actually make

sure they flourish here in the United

States and then we can export them

around the world right that has been the

industrial backbone of the United States

for decades but you know I think that if

the policy support starts to fracture

well then you know these companies may

end up being companies who are on the

chopping block and those technologies

will go to the highest bidder something

that the bid Administration that Trump

Administration seem to completely agree

on is that what we absolutely should not

do is import a lot of cheap Chinese EVS

which by the way would reduce oil demand

would help our decarbonization goals why

should the US not do that remember that

Autos is one of the largest parts of our

economy I mean it is not surprising to

me that people do not want the big three

automakers to go bankrupt that they want

to make sure that they can make this

transition in a way that makes sense for

workers for supply chains for all of

those people who are employed in those

Industries right and so we have the best

technology in the world our automakers

have the ability to make this pivot but

they're going to need a little time and

so we need to make sure that in these

really important industries that we're

not Outsourcing all of it to other

countries that some of it is a big part

of it is being done here and that

includes steel manufacturing aluminum

manufacturing I think it's important to

our national security for them to be

very

domestic in some ways that feels like

the most classic I think throughout this

conversation you've rejected that some

of these trade-offs exist but this seems

like the most classic trade-off that

there is right in your argument we

should be favoring domestic deployment

of these Technologies over the emissions

reductions of them especially if they're

coming from China it just seems like

you're taking a real hard stand on this

particular tradeoff I'm saying that if

you think about what it's going to take

to decarbonize our grid by 2035 which is

what President Biden has outlined and

our economy by 2050 you have to bring

the American people along with you and

for them importing every single thing we

deploy here in the United States isn't

going to work right that's just not

going to work and so we have to make

sure that this is something that

everyone is cheering about and we can

because we have the best technology in

the world we haven't tried to do big

things in these particular sectors in a

long time but we're doing them now and

I'm pretty sure that when we come back

and talk about this in 2030 or 2031

everyone is going to be looking at

themselves going oh yeah we were a lot

better than we gave ourselves credit for

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one of the big stories of the past few

years in the American Energy economy RIT

large is that Americans and the economy

broadly is using more electricity again

that is often talked about as a

phenomenon of AI that it is purely a

result of AI what do you think is

driving that rise in electricity demand

and how big a deal is it for clean

energy well I think we should start by

saying that the department of energy has

approved so many new Energy Efficiency

measures that we're going to continue to

have Energy Efficiency for as far as the

I can see and I think that's going to

play a major role in meeting load growth

right now but the bigger part of load

growth is not AI data centers you know I

think people want to blame data centers

and data centers are important but a lot

of people want to store their photos

forever of their children right and so

they pay the extra $2.99 a month uh to

do that stuff and make no mistake most

of the load growth in the data center

side is still Cloud AI is coming but

it's not yet the dominant thing that's

going in most of it is light

manufacturing heavy manufacturing um EV

and you know heat pumps and all sorts of

other stuff right and so we have

multiple solutions to load growth but I

think it's important to recognize that

we have just had so much winning like so

many people have chosen the United

States as their place to commercialize

their technology and not just American

innovators and entrepreneurs Japanese

and Korean innovators and entrepreneurs

uh European innovators and entrepreneurs

everyone is choosing America to scale up

their technology and that is awesome and

that's where the load growth is coming

from so as Americans have used more and

more electricity suddenly electricity

prices have gone up companies think

they're going to go up further Microsoft

and Constellation Are reopening uh the

three m Island nuclear plant to meet the

demands in their case specifically of

the AI

industry how is nuclear doing in America

right now and how do you see AI playing

into it well I think we have to take one

step back I think there's a recognition

by all the hypers skill data center

companies that their power Dem is

uniquely harmful to the cost of

electricity and so I think there is a

recognition by the hypers skill data

center companies that they do not want

to pass the costs of their data centers

on to poor people like you know was

happening in the past not that they were

wanting to do that but the utilities

sort of offered them an industrial rate

and so there is an Awakening by the

hypers skill data center companies and

the governors and the public service

commissions and the utilities to say hey

hey wait a second if these guys are

going to cost so much to serve we should

make them pay full Freight and it turns

out that after Microsoft Google and

newor did this massive request for

information and they got and they went

through them allall that nuclear was one

of the cheapest options that they could

pursue to not pass costs on to the rest

of the rate

payers do you see the politics around

nuclear changing right now I think

historically this is something that

Democrats have been more skeptical of

and Republicans have been an

enthusiastic support of this year that

changed somewhat you saw a lot of

battleground Senate candidates from the

Democratic party supporting nuclear

enthusiastically and it's actually from

folks like RFK Jr who are now the bigger

Skeptics of nuclear do you see there

being a a broad shift in how people are

thinking about the politics of nuclear

energy on the grid in the United States

well look I think today when you look at

how much new capacity we need to build

people are saying we need everything

like there is no way for us to meet this

just with solar wind and battery storage

and we will do as much solar wind and

battery storage as we can and we will

still need nuclear and enhanced

geothermal and other Technologies but

more importantly I think the department

of energy has done tons of modeling work

and it shows if you can maintain that

20% nuclear that we've had for many

years it is so much cheaper to run a

decarbonized grid with all that nuclear

and so people are now starting to

recognize that instead of thinking just

about levelized costs of energy you have

to think about the entire system cost

that also includes deploying

technologies that we invented 20 years

ago around grid modernization and

dynamic line ratings and topology

mapping and all the things that we need

to do to get you know 50% more capacity

out of the grid that we already paid for

it also means that like all of these

smart appliances that we've had for 3 or

4 years now where even my humidifier

comes with an app on it you can use that

to connect it to demand flexibility

programs and you can give people a 20%

discount on their bill to allow their

demand to be more flexible so your water

heater doesn't have to heat up that

water right after you finish your shower

it can wait until electricity is cheap

right and that also allows us to make

more of what we've already paid for and

so I think where we are now is people

didn't have to think differently for the

last 20 years today they have to think

differently if they don't then we're not

going to be able to have all this

economic

growth Trump is going to take office

next year and he's indicated and project

2025 indicates they want to undo a lot

of Biden's policies around

decarbonization and clean energy what do

you think is going to happen to lpo and

this current set of

projects I don't think that American

innovators and entrepreneurs have a

political party they want to take their

technology they want to work with their

Venture capitalists they private Equity

firms they growth Capital companies and

they want to build big things and I

don't think any politician wants to send

American companies packing and saying

sorry we don't want you to scale up

stuff here cuz let's make no mistake

American innovators and entrepreneurs

are an Unstoppable Force you cannot say

no to them if you say no to them they

will go to another country and scale up

their Technologies there they will not

be stopped around their ambition that's

why we love them so much they walk

through walls right it is an

extraordinary thing to see and I can't

imagine any politician like not wanting

American entrepreneurs and innovators to

win is that what you hear from the

entrepreneurs and Business Leaders that

you talk to like how are they feeling

about the Trump Administration look I

mean I don't think people love the

tweets I don't think people love a lot

of the rhetoric that's coming out of

people's social media right now but I

think that they're working hard to do

big things in this country right and

they are going to play it out they're

going to work with Governors they're

going to work with all of their

Champions and they're going to try to

make sure that the policy here in the

United States continues to allow them to

raise Equity because remember we're

private sector L government enabled

right and so the private sector still

has to write that big check to build

that facility in nebr Nebraska or in

Kansas or in Georgia or in Tennessee or

in Kentucky and if they don't write that

big check then they're going to have to

go to plan B and plan C and so I just

think that in general these people are

very practical people they just want

their Technologies to be scaled up

there's another scenario in the future

Trump Administration which is that V

ramaswami the seeming co-lead for the

incoming Department of government

efficiency to the degree that such

department will actually exist has has

been really critical of lpo and has said

that some of the money going out the

door should be clawed back can they do

that and what do you make of that I

don't know I mean look I think that we

are making commitments on behalf of the

US government when the government makes

commitments to an outside party that

outside party expects the government to

honor those commitments right I think in

the past all commitments have been

honored I expect in the future all

commitments will be honored right I mean

this is the whole point of trust right

and so if you're worried that after you

get a loan commitment that that

commitment is not real well then why

would you subject yourself to the

process of getting a loan if the

government doesn't keep its promises

then it makes all applicants suffer

whether they're in the preferred sector

or the not preferred sector and so I

can't imagine for a

second that people of any stripe want to

hold back American innovators and

entrepreneurs like they're going to fail

they're going to succeed and frankly we

did not get a lot of blowback for the

other loans that were done in a

different way like you know when they

failed so we're going to have a lot more

failures that is why the government is

supposed to lean in but we're going to

have so many successes and I just think

that that is something that we are so

proud of not just within the Biden

Administration

but the entire American public they love

bragging about how awesome we are at

inventing new stuff and pretty soon

they're going to be bragging about how

we've all scaled it up here I guess I

agree with Americans love bragging about

this but I'm not sure that their love of

doing big things comes through the

political system for instance Biden has

tried to do a lot of big things and

Biden's party just lost the presidential

election and you really think that the

presidential election was all about

energy I don't think it was all about

energy but I don't think it was about

this stuff at all I think Biden made a

pitch to voters that he was going to

bring back a certain type of American

dynamism we saw a lot of that in the

economy and then it wound up not

mattering it seems to me these

trade-offs are pretty important and it

also seems to me that the way that

political parties are set up right now

the set of incentives that they're

acting under are we really set up as a

country to be able to do the big things

that we want and are we going to be able

to get there so let me say this a

different way

we have unprecedented load growth in the

United States right now the tools that

got us here are not going to be able to

solve this problem in front of us if we

don't scale up new nuclear if we don't

figure out enhanc geothermal if we don't

figure out grid modernization if we

don't figure out virtual power plants

then we will not meet this moment and we

will have to sacrifice economic growth I

do not think that anyone wants us to

lose the AI race I don't think anyone

wants us to lose these manufacturing

plants because we cannot interconnect

them and before you say don't worry

we're going to do it with natural gas

you build as much of that as possible

it's not enough and building new natural

gas pipelines to all those plants is not

you know an insurmountable hurdle and so

we're going to need all these

Technologies to succeed we need it to be

able to meet this moment and I just

think that I can't even fathom that any

president would say uh I'd rather us not

grow

economically what is your advice if

there is an lpo next year what is your

advice to that office's director to the

next lpo director there will be an lpo

next year there will be an lpo and we

have 22 active loan applications seeking

$324

billion and

my advice to the next lpo director is

enjoy this extraordinary team that we

were able to build enjoy the amazing

people who have decided to interrupt

their careers and move it here to the

loan program's office and to the

Department of energy and dream big do

big figure out how to help these

American innovators and entrepreneurs

realize their dreams and final question

what are three books you'd recommend to

the audience oh my goodness I was

supposed to be prepared for this um well

you know the book that has forever

changed my life is Nim Nicholas talib's

book Fooled by Randomness I read it

before I started son Edison a long time

ago and it reminds me today that like

all the things that people take credit

for a lot of it was luck and it's

important to figure out Luck versus you

know what you actually did the second

book would be what if we get it right by

Ayanna Elizabeth Johnson and she is such

an inspiring person um I've had the

pleasure to know her for years and she's

really attracted many of the brightest

Minds in the climate movement to really

think through what this looks like and

how this can be you know really a

positive world that we're going into um

CU I really do think that getting this

right is going to be an amazing future

for all of us and then the last book was

I recently read um Romney a reckoning by

I think McKay coppins and I think I

think that when you think about his

journey right and the journey of many

folks who just want to do right by

people who just want to make this place

the best version of what America can be

I just think it's super

inspiring Trier thank you so much for

joining us on the Ezra Klein show today

thanks for having me

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this episode of the Ezra Klein show was

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show's production team also includes

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