The Inflation Reduction Act (IRA) established substantial tax credits for wind and solar power. Trump’s One Big Beautiful Bill Act (OBBBA) eliminated those tax credits. How much damage did that do to the overall trajectory of clean energy in the post-Trump world? A new research commentary argues that the damage was less than many had feared and that the road forward for clean energy is less about restoring those credits than about easing the permitting and interconnection constraints inhibiting renewable energy. Today I talk with author Lily Bermel about the modeling her commentary is based on and the somewhat controversial conclusions she draws from it.
The Inflation Reduction Act, the Democrats’ historic climate bill, was signed into law by Joe Biden on August 16, 2022. Several people I know devoted their lives and hearts to the fight for that bill, at no small personal sacrifice, and I covered its many twists and turns closely. At least in my world, there was enormous elation at its passage, a sense that the US was finally doing something serious about climate change after decades of lassitude, that all the years of frustrating work and heartbreak had not been in vain.
Less than three years, later, on July 4, 2025, Trump signed the One Big Beautiful Bill Act (OBBBA), which seemed to crush the IRA entirely. By then, Trump’s EPA had already reversed many of Biden’s key climate-related regulations, like the Mercury and Air Toxics Standards, and more would fall in 2026, like the tailpipe standards.
All of this violent destruction of their life’s work left many climate advocates in a funk from which they have not entirely recovered.
But a new report that has gotten a lot of attention lately says to turn those frowns upside down. “Glass Half Full: Building a Decarbonized U.S. Power Sector” is a research commentary out of MIT’s Center for Energy and Environmental Policy Research, written by Lily Bermel. She’s currently a visiting fellow at Columbia’s Center on Global Energy Policy; before that, she worked under previous Volts guest Brian Deese at MIT, and before that, worked on John Kerry’s State Department climate team.
The report uses modeling from Energy Innovation to compare what would have happened in the electricity sector under the IRA versus what did happen under the OBBBA. Its basic argument is that things worked out better than many people predicted, that many of the clean energy and emissions gains are on track to be achieved regardless, and further, that there is reason to believe that the incentives Republicans took from renewable energy are not what it most needs to continue growing in present circumstances. Within that argument is a great deal of nuance and some interesting details, so I’m excited to have Lily with me today to dig in. Let’s go.
Timestamps
00:00 – The IRA, the OBBBA, and the case for optimism
03:25 – OBBBA - Why Bermel ran the analysis
05:50 – The headline numbers: 74, 71, 67
08:07 – Deconstructing clean: solar and batteries hold, wind takes the hit
12:14 – The lag analysis, and the 'glass half full' perspective
15:27 – 2.8 gigatons, and losses you can't get back
18:01 – The third scenario, and Trump I versus Trump II
21:49 – What the model leaves out: manufacturing, LPO, loans
23:07 – Interior's permitting campaign against wind and solar
27:22 – The demand surge and behind-the-meter gas
32:15 – Nuclear restarts, geothermal, and clean firm
35:31 – Booms, busts, and the electrification wave
42:22– Transmission, interconnection, and the ceiling
46:41 – Tax credits versus permitting reform
51:46 – Durability, polarization, and preemptive surrender
60:01 – Can enough storage make renewables firm?
66:48 – Grid utilization versus building new grid
70:52 – Final reflections: 2021, and what Bermel would do with a trifecta
Resources
People & Organizations
David Roberts (Substack - Bluesky LinkedIn)
Volts (Apple Podcasts - Spotify - YouTube)
Lily Bermel (LinkedIn - Columbia CGEP)
Michael Thomas (Distilled - Cleanview Newsletter)
Company & Industry News
IRA clean energy gains mostly on track despite OBBBA, says MIT study
New report says Trump hasn’t squashed Biden’s clean energy buildout
Books & Articles Discussed
Glass Half Full: Building a Decarbonized U.S. Power Sector (The report)
Queued Up: 2026 Edition, Berkeley Lab interconnection queue report
Related Volts Episodes
Text Transcript
David Roberts: With no further ado, Lily Bermel, welcome to Volts. Thank you so much for coming.
Lily Bermel: Hi, Dave. It’s so great to be here. Longtime listener, so thanks for all that you’ve taught the climate community so far.
David Roberts: Thank you. Thank you. Well, let’s start. Before we get into the report, just tell me what put this bug in your ear? Why, why did you do this? What, what made you want to do this analysis in the first place? What question were you trying to answer?
Lily Bermel: Sure. I think I resonate a little bit with what you said about people who feel like they’ve dedicated their life to climate change. I was, not one of those amazing thought leaders who led to the creation of the IRA, but rather, have just been deeply motivated by climate and emissions reductions throughout my career and in my life. And so as I think with almost everyone in our community, the 2024 election, but really 2025 was a distressing time. There was a lot of debate, a lot of change in policy, and a lot of real, you know, attack on clean energy. And so, not only were there the emotional ups and downs throughout the negotiation process that led to the One Big Beautiful Bill Act, but I felt a little bit confused after the fact, in just trying to grapple with the question of how bad is this really going to be? And therefore, you know, once you one day have clarity on that question, what do you do about it and how do you move beyond this moment? So for me, that was the question that I sought out to answer, really looking at the world we just left, Biden policy really represented by the Inflation Reduction Act and the power plant regulations, and comparing that to what we now inherited, represented by the One Big Beautiful Bill Act, I’ll call it OB3, without those regulations in place. And so-
David Roberts: Oh, is OB, is OB3 the term? Good. I’ve, I’ve been gr- I’ve been grappling around for some non-awkward way to refer to that bill. I’m gonna adopt that.
Lily Bermel: I say OB3. I’ve heard O3BA, O triple BA. I don’t know. I don’t like any of the names, but I, so I do whatever rolls off the tongue, yeah, fastest. Exactly. And so the question that I was asking was, of the clean energy future that the old policy promised in the power sector specifically, how much will still show up over the coming decade? And that decade’s important because that’s, one, the near term impact, but then also where the next policy decisions will have the ability to influence and change. And so what I found is that for clean capacity, 74% will still show up on the grid, and emissions reductions in the power sector, 67% of those will still occur on average over the coming decade.
David Roberts: Yeah. Okay, so this, I wanna be clear upfront about what’s in the model and what isn’t. So right now we’re gonna talk about what’s in the model, and then once we sort of discuss those results a little bit, then we’re gonna talk about some things that didn’t make it in and how they might influence our thinking about all this. So just to be clear, the model compared not just the IRA, but the IRA plus Biden’s key climate regulations. And I’m wondering, like, that included the tailpipe regulations, also the mercury regulations, most of the big ones. Yes?
Lily Bermel: Yep, you’re right. So the two models include the presence or lack thereof of the regulations, and the regulations in scope for this report are the power plant ones. So that’s the mercury and Air Toxics Standards, the Section 111 power plant rules, and the effluent limitations guidelines.
David Roberts: Right, versus a world with the OBBB and none of those regulations.
Lily Bermel: Exactly. Yep.
David Roberts: Since they all, since they all got nuked. I mean, you said this, I said this, but just to underline it, this is just about the electricity sector, not other things outside the electricity sector, which we might touch on in a minute.
Lily Bermel: Exactly, yep. Power sector only, laws plus regulations or lack thereof.
David Roberts: Right. So 74% of the clean capacity, meaning clean energy built and 71% of the clean energy generation from the IRA trajectory still show up in the OBBB trajectory. Yes?
Lily Bermel: Yep.
David Roberts: And then what happened about, emissions?
Lily Bermel: Right. So emissions in the power sector, the math is quite simple. It literally takes the current policy environment divided by the prior policy environment and looks at it as a percent. And so I see that 67% of the emissions reductions will still occur on average over the coming decade. And the analysis dives into, you know, what technologies are preserved at what share, and, and it’s interesting to see that, the fossil fuel plant is really sticky. And to me, a lot of the emissions increase that happens today is because of the retention of coal, without those regulations.
David Roberts: Right. So you, so there are three buckets you compare. There’s clean electricity—
Lily Bermel: Yeah, perfect ...
David Roberts: There’s fossil electricity, and then there’s the emissions.
Lily Bermel: Yeah.
David Roberts: Clean electricity we just covered on, 74%, 71%. Emissions reductions, 67% were preserved. And then on the fossil electricity score, it is, it is interesting. Talk a little bit about what happened there.
Lily Bermel: Sure. And I think this is almost perhaps where I was most surprised in doing the analysis. I saw that the capacity of the fossil fleets did not really change much between scenarios.
David Roberts: Meaning not a lot, not a lot more built.
Lily Bermel: Right. So the capacity in the OB3 scenario is 4% higher than the prior trajectory, but the composition changes, right? So you have more coal and less gas, so it’s more emissions intensive per unit.
David Roberts: Right. 19% more emissions.
Lily Bermel: So then the 19% comes from the generation.
David Roberts: Or sorry, more, more fossil generation, right, than...
Lily Bermel: And so what that speaks to is, you know, fossil power, fossil fuels are dispatchable and can ramp up or down. And so even though the capacity is more or less flat, it will run for more hours of the day to fill in for the less clean energy that’s built.
David Roberts: Right. And briefly, let’s pick apart the clean electricity bucket because the composition there is really interesting. So solar and batteries retain 80, something like 80%, around 80% of their capacity in generation.
Lily Bermel: Yep.
David Roberts: And wind is down around 50% or a little bit below 50%. So the average there of 70 whatever percent sort of hides the fact that solar and batteries survive quite well, and wind gets hurt quite badly. So can you explain why, what in your estimation explains that sort of disjunct there? Why do solar and batteries prove so resilient and wind gets hurt so badly?
Lily Bermel: Sure, yep. So that 74% is an average, and it represents the aggregate clean number. So in it, you can decompose it to all of those different numbers, basically weighted by the technology. So solar, interestingly, you can break it down between utility scale and distributed, and distributed is, is far, far more resilient. About 95% of its capacity is preserved. And I attribute that to thinking about the, the strength of net metering and other state level policies that—
David Roberts: Mm-hmm ...
Lily Bermel: Enable its deployment. And if we’re seeing rising prices in the utility scale sector, that will incentivize folks to keep building on the distributed side. For solar and batteries, I think those are seeing great cost declines, and the battery still retained its tax credit, so it’s able to benefit from that as well. On the wind side, that, again, you can break out into onshore and offshore. Offshore is so tiny of a pipeline that the model shows that it will probably all get built ‘cause it’s so small, so that’s 100% preserved for offshore. But onshore is the biggest casualty of, of everything. It dips below that metaphorical glass half full threshold. And we only see 47% of its capacity preserved, and I attribute that to, it’s a little bit like wind was already struggling. It was already down and yanking the tax credit was kind of beating it on its way down. A lot of its struggles are it’s extremely transmission constrained. It’s only, you know, able to be built and utilized in a specific region. It doesn’t see the same cost declines that we’re seeing because of innovation from on the solar and battery side, and it’s just, like, more CapEx heavy. It’s a hard technology to manage in that so it was already suffering, and now it’s taken a beating.
David Roberts: Right. It’s basically a measurement of how credit, how much these technologies depended on the credits, on the tax credits, ‘cause that’s the main thing. The tax credits go away, which ones we’re most dependent on. It turns out wind really needed them, solar and batteries somewhat less.
Lily Bermel: Yeah, I would say, yeah, the difference shows the impact of the credits, and then what remains shows the market momentum behind it.
David Roberts: Right. And so one of my questions I had about all this is it seems like there’s been a real effort to spin this report as a positive in the most positive way possible. So like for instance, you talk about this 2.5 year time lag for solar and batteries. Talk, first just say what you mean by that.
Lily Bermel: Sure. I think, yeah. One, first thing I’ll say is the report represents a really specific framing, and the result is very positive. So I wouldn’t say that it’s spin, for one. But number two, on the two and a half year lag, what I did there was, was really wanting to figure out how far behind the current trajectory is compared to what the IRA would’ve put forward. So I was trying to think of creative ways to do it, and I thought of this concept of, of what I coined a lag analysis. And basically what that does is it looks at a given year, so say 2031, and it looks at how many gigawatts of energy will be deployed. So for solar, the Energy Innovation model shows about 333 gigawatts of solar will be deployed. At what point, how many years later, will OB3 reach that time period? And it’s, it’s only two and a half years later. And so for me, again, when I was doing this research, that was much smaller than I thought. And so that doesn’t even equal two and a half years worth of capacity or deployment lost because it’s still being deployed at about, you know, 75% of that high level. It’s just looking at the total levels of deployment and at what point in time will you reach that milestone.
David Roberts: Yeah. Well, this gets a little bit at what I mean, which is that 2.5 year number is the, is the per year average over the 10 years. But if you look, like the report says, by 2035, we’ve lost a cumulative 44 deployment years—
Lily Bermel: Mm-hmm
David Roberts: On clean capacity and 56 deployment years on generation. And like if you look at wind, even the per year average on wind is 11.5 years deployment, all of which sounds to me bad. You know what I mean?
Lily Bermel: Yeah.
David Roberts: Like, like another way of looking at this is we got 30% less of the clean energy than we would’ve gotten and 25% or like even more, like 33% less of the emissions losses, and that seems bad to me. Like those seem like big numbers to me, I guess.
Lily Bermel: Yeah. I mean, you’re right. It’s bad. Any energy lost is bad, and that report does not hide that in any way. Page one, it talks about how Trump’s policies are leading to less clean energy, less investment, fewer jobs, canceled projects, all the like. And so on the lag, right? That was, that was my honesty that, and rigor in the analysis that those lags compound and they add up every single year.
David Roberts: Yeah. Yeah. And they get, and they get bigger and bigger over time is the thing.
Lily Bermel: They get bigger. And just as you asked earlier about the 74% number, you know, how, why is that rosy when wind sucks? It’s, it’s the same thing on this side. Like wind is clearly the laggard and the down weight in all of these numbers, and then at the individual technology level, solar and batteries fare far, far better than wind.
David Roberts: Yeah, and it’s also worth saying, I think that when you, there’s 2.8 gigatons of CO2 is the difference between these two cumulative 10-year difference—
Lily Bermel: Yep ...
David Roberts: Between these two scenarios, and that’s also a lot. And that’s... And, and unlike clean energy progress, you can’t, you know, I’m not telling you anything, you can’t get that back. Like, it’s a cumulative, it’s a cumulative measure how much is in the atmosphere. So all of which is just, this is just me arguing for my natural pessimism, arguing for the glass half empty perspective. Like, it just seems to me like ev- your analysis shows, and as you say, it doesn’t hide it, it says it right in the analysis, that these are big, these are big hits, basically. Even if not as bad as some people might have thought or feared, they are big.
Lily Bermel: Yeah, I’m glad you pointed out that 2.8 gigaton number. That’s the amount of emissions that the current policy scenario will see over a 10-year time period. And actually, right before this, I did the math. That’s equal to about two, like, 2024 sized worth of power sector emissions. So that’s just in the power sector. And again, I focus on that, that 10-year window because to me, it, it highlights that urgency of like, this is real. These losses are real. It’s tangible. You, you know, you can calculate it or estimate it. And it’s also the window that policy can do something about it. Like, this is not 2.8 gigatons that automatically happen the moment they signed the piece of paper for OB3.
David Roberts: Right.
Lily Bermel: This is something that right now, you know, permanent reform negotiations can address, and that next Congress will have the opportunity to address, and the next administration will as well.
David Roberts: Right. None of, none of these are locked in. Yeah, we should, we should say that. None of these numbers are locked in. They’re, they’re out to 2035, so-
Lily Bermel: Exactly ...
David Roberts: We could, we could change this reality.
Lily Bermel: Exactly. And I think one more thing I’ll say about the framing is that any person in the climate community know- knew that the IRA was not enough to get us to net zero by 2050, and it put us within a stone’s throw distance of it, which was really exciting and invigorating. And so, you know, when you know that what is this glass that we’re measuring, it’s, it’s the current compared to the prior, what we have now versus what we thought we had and what made us really excited, and the glass is, is pretty full, more full than we thought. You know, of course there is so much more to do. We don’t just wanna fill up the glass. We wanna do way better than that.
David Roberts: Yeah, yeah.
Lily Bermel: And again, I think that’s pretty clear in the report ‘cause a lot of it’s dedicated to talking to, talking about solutions and how to move forward.
David Roberts: Yeah. And, and I meant to ask this before actually.
Lily Bermel: Mm-hmm.
David Roberts: Why not a third scenario that’s neither IRA nor OBBA? In other words, like, I don’t think anybody thought that none of this clean energy build-out would’ve happened absent the IRA. You know what I mean? So I don’t even know. Is it even possible to sort of estimate that kind of... It’d be a lot of kind of guesswork, I guess. But did you think about trying to include that scenario?
Lily Bermel: Oh, yeah. I, I totally did. And I’ll say that, again, this is in the throes of last year, but I, I mean, I’ve heard this recently from some high-level former Biden, you know, DOE officials, like, a real concern that clean energy was kneecapped. And so I think, yeah, it, it would be silly to think it’s all gone, but I think there is a line of thinking that thinks the majority of things were lost. And so again, why I took that, that specific framing. I asked Energy Innovation, who, that team is amazing. They were really kind in giving me their, their modeling, their data. So it’s, it’s all their work, and I just did some extra math on top of it. But I asked them about that pre-2021 scenario because of course that’s, like, the other counterfactual. And one thing that they told me is that it was built with different demand assumptions, so I can’t apples to apples compare it. It’s like, mathematically illegal, you know? But, but you can kind of reason through, like, what’s the difference between Trump I policy and Trump II policy on paper. And Trump I policy also had zero regulations. Trump I policy also had wind and solar tax credits phasing down, and that’s the same in Trump II. Trump II also has the clean firm tax credits and more LPO funding, Loan Programs Office and, and more. And so you can imagine that on paper they’re a little bit similar, but there is better policy this time around. And then we also have higher demand, which is being a demand pull and an incentive to deploy as much energy as fast as possible.
David Roberts: We’re gonna get to that. So I guess—
Lily Bermel: Yeah ...
David Roberts: You could say Trump II policy is better on clean energy than Trump I policy for the simple reason that—
Lily Bermel: Low bar ...
David Roberts: For the simple reason that Democrats passed a bunch, and they were not able to get rid of all of it, basically. So yeah, as you said, and as, as, as Jigar Shah, as previous chair, uh, guest Jigar Shah said—
Lily Bermel: Mm-hmm ...
David Roberts: If we just went from Trump I to the OB, O triple B, it would look pretty good. It would look, it would look like a pretty strong energy bill.
Lily Bermel: Yep, and, and that comment, I mean, I remember him saying that in the fall, and that’s a little bit what perked my ears up to this originally because he was saying, right, if we only had OB3, we’d be shouting from the rooftops and, like, overjoyed. And Jesse Jenkins too was like, “The Republicans on a trifecta, you know, party line vote just agreed to create investments and spend money on zero carbon technology for a decade.” And that’s incredible. That’s great.
David Roberts: Just not wind and solar. They really just-
Lily Bermel: Just not wind and solar.
David Roberts: They really just hate wind and solar.
Lily Bermel: Totally.
David Roberts: Which I, which I think is just gets to sort of the kind of symbolic culture war aspect of, of, of a lot of it. They just-
Lily Bermel: The sacrificial lamb
David Roberts: They, they just wanted to own the libs. They just took enough of the chunk out of it to own the libs, but, you know, they, they didn’t seem that concerned about the policy per se. Okay. So let’s then talk about a variety of things that for various reasons could not make it into these model comparisons, ‘cause they, like, some of them, they weigh in different directions, these, these things that got left out. They’re interesting to, to walk through, I think. So I think the first thing to say, and this gets back to my, to my glass half empty insistence, which is, which is that it left out all the non-electricity sector stuff, which has left out the EVs, which took the biggest hit, I think, probably like policy-wise were hurt worst. A lot of the clean and manufacturing stuff got hit.
Lily Bermel: Yep.
David Roberts: A lot of the LPO stuff, the loan programs office stuff, the grants, loans—
Lily Bermel: Yeah ...
David Roberts: All that stuff, did not-
Lily Bermel: Yeah. Well, on that real f- on that real fast, I mean, the report’s only about the power sector, so—
David Roberts: Yeah, yeah. Yeah ...
Lily Bermel: You know, it, of course it doesn’t include EVs.
David Roberts: And to say the, the, the, the news out, the news outside of the electricity sector—
Lily Bermel: Yeah ...
David Roberts: Is grimmer than the news within it, I guess is what I’d say.
Lily Bermel: Yes, and I think it is actually really valuable. My, my CGEP colleague, Noah Kaufman, has a really great point about how, you know, when you take such a narrow view, like, a strength of the Biden industrial policy for climate was that it was a whole of economy, was that the manufacturing tax credits spoke to the demand, tax credits spoke to the transition funding for fossil fuel communities. And so, you know, when you look at one, one part—
David Roberts: All of which spoke also, as he said, to the international community and the international dynamic, just the signal to the international community that the US had its shit together was in and of itself a, an important thing.
Lily Bermel: Right. And so, I mean, part of that, right, again, on this beat, like I think it’s, it’s helpful to not then wonder what happened or prognosticate or theorize about the future based on vibes. It, it helps to have the data to point us in the right direction.
David Roberts: Yeah. Okay, so another thing this, that you couldn’t get in the report necessarily is that the Trump administration has not just removed the tax credits from wind and solar, they’re also very specifically going after wind and solar permits in a variety of ways. They’ve sort of launched this- You know, it’s like the negative, it’s like the mirror image. It’s like a whole of government effort against wind and solar.
Lily Bermel: It’s creative.
David Roberts: How... yeah, how big… It’s hard to model, for one thing, because it’s just hard to know, like, what exactly is going on and how much of it’s gonna stick. But, like, what’s your sort of assessment of how big of a piece of the pie? How much worse would that make the OBBB scenario look if you could’ve included it, I guess?
Lily Bermel: Yeah. I think first just to start with, you know, why could it not fit in the model? This, again, was an exercise that reminded me that a model is just a camera. It just captures a moment in time of what we think might happen.
David Roberts: Yeah.
Lily Bermel: It’s not a thermometer, and it’s not a live weather forecast. So with that aside, plus it’s just, like, simply hard to figure out, like, how deep and how intense, and how far-reaching are the Trump administration’s efforts on restricting renewables.
David Roberts: And how are the legal cases gonna settle out?
Lily Bermel: Totally. And the investment environment
David Roberts: Yeah ...
Lily Bermel: and like I think about the July 2025 memo from the Department of the Interior right after the law was signed where they said, you know, “Any wind and solar project that wants to get permitted on public land has to get signed by the secretary” with a 69 line item list of things that they had to check off. Like—
David Roberts: Yes ...
Lily Bermel: Egregious. And now that’s been vacated by a judge. It no longer has legal standing. It’s not in place. And but, you know, there still is an impact of that last year.
David Roberts: But does, but does that matter? Are they gonna follow the law that the judge says? Who know like, who knows, you know? The fact that a judge ruled on it doesn’t even settle the question anymore with this administration.
Lily Bermel: I think, yeah, I mean, the whole constitutional law thing is a whole other other question we need to defer to our lawyers about. But I’ve been at least, comforted and, and yes, on a delay, speaking of a lag. I’ve been comforted that the, the judges have come in and tried to stop actions that are overbearing, far-reaching, or outright illegal, ranging from impoundment to the stop work orders to the wind projects, where all five instances a judge came in and said, “you can’t do that.” Yeah.
David Roberts: Right. Speaking of offshore wind, you know, the, the, the model had all that getting built, but they’re, they are doing their best to scuttle those things or buy off those leases or whatever.
Lily Bermel: Yeah. And so to me, those, those countervailing forces does, do matter, but of course, like, it’s hard to measure how chilled is an investment environment and what impact does that have. I think two things that have helped me think about this, that, like, the near term pipeline is very robust. Like, yes, because of the safe harboring of the tax credits, they’re available. Projects are able to benefit from them if you qualify, you know, by all these really technical standards through 2030, and that matters. And so- I wanna point out that the data that I use is pretty validated by the Rhodium Group, by Jesse Jenkins’ REPEAT Lab. And so Rhodium Group finds that, you know, deployment through 2030 is very strong and robust because of that safe harboring.
David Roberts: Right.
Lily Bermel: And the second way that I’ve liked thinking about it is Alfred Johnson, who’s CEO of, of Crux Climate, who does the tax equity, you know, financing platform, he calls the grid something like light years, where what we see today, what gets deployed this year, was because of construction and permitting decisions made years ago
David Roberts: Right. Right, right, right. So all this, all this stuff Trump is doing now is theoretically will show up 5, 10 years from now.
Lily Bermel: Yeah. So it’s a bull for right now, but then it’s a bear for, like, Trump will have a lingering effect, but on, like, discrete concrete projects. Yeah.
David Roberts: Right. Right. Yeah. So we’ll just say that Trump’s executive branch campaign has some nebulous negative effect on the scenario that is difficult to measure, but that will also compound over time.
Lily Bermel: Yeah.
David Roberts: The other thing that was hard to get in is just this extraordinary surge in demand. Talk about that. Talk about why, what d- what the sort of demand numbers were in the model versus what is showing up in real life.
Lily Bermel: Sure. And can I just add one more thing on the, the Trump executive piece, which is I think it’s also just helpful to remember that Trump’s actions that directly affect projects on federal land is relatively small and distinct from just, like, the general investment environment in our country.
David Roberts: Mm-hmm.
Lily Bermel: Because 99% of wind is built on private land, and 80 to 90% of solar is built on private land as well. And so while there’s certainly, like, you need a FAA approval for every single wind project that gets built, so wind’s kind of screwed.
David Roberts: Yes. Now they’re doing national security ‘cause of drones or something.
Lily Bermel: Totally and the whales. I don’t know. Yeah.
David Roberts: They’re trying, they’re trying to go after the private land stuff, but they, I think they have much less, they have much less reach
Lily Bermel: For that. Yeah. So that’s, like, one of those weird comforting things is, like, oh, they sound so scary, but they can only go so far, but then at the same time, like, it’s bad. Like, why isn’t wind and solar being built on federal land? Like, that’s a whole other conversation, you know?
David Roberts: I know.
Lily Bermel: So anyways, that’s on that. Okay, your question on demand. So I intentionally, conducted the analysis, uh... Actually, the analysis had to be conducted using two scenarios with the exact same assumptions across the board. As time has gone on, you know, since the IRA has been passed and every single year since, demand and our projections for it have just skyrocketed, and of course, with that, the uncertainty about it. And so I think Energy Innovation came out this month actually with some of their, their updated OB3 scenario with the higher demand, and I purposely kept my analysis to ratios and percents just because the gigawatts, the specific numbers themselves were less important. So essentially, the analysis is, is robust and correct because it’s kept within that frame, and I didn’t push it beyond what it wasn’t meant to do.
David Roberts: Right. The demand surge would’ve affected both scenarios equally.
Lily Bermel: Exactly
David Roberts: So it wouldn’t have affected the ratio between them necessarily.
Lily Bermel: Exactly
David Roberts: But, but I think maybe we could say that it would have meant more fossil generation for both scenarios, all things considered?
Lily Bermel: Yeah, I think what we see with more demand means more needs to get built. And then there’s, there’s a, I think a helpful discussion in the report that talks about, you know, how is that more demand being met in the real world? And we are seeing that with behind-the-meter, both gas and clean, you know, the work that Google’s doing with their clean energy parks. But really to me, what it crystallizes is that speed to power has a price that companies are willing to pay.
David Roberts: Yes. This is so important about models. These models kind of run on cost optimization. They’re kind of cost optimization exercises. But the real world is not that.
Lily Bermel: Yeah, well said.
David Roberts: In the real world, these hyperscalers care about speed more than optimized cost necessarily, and speed. Yeah, this was actually my next thing that didn’t get included in the analysis for just… ‘cause it couldn’t be, which is the behind-the-meter stuff, which is, to my dismay, mostly right now gas. Some clean, but mostly gas. Seems like a big surge of behind-the-meter gas happening.
Lily Bermel: Yep, and I’m a big fan of Michael Thomas’s work at Cleanview and his newsletter, Distilled, where he has this amazing project database that’s looking at behind-the-meter gas announcements, which ones actually have commitments from manufacturers for turbines.
David Roberts: Yes
Lily Bermel: Only two-thirds do. And then which ones are actually getting built and which ones are delayed or canceled. So even though there’s like, you know, a big scary number of how much behind-the-meter gas has been built, I think it’s 90 gigawatts, only two-thirds of that might actually have turbines, and then only 2 gigawatts have actually been built so far.
David Roberts: Yeah, I’m sort of, of the, of the Jigar Shah school on this question, which is that I think those projections are... There’s a large element of fantasy to that. I think once people start actually building those, they’re gonna find out that building your own energy grid and operating it is a lot harder than it looks on paper. It’s a lot harder than your little model that you’re, that you, that you came up with on Claude, and that, and that there’s a lot of pieces to that puzzle. I think just a lot of that, a lot less of that is gonna get built than is projected. Yeah. But it would nonetheless add to the fossil side of these projections.
Lily Bermel: You’re right. And off-grid stuff can’t compete, and can’t compete with clean, so we of course want to direct all energy to get added to the grid.
David Roberts: Yeah. Yeah, yeah. Another thing that doesn’t show up in the projections is these nuclear restarts. And I, and I would say maybe I would broaden that to, to, like, the model doesn’t show much clean firm getting built, but there’s some reason to believe that there’s gonna be more clean firm than might show up from that number. And that includes nuclear restarts and maybe some geothermal that’s already under contract. So talk a little bit about that and how you think that might have affected the outcomes
Lily Bermel: Sure. And first on the why, I should point out that a model is also built on other data sources, and so Energy Innovation is able to track behind-the-meter and is able to track clean firm, but because their inputs don’t yet capture it, right, then as a result, their output doesn’t capture it. So I could imagine in a couple iterations of their model, all the behind-the-meter stuff will be there. On clean firms specifically, as we discussed, right now they have a series of assumptions that, to be frank, you know, I don’t know what they are, they set them, it’s their model. But that are about cost and performance. And, you know, they’re, they’re pretty stringent, and as a result, they don’t see a lot of clean firm, be it nuclear, geothermal, hydro, you know, fusion like other stuff—
David Roberts: Right ...
Lily Bermel: Get built in the next decade. But per the conversation about hyperscalers having deep pockets for speed to power. That stuff is happening and changes then the economics of these projects. So we have on the nuclear side, we have three projects that are getting restarted that will add gigawatts of capacity within a couple of years. The Palisades Project, Crane, Duane Arnold.
David Roberts: And that’s within the decade horizon of the, of the model, of the projection, right? So
Lily Bermel: Yeah, and even within, like two or three years. It’s, it’s pretty near term
David Roberts: So that would help on both the clean energy generation side, the gene-- the clean energy capacity side, and presumably on the emissions—
Lily Bermel: Exactly ...
David Roberts: Side, ‘cause you’re not gonna need as much coal running—
Lily Bermel: Yep ...
David Roberts: If you’ve got nuclear, if you’ve got more nuclear, right?
Lily Bermel: Yep. So that’s one tangible thing. The second tangible, you know, bonus plus-up on all those categories is nuclear extensions. I think a lot of these projects are running for 60 years, and we’re seeing them revise their contracts to run for 80 years. So that’s good news. And then on geothermal side, I often point to Google’s framework that they have with Fervo Energy to deliver several gigawatts, I think 3 gigawatts of capacity through 2033. So those are all tangible things, and then the expectation that as commercialization timelines get pulled forward, more will precipitate as well.
David Roberts: Right. So, so the behind-the-meter gas thing might make the glass look a little emptier. The nuclear restarts thing might make the glass look a little fuller. There’s a lot of nuance there in, in, in actual current events that are difficult to capture in the model.
Lily Bermel: Yep. And the report, you know, hopefully lays that all out so it’s, it’s clear. It, it thinks through this. And you know, on net, I still think it will, it will run glass half full, given, you know, it is near that three-quarters mark, but, you know, time will tell, which is what is exciting.
David Roberts: Yeah. Yeah. There are some also medium term rather than short term, kind of medium term factors that are difficult to capture in the model, like how much clean firm will get commercialized whether costs on the clean energy side will continue to decline faster than projected—
Lily Bermel: Yep ...
David Roberts: Which they seem to do.
Lily Bermel: Yeah, every time.
David Roberts: Every time.
Lily Bermel: My, one of my favorite graphs of all time is, like, that solar expectation line where—
David Roberts: Yes ...
Lily Bermel: Every single line is more steeper and steeper and beats out expectations every time. It’s so great.
David Roberts: Yes. A very, I’m very familiar with that graph, and makes me wonder why modelers, you know, keep doing it. But, but you know, maybe medium term we can rely on that. There’s intangible, but a real thing is, and this has proven true in the past too, I think, when the clean energy industry goes through a contraction like this or a blow like this, they kind of tighten up. You know, they kind of, like, improve, they get more efficient, they get more resilient, and maybe come out of the other side of that a little better off in terms of just, like, having their stuff in order a little better.
Lily Bermel: Yeah.
David Roberts: I don’t know how you’d measure that.
Lily Bermel: Yeah, I was gonna say, I, um, I was doing some presentations on this work in the spring and, and had a longer section in my presentation about this that I slimmed down for the report, ‘cause I’d rather an economist give me some pretty explicit definitions of booms and busts and whatnot. But my sense is that in, in these capital intensive and cyclical sectors—
David Roberts: Mm-hmm ...
Lily Bermel: Busts are bound to happen at some point.
David Roberts: Yeah, yeah.
Lily Bermel: And, and the boom is always bigger than the last time. And so one perspective that I, I mean, I remind myself is that 2021 was such, like, a euphoric, frothy moment in the clean energy market. Right? Like peak woke, zero interest rate— so much excitement, like, so much investment ready to go into this sector, and then all of a sudden, like, inflation surge, interest rates got super high and stayed high for a long time. And so I think expectations versus reality, there was already a tiny mismatch there. And then when you had Trump come in, like, then you have a series of politically induced headwinds, which, like, are yucky and sticky and gross.
David Roberts: Mm-hmm.
Lily Bermel: And that just, like, makes the bust part feel so much worse. But, like, at some point, a bust was bound to happen, so, you know, at some point the boom is going to happen and, and it will surely be better than the last one.
David Roberts: Yeah. And, and one final medium term thing that’s difficult to quantify is—
Lily Bermel: Yeah ...
David Roberts: There’s some reason to think that this extraordinary demand growth—
Lily Bermel: Mm ...
David Roberts: Could help clean energy, could help boost the ratio of clean energy. Talk a little bit about that maybe, that dynamic.
Lily Bermel: Sure. I think we’re seeing the fastest energy growth since World War II, and this is a really unique moment where all hands on deck, we need as much energy as fast as possible, as cheaply as possible, getting added to the grid. Clean energy right now, the latest Lawrence Berkeley National Laboratory numbers from their 2026 “Queued Up” report is that 90% of what gets added to the grid last year was clean. And so if we have more pull on that demand, like more need for those additions—
David Roberts: Mm-hmm ...
Lily Bermel: That will, that is such a strong incentive for clean to continue happening. And so I think the boom from data centers and from AI, which is the near term stuff that we’re seeing and is all that’s being talked about, is what’s happening right now and causing that demand pull. But what’s really helpful to think about is that the demand from electrification, clean electrification, which we love-
David Roberts: Yes this is such an important point
Lily Bermel: Yeah, from EVs, from heat pumps, from buildings, from all the forms of decarb and electrification, that will end up being just as big, if not bigger, than the demand pull from data centers right now. And so, like, thank God that right now the demand growth that we are seeing is from customers with massive pockets who want to pay and are willing to invest in our grid. Like, literally, thank God.
David Roberts: Yeah.
Lily Bermel: And we can do so much better and, like, really utilize this moment because when the next wave of demand comes, we’ll be in a better place, and we’ll have grown such that we can, you know, run through first base.
David Roberts: Yeah. Yeah, yeah. This is, I, this, it’s a point I make on the pod over and over again. Thank you for making it again. Like, whatever you think about data centers, there’s a giant wave of electrification coming in behind it.
Lily Bermel: Mm-hmm.
David Roberts: We need lots more electricity. We need lots more grid. We need to think about this whole thing a lot more. You know, don’t get obsessed about AI to the point of forgetting, forgetting that this is all, this all matters regardless.
Lily Bermel: Yeah. And I think that’s something also just about, like, the concept of policing load growth, like good versus bad load growth. Like, one could think that the load growth that’s coming later is good. It’s from decarb purposes electrification, but, like, it’s gonna happen regardless, and so let’s welcome it and let’s prepare our grid to be stronger and bigger and build more. Like, that’s a great challenge.
David Roberts: Yeah, I think what maybe not everybody, but I’m sure you and I agree on, is—
Lily Bermel: Yeah ...
David Roberts: The scenario we want eventually is for a big enough and robust enough and abundant enough grid that we can, we can use all, all the energy we want. I know, I know—
Lily Bermel: Love it
David Roberts: A lot of, a lot of my maybe fellows in the environmental movement, uh, don’t necessarily share that perspective, but that’s certainly a perspective I take.
Lily Bermel: I think that’s the American dream right there. We want enough energy to power economic growth and prosperity, and do it in a decarb way. Beautiful.
David Roberts: Yeah, and like, and like even aside from industry and transportation and heating and cooling, you know, maybe we want to like desalinate the oceans. Maybe we want to like rewild the deserts.
Lily Bermel: Yep
David Roberts: Maybe we want to send Elon Musk to Mars, you know?
Lily Bermel: Totally
David Roberts: Like all, all these things.
Lily Bermel: Let’s do it all. Yeah.
David Roberts: Who knows if we have an abundant, abundant power system, I’m sure we’ll find lots of pro-human ways to use that power if we got a bunch of it, you know, that we don’t even know about now. Anyway.
Lily Bermel: Yeah, one, one more plug I’ll put is the report kind of has that through line of building is the answer. Like, we need to build our way through, to decarbonization, to the end state. And when you think about, and sorry if I’m jumping ahead a bit, but if you think about two goals of like we need to build more clean and, and fill that glass all the way up and spill it over, like you need to build more wind and solar and batteries. And if you want to decarbonize and get rid of fossil fuel emissions, you need to build clean firm. And like the only solution is build, build, build.
David Roberts: Yeah, we’re gonna get into that much more in a second. But one, the one final thing which might be an X factor for the results of these models in the next 10 years is transmission and interconnection. Right now, you say, and I think there’s good reason to say this, you know, Jesse Jenkins’ modeling shows this, common sense I think tells this, that there’s some reason to think that even the IRA projection would not actually come true, because for it to come true, you have to build, you have to make permitting easier, right? You can’t block it all, and you gotta build a bunch of transmission to make room for it on the grid.
Lily Bermel: Yep.
David Roberts: So there’s some reason to think that both scenarios should be a little bit more glass half empty given current transmission and interconnection restraints, right? But the flip side is, should we get our shit together and reform those— both scenarios could be higher, right? That the glass could be much fuller if we actually got our stuff together. So just maybe like spell that out a little bit, the sort of like the ceiling, as you call it, for current clean energy deployment.
Lily Bermel: Yep. Um, going, writing this report made me really appreciate like the literal ceiling that exists and how much energy can get added of all types at any given point, and how fast it can be, and that’s due to this like massive gauntlets and all the barriers that it... How long it takes to get permits and find a site and connect to the grid and construct a project. And the model itself actually does include this in its construct. It has a literal cap on how much energy can get added. So the model reflects that, and yes, if you lift the cap, you know, the results would be a lot better. And so Jesse was someone who, right after the IRA was passed, tried to put a number on, on how bad it is, and he found that 80% of the 2030 emissions reductions from the IRA would be totally lost if we could not build transmission any faster. And the sad reality is that we’ve been building it slower ever since that report came out.
David Roberts: God.
Lily Bermel: And then John Bistline, who’s another modeler, he put out this great paper in Nature with a lot of folks, a lot of different groups, and they compared every single IRA model, and what one of the things I found most interesting about that report was that later assessments of the impact of the IRA had dimmer and dimmer outlooks because people began to appreciate this concept of the ceiling and the transmission constraints a lot more.
David Roberts: Yes. But those are not technical restraints. Those are political and regulatory constraints that theoretically policy could ease, theoretically.
Lily Bermel: Yes.
David Roberts: Okay. So, so- Maybe this is difficult to answer, but just like taking into account all the things that were not really modelable, that were sort of exogenous to the model or that are, you know, all the other factors, do you think all those other factors increase or decrease your net, the net level of the glass as long as we’re using that, that metaphor?
Lily Bermel: Sure. Yeah, I mean, in the report I, I take the time to really spell it out across different time horizons, dig into both the good and the bad news and, you know, I come out still glass half full. I think the demand pull that we are seeing is really massive and really important to delivering clean energy. It comes with it the hyperscalers’ deep pockets to pay, it comes with it an urgency to build more and faster. And then, right, there’s literal gigawatts and gigawatts that I enumerate in the report of what will actually get added in the coming years that are plus and, you know, I’m, I’m hoping that that will offset the behind-the-meter gas that we’re seeing. So I still think it’s, it’s glass half full.
David Roberts: All right. Let’s, let’s move on to a couple things that I kinda wanna argue with you about even though I agree with you.
Lily Bermel: Okay.
David Roberts: If that makes any sense. I find myself in this position more and more often. Uh, could just be that I’m getting cranky and old. But first is, um, you argue that Democrats should get their act together and push for permitting reform and push for more transmissi tally agree with that. They should do that. But in the process of making that argument, you argue against pushing to extend the tax credits. And before I say anything about that, why don’t you just say what’s your political economy thinking behind that?
Lily Bermel: Yeah. This is a fun discussion, and I’m glad we’re gonna dive into it. I think first, an important clarification is that the report does not view any, you know, policy scenario as mutually exclusive. Like, if you do one, you can’t do the other. Rather, it’s an attempt to shine light on the different policy levers to figure out what they are, how they work, how effective are they really. And so—
David Roberts:You’re trying to prioritize, I think, which is, which is God’s work. Like, it’s, I think Democrats don’t always do that, so.
Lily Bermel: Thank you. Yeah I think, right, so now’s the time to think about the strengths and the weaknesses of these policies, which encourages conversation about can you design it better, what’s most effective? Like, what is worth spending our money on? Because there will come a point in a few years where, like, the leadership in Congress will meet with the 50th senator once again, and they will say, “How much are we spending? Where and why?” Let’s, you know, have some good conversation now and think it through. But it’s of course not taking things off the table or any of that. And so in the category of, like, how do you build more clean, the clean stuff that’s most at hand right now is that wind, solar, and batteries, ‘cause that’s what’s getting constructed the most. And so the two core levers are permitting reform at the federal level. The two core levers at the federal level are permitting reform, comprehensive bipartisan compromise, and the tax credits that the Republicans put on the chopping block. And so the political economy argument you started there, is both thinking about, like, what is more durable, and how much does it cost, and like, you know, how triggering is it, I suppose. And so on the permitting reform, like, it can only get achieved through bipartisan compromise, and it costs $0. And so permitting reform, I’ve loved thinking about it recently, is, like, free money. Like, it costs no fiscal space, and then it will lower the cost of projects because they will not be delayed as often or canceled, and it will take less time to build. And so, like, that’s free money in some ways that we can pick up versus the wind and solar tax credits have, you know, a sizable bill that comes with it. They’ve existed for almost 50 years, since its inception, and always extended on a bipartisan basis, bipartisan support, which is really cool. And then as we discussed, it was, like, the sacrificial lamb for the Republicans right now. And so to me, like, it’s not just taking that fact in isolation. It’s also recognizing that, like… Right like there’s so much antipathy against renewables that has far predated Trump, but this was like another arrow in their sheath that was like, you know, wind and solar get free handouts from Daddy Biden, and like Democrats are out here saying that clean is the cheapest thing on earth, yet they need to be subsidized. Like they’re pointing out the incoherent politics of it all. And you have Republicans who will acknowledge that they are against transmission because of the slush fund that being able to build more would unlock if you have those tax credits in place. And so recognizing that, but then in conjunction with data that shows like, wow, these technologies are mature. Like there’s 50 years of US policy and then decades of policy in China and Germany that have driven down the cost. Like we’ve done such a good job as a planet and as a country supporting these two technologies that Trump can try to kneecap it and can’t.
David Roberts: Hmm.
Lily Bermel: And like that is so promising to me of their viability that it’s not just some like emissions reducing target that like some people like, that it is something that overwhelmingly is getting added to the grid, even when there was no policy supporting it to do so. And so in that light, it makes me think, I mean, this is at a really high level, and we can jump into the weeds on it. Like, oh, like they do less perhaps than we thought they did a few years ago, and there’s other first order policies that might make a bigger impact, and there’s still like other things we need to invest in and spend our money on. So in terms of prioritization, like maybe other things are worth prioritizing the next time around.
David Roberts: Right. I guess the only thing, and this is, this is just one of my hobby horses.
Lily Bermel: Sure.
David Roberts: Is the only thing that bugs me is this notion which, not necessarily from your, certainly not from the, so much in this report, but I, I hear this a lot in energy circles, which is, “Well, Republicans have polarized this, and if we do it, they’ll just undo it next time they take power, so it’s not worth doing.” And I just find that kind of, sort of like DC brain so poisonous because you are undercover of being savvy and realistic, just more or less explicitly allowing your political opponents to define the space of what’s permissible and what’s allowable. And like we can’t really take that literally, right? Because like if we restore abortion rights, they’ll just try to undo those next time. If we, you know, voting rights, like name it. Like they have shown that they wanna undo most of modernity. Are we just gonna say that like, “Oh, well, if we try to restore modernity, they’re just gonna undo it next time we, they take power, so it’s not resilient or not durable, so we gotta give up on that”? Like it can’t be that we’re formally allowing them to define the space of the possible, right? You see what I’m saying there?
Lily Bermel: I do, and I, and I like your abortion example, and frankly this is something that I think about often. And our country is very burdened, let’s say, by the political pendulum, and we will have, my guess is, you know, a series of one-term administrations back to back to back going forward. And so of course it’s about taking a few steps forward, you know, getting, taking a step back and continuing that process. But I think for me what really stands out is that there are so many reasons to do what you and I think of as climate solutions for non-climate reasons.
David Roberts: Mm-hmm.
Lily Bermel: And honing in on that and, like, exemplifying that and elevating that builds more support and increases durability.
David Roberts: Hmm.
Lily Bermel: And so I think about, like, when the IRA was passed, for example, we were so excited because of the promise that it had, and looking out at a 10-year horizon and all that it could do. But if we knew it would only have lasted a couple of years, you know, its impact is immediately hamstrung by how long it can last.
David Roberts: Mmhmm.
Lily Bermel: And so to me, the best decarbonization, well, the fastest decarbonization is the best. And it happens via what is politically viable in a given moment and has the chance at lasting. And so to me, the strongest climate policy is the one that can last and deliver durable, consistent decarb results instead of, like, a jump forward that, you know, by the time the IRA happened and guidance was out and there was a, a boom in investment and deployment right away, but you only had a year or two of impact, and then it got cut back. And so I would love to see something that is a bigger amount of impact for a longer period of time. And then now we’re in a moment where, like, wind and solar seem to be pretty self-sufficient in a really comforting way, right? Like, that’s not a bad news story. And meanwhile, there’s these other technologies that need to get commercialized that, like, Republicans support. They kept all the policy on the books for them, all the investment. And like—
David Roberts: Well, for now. I mean, well, this is, I mean, this gets to another point, like—
Lily Bermel: Mm-hmm ...
David Roberts: Transmission.
Lily Bermel: Mm-hmm.
David Roberts: Like, what if instead of taking Republicans at their word that they just want economically rational policy, what if instead you look at their actions and you’re like, “Oh, they just hate clean energy and they love fossil fuels,” and if they get wind of the fact that more transmission will net-net benefit clean energy, then they’ll turn against that too, which we, as you say, we’ve already seen some of that happening. Like they can, they might say we’re turning against transmission because clean energy gets all these credits, and it’s just gonna build out a bunch if we build transmission. But then if they find out, if they read your report and they find out, oh, clean energy’s gonna get built out regardless if a bunch of transmission gets built, why wouldn’t they just polarize against that? And then boom, that’s not durable. That’ll get undone next time they take power. So does that, are we gonna take that off the table too? You know, what are they, are we gonna let them define that out of the space of the possible too?
Lily Bermel: Sure. I think two things. One, I would be very impressed with myself if the Republican, uh, machine took my report as the reason to not do wind and solar. I think there’s, there’s other problems if somehow my report does that, number one. Number two is that this shows, like again, wind and solar is 90% of what gets added to the grid. Like, it is not in anybody’s interest to take that 90% off, as one thing. The third is that as we know, we want to fill the glass and do a lot more than that. But I think this whole thing of like transmission helps renewables is not a secret. And I think about, you know, I’ll, I’ll point out explicitly that Travis Fisher, who’s one of the most influential people on grid policy at, uh, on the center right, he testified in front of Congress this year that the phase down of the wind and solar tax credits has made him come around to transmission. And so ironically there we see like the counter polarization is tangible and not just some like conspiracy theory or fear-mongering or like us shooting ourselves in the foot preemptively. And so I think it’s worth thinking through like there’s a deal space, and there are things that are bipartisan, certain technologies, certain policies, and of course like we should still do things on our own that are ambitious in our own unique ways in, in attempt that, you know, three steps forward, one step back. Like it, it’s, it’s a multiple all of the above approach there.
David Roberts: Yeah. And I, and I would just say, and then, and then I, and then I’ll let this point go like—
Lily Bermel: Sure ...
David Roberts: I’ve seen many times over my career the sort of technocratic DC liberal establishment take these think tank right-wing guys at their word that like, “Oh, dude, we just want some technocratic tweaks in this policy so it’s more economically rational.” And you’re like, “Oh, then oh, we can, we can, you know, we can deal with these people. We can compromise with these people.” And then when they take power, they don’t just do the little technocratic tweaks. They, they use a, a sledgehammer, you know, to like crush the whole thing. Like Travis Fisher is not representative of the right-wing coalition now, which is full of like maniacs. He’s, you know, he represents a right-wing think tank. Like what armies does he have? What MAGA politicians are coming to him as opposed to just saying, “How can we hurt the left? How can we hurt what the left likes?” Like that’s how they behave when they get power. They don’t put people like Travis Fisher in charge when they get power. When they get power, they go nuts.
Lily Bermel: Yeah. On that I do think for those technocratic changes are not the recommendations Republicans are touting or purporting that they’ll do on their own in a trifecta for one. But two, I think it just speaks to policy design and how can you do it in a way that makes it harder to undo. And so, right, like I think that all the stats and the math that my report shows and demonstrates, which strengthens the case, but even that aside, like the IRA, there was no sledgehammer taken to it. It was a scalpel, right? Every single tax credit was preserved in duration and in amount except for wind and solar. You applied the FEOC restriction, and then they removed a lot of the grants, and they kept the Office of Energy Dominance Financing office, which does a huge amount of work on the loan side as well. And so they did take a scalpel to it, and it’s in their interest to make it seem like they completely squashed it all.
David Roberts: Well, they squashed the EV parts, they squashed the grants and loans.
Lily Bermel: So back, back, back to the power sector as our, as our scalpel.
David Roberts: Yes, yes. Well, we’ll see. All right. So moving on then.
Lily Bermel: Yeah.
David Roberts: The other point which I agree with you on and wanna argue with you anyway because I’m perverse like that, is your second... One of your recommendations is, and this is the other big one, is we should invest heavily in commercializing clean firm technologies. Which again, I agree with. Hip hip hooray for doing that. But in the process of arguing for that, I feel like you’re a little more pro-gas than I am comfortable with on this score. And one of the things I wanna ask is, like, I see a consensus forming in the DC Borg, the Searchlight people, the Breakthrough people, all these people that, that, that wind and solar and batteries are, like, good for satisfying new demand, but they’re not firm, and furthermore, can’t be firm, that there’s some essential difference between them and firm and clean firm technologies that can never be bridged by renewables and storage. And I guess I just don’t... No one’s ever been able to explain that to me in a way I can understand. I get that renewables with 4-hour batteries specifically can trim peaks, right? And they are trimming peaks. They’re trimming peaks visibly in Texas and in California and South Australia, like, not nothing. They’re reducing the amount of natural gas needed, natural gas generation needed in those places. But we have 8-hour batteries already semi-commercial. We have continued cost declines in batteries that might make further durations viable. We have other chemistries coming online, sodium-ion. We have-- I just did a, I just did a pod, it hasn’t come out yet, about these new anodes made of silicon that boost energy density by 5x. There’s long-term storage coming online, and I guess I just wonder, like, if you get enough storage, why isn’t it firm? Like, what is the firmness of natural gas that sufficient storage can’t get renewable energy to? Does that make sense? Does that question make sense?
Lily Bermel: It does, yep. I mean, I think you outlined some of it right now. What we have on hand is 4-hour batteries, and that’s insufficient to provide around-the-clock reliability. And I think, I mean, I think I’m more bullish on, on 8-hour batteries in terms of their promise. We need to commercialize that. And the thing about batteries is that it, like, shifts the time of generation rather than making it dispatchable. Like, at any time, power can come from it. You have to charge them up first. So there is a distinction between batteries and the storage that it provides and the, like, around the clock, always available stuff.
David Roberts: Well, let me stop you there. Like, why like, if you build enough solar, right, you had this enormous excess—
Lily Bermel: Mm-hmm
David Roberts: During the day, which right now is a lot of it is just getting curtailed all over the place. If you can fill enough batteries up with that, then it will be there whenever you call on it in any way that seems meaningful to me. Like, why wouldn’t it be there whenever you call on it if there’s enough excess and enough is stored?
Lily Bermel: Yeah. I mean, I, I would love to see numbers that show that, like, solar and storage can power everything. And I think some of the constraints are, like, back to the transmission and back to land. Like, do we need to build a solar farm the size of Manhattan to power the data centers? But, oh, yes, that’s possible. You know, you just need the storage to do it. Like, no, you’re constrained by land and other things as well. And I just, I highly doubt that 4- and 8-hour storage will be able to do it. But, like, I mean, per the, like, these aren’t mutually exclusive. Like, clean firm is something that is happening within this decade and is a really rich opportunity. And again, for more than just climate reasons, like, this is a massive American export opportunity. This is a beautiful opportunity to transition fossil fuel communities in a way, uh, toward clean energy. And it’s innovation, it’s exciting, and it’s really great, uh, rich power opportunity. And so, like, there is a difference, I think, between fully getting to supplant or substitute fossil versus just reduce its generation. And that was a theme running through the report is this concept I coined, like, shallow versus deep decarbonization and getting at how that happens.
David Roberts: Yeah, that’s, that’s what I guess I don’t fully get. Like, I just don’t know why there’s some ceiling on storage that makes it intrinsically shallow. You know what I mean? Like, right now it’s only reducing fossil fuel generation, but why not if there’s more and more and more and more of it, won’t it eventually eat into fossil capacity? Like you say, for instance, you say even in 90 percent renewable scenarios, you need some gas. And I’m just like well, yeah, fine. Like okay, but is that what we’re talking about? Are we talking about a 90/10 ratio? Because if that’s true, then I don’t see the impetus for building a bunch more gas. Like if we want, if we’re aiming for a scenario where there’s 10% gas, you’re just gonna have a bunch of gas plants sitting around that don’t run most of the time.
Lily Bermel: Yeah.
David Roberts: It seems like we already have enough gas for that.
Lily Bermel: Yeah, we do have enough gas, which is why the models don’t build more gas, ‘cause, ‘cause it’s able to ramp up and down. But I mean, I’m excited to listen to your podcast with these battery people to learn more. Yeah. And I also think there’s some fantastic academics who do a lot of the like what do stranded assets mean and look like, and how do you get to that point? So that’s kinda stuff that I don’t really dip into at all in this report. Just because solar and storage and wind has the opportunity to power a high percentage of the power grid does not mean that you don’t work on that last percentage and innovate there at the same time. Like—
David Roberts: Sure. Sure.
Lily Bermel: To me, it’s an eggs in basket thing, it’s a timeline thing. Like right, it doesn’t make sense to start on the last 20% only when you reach the 80% threshold line. And I think there’s some... I mean, you can look at data within energy markets and see that variable renewable penetration right now, like the average it sits around 40% across all these grids, and it can surge and spike up to 70 to 90%, but that’s not a sustained level. So right, we’re tackling a whole bunch of stuff at once, like increasing that penetration at a sustained level, innovation to get that last percent over the line.
David Roberts: Transmission obviously a huge—
Lily Bermel: Yeah ...
David Roberts: Piece of lifting that ceiling, as we say.
Lily Bermel: Yeah. Like, there’s so many things to solve at once. And it’s worth doing them all.
David Roberts: Okay. One other thing, which is, that’s been bugging me, is people who are advocating for building a lot more grid, doubling the size of the grid, which again I’m all for, doing that by way of diminishing the contribution of better grid utilization, and this is a very hot topic now that’s, that’s, that a lot of people are talking about.
Lily Bermel: Yeah.
David Roberts: And I think in the report, you call better utilization marginal relative to what we need, and that just raised my hackles slightly. Like, you have, like, Brattle out there with studies saying that there are, like, 200 gigawatts of unused capacity floating out there on the US grid. That seems like a lot to me. That seem, that doesn’t seem marginal to me. And I guess, like, in the spirit of doing everything, why shouldn’t we pursue utilization with all our might even as we are building more grid? Like, why do we, why do we need to dismiss the contribution of, of utilization?
Lily Bermel: Sure. I think while I call it marginal, I also describe it as, again, free money and worth pursuing rapidly and with urgency. When I worked for Brian, we were doing research about policy opportunities to increase the speed and quantity of these grid-enhancing technologies on the grid and in markets and looking at the utility business model and, and all of that jazz.
David Roberts: Mm.
Lily Bermel: So totally worth doing. I’d say that the JPMorgan report by, oh, what was his name? Cembalest, but his first name... Hmm. Oh, Michael.
David Roberts: I could be getting my reports confused. That’s fine. There’s so many reports, Lily. You know this. You know the report profusion.
Lily Bermel: Yes. Yeah. Might be problematic in its own right. But I’ve seen a report that quotes about, like, up to 40 gigawatts of demand flexibility capacity here in the US today, and maybe sure, some, some of that amount more to come. If we need to be growing the grid by, like... A, a doubling of the grid would be 1,300 gigawatts. So if we have... I mean, you’ve cited 200 gigawatts of extra capacity available on the grid. That’s just 15%. For demand flexibility, you know, that’s only a couple percentage points, and so it’s just in scale to what it can contribute and the amount that a building that really needs to happen. So not to diminish what it can do, needs to pursue it at all costs. It just simply can’t replace building, and that’s a fact.
David Roberts: Yeah. Yeah. I get it. It’s just that in the short term— there are these constraints on wind and solar that we are bumbling our way toward trying to lift. And while we’re bumbling—
Lily Bermel: We are bumbling, yeah ...
David Roberts: You’ve got a bunch of tech guys out there pushing and pushing and pushing to build gas in the name of speed to power. So all I’m saying is you got utilization that could do what that short-term gas is doing as you are trying to raise those long-term constraints on wind and solar. I just want to avoid a big short-term gas build out, basically is what I’m, is what I’m about.
Lily Bermel: Yeah. I’m about that, too. And, and I think pushing for utilization and demand flexibility is important and great, and, like, can’t wait to see more fruition of that come to pass, right? It’s still, like, a relatively novel thing and, right? I don’t know where the demand centers are being, data centers are being built versus where that capacity is on the grid and the technicalities of how you reach all that. But I hope it’s happening and, and hope it can come to pass.
David Roberts: Well, talk about difficult to model is utilities getting o- you know, getting over themselves and, and, and getting serious about this. Who knows how to model that? You would’ve thought it would’ve happened by now.
Lily Bermel: Yeah.
David Roberts: Okay. Well, we mostly out of time, but I just wanted to do a couple of final things. One is, pulling the lens back, this is I think a useful frame. You talk a lot about how the IRA was passed in a particular set of circumstances, not just technical circumstances, but political circumstances, political economy circumstances, economic circumstances, and now we face a very different set of circumstances, and that should inform how we approach policy today. So maybe just take the camera back and, and, and talk about that on the, on the sort of broadest level.
Lily Bermel: Sure. I think about both the last six years of climate policy development, but then also, you know, the past 20. And first, uh, the consensus in the climate movement was that you needed to tax carbon. That’s the best policy to do, and we tried that several times, many times, and of course it never came to pass at a federal level.
David Roberts: They’re, they’re still in my inbox, Lily. They’re like the, the soldiers on the Japanese islands that, that didn’t hear about the war ending or whatever. Like they’re, they’re still out there.
Lily Bermel: You know, and I, I respect they’re committed to their principles and their values and their priorities. But then like I mean I think it’s beautiful the conception of like make clean cheap and industrial strategy, and incentivizing innovation and deployment in the demand side and manufacturing. And so there was able to be built a political coalition to make it pass. A lot of people spent years developing the policies, including, uh, the Energy Act of 2020 that happened during the Trump administration, and bipartisan work that, that happened to lead up to the IRA, created a lot of the authorizations that then the Biden Infrastructure Law and IRA was able to appropriate and fund, which is a cool part of the history. But then I look specifically at like 2021 as a window, and it was a Democratic trifecta— interest rates were zero. Like, the administration was prioritizing jobs over inflation, and there wasn’t much room for climate bipartisanship. It was like peak woke era. And with that came a law that was built and sold as, like, man’s greatest climate law, and it, it is on paper. It’s the best climate law America has had. But then it got attacked that way, and now almost all of those conditions are, like, completely inverse, where cost of living and affordability politics is the name of the game. We have a massive demand growth that we did not see at the time. You know, geopolitical competition over this stuff has increased, and interest rates have stayed high. And so... And we’re in a Republican trifecta, more polarized than ever, et cetera. And so I think as a result, like, just simply looking at, like, the color of the room that we walked in in 2021, it’s decorated really, really differently this time around. And so to me, that’s, like, the first obvious sign that the next Democratic president should not try to redesign the room and decorate it, you know, the same way as what we had in 2021. It’s just a different world.
David Roberts: Yeah. The only thing I would add to that, and this is again just grinding my personal axis, which is like I, I have seen so many cycles of this over my life of like Republicans come in, spend all the money, right? Jack up the deficit, break everything, and then Democrats come in and have this reasonable conversation like, “Well, everything’s broken now, so we have to, so we have to, you know, trim our policy ambitions ‘cause they broke everything.” And I’m just like, well, they, they took all the money and gave it to rich people. Democrats could, if they got real ambitious, take it back. You know what I mean? And like they broke all our scientific research and they broke LPO and they broke all these institutions. We could rebuild those things. Like we could remove these barriers that are holding clean energy back. Like I just would like to see a little bit less, “Let’s be reasonable given these constraints they placed on us,” and a little bit more, “F these constraints. Let’s be ambitious. Break the constraints and like try to, try to win rather than just accommodate.” You know what I mean? I just wanna see more ambition, Lily.
Lily Bermel: I, I want ambition too, and I think I, I translate ambition to results. Like I want results more than I want ambition. So to me, it doesn’t matter how colorful or massive or large a climate law is if it’s only gonna last a couple years. So I care about durable, consistent results, but agree that like we should not do performative austerity, like make it a fetish for every bill, or accept the framing that all spending is equivalent, or put ourselves in traps. But it’s possible to design policy in a way that doesn’t cost as much, ranging from permitting reform that literally is, is not a tax policy to just like the methane fee I think is pretty underrated, that it was able to survive because it has revenue sources beyond 10 years and like therefore you can’t just repeal it that easily, and the Republicans had to figure out some other legally creative way to do so. So I think there’s a lot of ways to have ambition, but most importantly, like as someone who cares deeply about climate and about climate mitigation, like to me ambition is are we actually doing it or not?
David Roberts: Okay, final question. Lily is in charge over the next 10 years. Miracle
Lily Bermel: Yeah. Big, big miracle. Just flagging that.
David Roberts: Are just, are just, let’s say, let’s say a miracle happens in 2026 politically, and then again in 2028, there’s a Democratic trifecta, and Lily’s in charge of the Democratic trifecta. A slightly smaller miracle. Still a miracle. What would you... Describe what you want to see over the next 5 to 10 years. What looks to you like good, smart, durable, clean energy policy that’s going to produce results and advance decarbonization and advance clean energy? Just sketch out what you’d like to see.
Lily Bermel: Sure. I think the report is pretty simplistic in that it looks at a couple building blocks of renewables, of gas, and of clean firm. So there is a whole myriad of like FERC technicalities and all this other stuff that maybe one day I’ll be smart enough to dive into. But I’m not right now. I think on permitting reform, to me, that is a 1000% priority to happen this Congress. I do not want to do that next Congress or next administration. Like, that needs to be done now, and I think if it’s not done, the next administration will show up with an embarrassingly empty pantry of tools to use.
David Roberts: Why this Congress and not next one? I mean, obviously, like sooner is better on some marginal way, but what, why the extreme urgency? Why, why, if there’s a better balance of next Congress, wouldn’t there be a better bill?
Lily Bermel: You’re right that there’s urgency, as in the sooner the better. Negotiators are quite close to be coming to a final deal, and that’s exciting. Next Congress, the people, the members who manage the committees and jurisdiction will change, and—
David Roberts: Mm ...
Lily Bermel: It looks like they will be less favorable to a bipartisan deal. And because comprehensive permitting reform requires compromise on both sides, you need that to happen, uh, right now, and right now the conditions are most favorable to making that happen.
David Roberts: Okay. Permitting reform. What else?
Lily Bermel: Permitting reform. I think I would love to direct a lot of... I’d love to direct a lot of attention toward commercializing clean firm. One of my friends did an analysis looking at all of the federal support that has gone to energy technologies and found that solar has received 50 times as much as geothermal, for example. And so we have a long way to go in the amount of respective and adequate support that we can give to these technologies to commercialize them, accelerate their timelines,
David Roberts: But you specifically say in the report that tax credits might not be the best.
Lily Bermel: Yep.
David Roberts: Like tax credits, which are the most familiar and easily reached for and, and you know, like the usual.
Lily Bermel: Yep.
David Roberts: What the closest thing we have to a usual support policy for clean energy might not be best for clean firm. What sort of things would you like to see?
Lily Bermel: Sure. And just a note on that, it’s, it’s interesting because a tax credit works best when the market is mature enough to respond to a price signal. So—
David Roberts: Mm ...
Lily Bermel: Therefore right now you need more patient capital. You need, long-term debts. And so the Office of Energy Dominance Financing is doing a really good job of living up to the promise that was revealed in the Biden administration and is continuing to do really good work. And so I’d really want to supercharge that and really complement it to make sure that the full capital stack across the federal government is represented and is able to contribute to commercialization. I’d wanna spend a lot of time focusing on building out the grid, doing it as fast as possible doing it, making the most of it, of what already exists, and—
David Roberts: You also mentioned some, some gas policies which maybe you could shout out now in terms of—
Lily Bermel: Oh, yeah. ...
David Roberts: Preventing the worst of the damage from gas.
Lily Bermel: Yes. I have a nice list. I just wanna pull that up. Yeah, I think the model highlighted that the fossil fleet is pretty sticky and there are things that we can do. I’m a little bit assuming that the endangerment finding is going to be left for dead in some form or another, and at the very least it’s worth thinking through other regulatory opportunities, to decarbonize fossil fuels and reduce their carbon intensity. And so at least for ideas that by my understanding the oil and gas industry generally supports are to bring back the methane fee, expanding support for carbon credit, reinstating the Greenhouse Gas Reporting Program, which is, you know, making, uh, large emitters actually say how much they’re emitting—
David Roberts: Yeah
Lily Bermel: And all of that, which can be used for a carbon tariff, and it can be used to establish products level carbon intensity standards. And so yeah, there’s a lot of progress or a lot of opportunity to work there. And then of course— my bread and butter and, like, the things that I spend the most time about is international climate policy and competitiveness and export opportunities, and so there’s a whole suite of packages you can do there, both thinking about, like, being able to diffuse American clean tech abroad, but then also looking at tariffs and trade barriers and what can we do to alleviate costs here on Americans, and what tariffs make sense to lift, and how can we make deployment as fast and cheap as possible here in the US.
David Roberts: Well, maybe on a final note then, ‘cause this, this will return us to something we almost began with, which is Noah’s sort of concern about—
Lily Bermel: Yep ...
David Roberts: The signal that the death of, or, or the seeming death, at least the, the optics of America’s comprehensive climate plan getting destroyed send to the international community. You worked on, on Kerry’s—
Lily Bermel: Yeah ...
David Roberts: International climate team. What, what can we say to other countries basically? Like, what... You know, like they, from the outside perspective, I think it looks like America abandoned the fight. As you say and as your report very, very ably shows, that’s not necessarily true. There’s a lot of nuance, there’s a lot still going on, but the optics are terrible. What would you like to see a new Democratic administration do to try to repair that breach? Do you have any ideas on just how to, like, regain the trust and respect of other countries specifically on this fight?
Lily Bermel: Yes, that’s something that I spend a lot of time thinking about, and there’s a whole policy community of people, uh, putting a lot of time and energy into thinking that through. And I think one thing I’ll point out is that other countries are upset with America for reasons far worse than climate and far deeper than climate or the Paris Agreement. Yes. Like, right, like how trustworthy we are is not because we pulled out of the Paris Agreement. It’s because of everything else.
David Roberts: Yes, that’s one tiny…
Lily Bermel: Which would take too long to enumerate,
David Roberts: Yeah one tiny piece of the puzzle.
Lily Bermel: Exactly. So I think, like, it is helpful to show that, like, the American private sector and market momentum in states are still committed to this and, like, the American federal government will one day rejuice our efforts on climate here domestically. But something I think is interesting is that the US positioning to be able to contribute to global climate change is really in our innovation here at home and the potential to diffuse clean energy abroad. And so to give an example again, when the IRA came out, uh, the Rhodium Group released some analysis that showed that the emissions reductions benefits of the IRA would be larger in the rest of the world by 2 to 4x compared to here at home.
David Roberts: Mm-hmm.
Lily Bermel: And that’s because of the power of the United States to commer- to invent, to commercialize, to grow, and then to-
David Roberts: Drive down costs
Lily Bermel: Diffuse technology abroad. Yep. And so while the US is obviously a massive historical emitter, the historical emitter, and there is a lot that we need to do to decarbonize ourselves, we are not in any way hamstrung from still being able to help the rest of the world. And so there is a whole set of policies in the economic statecraft and foreign policy land, ranging from international investment and foreign assistance and trade, and all these other tools that... And, like, finding opportunities for climate and clean energy and normal pillars of foreign policy to be able to, like, get our solutions out in the world, to incentivize innovation and yeah, to accelerate the energy transition abroad. So there’s, there’s a really ripe and big toolkit that is not limited to the UNFCCC and to the Paris Agreement, and that’s really exciting because it means, I think, that the next administration will come in with a lot more creative ideas, a lot more heft behind the international climate fight.
David Roberts: All right. We’ll leave it there. I kept you too long.
Lily Bermel: It was great.
David Roberts: Thank you so much. Really clever, interesting, uh, report. Really, stimulating a lot of interesting discussions. Thank you for doing it, and thank you for walking us through it.
Lily Bermel: Of course. Really fun to talk to you, and glad we got to spend time going through all the wonky stuff.
David Roberts: That’s my jam.
Lily Bermel: Me too.
David Roberts: All right. Thanks, Lily.
