We Need Industries, Not Projects
To avoid making small things sound big a little context is required and one particular headline this week screamed for some context. It's possible that global power sector emissions have plateaued. While it's true there were major falls in power sector emissions in the US, EU, Japan and South Korea these were offset by significant increases in China and India leaving the global emissions basically flat. Global electricity demand has grown from 7 terawatt hours (TWh) in 1980 to an estimated 25 TWh for 2023 and the possibility that emissions are no longer growing is news. Now for the context. Wind and solar increased by 1.5% in the first half of this year to account for 14% of global electricity generation and while they are not the only reason emissions are plateauing, they have an outsized role. The problem is that installed capacity is slowing to 10% and 16% growth respectively, way below the 20% needed every year until 2040 to put a serious dent in the emission curve. The energy transition is complicated further by a drop of global hydro power by 8% due to drought which is a problem because the expectation is that it will continue to grow around 4% annually. We need to be installing a lot more wind and solar all over the world along with many other forms of renewable energy generation.
China accounted for over 90% of wind and 40% of solar additions in the first half of 2023 and our catchup strategy has faltered with New York's decision not to further subsidize offshore wind. The decision and our lack of serious competition with China highlights a problem far deeper than changing business fundamentals, our problem is that we are thinking in terms of projects not industries.
Until recently, the US was a country of entrepreneurs that solved problems and created wealth for our citizens at the same time by building and selling products to each other and also to other countries, in short, we had industries that sold to the world. While we should never lose sight of the goal to reduce our emissions, we could make this so much easier on ourselves by building world-beating industries in solar, wind, nuclear, geothermal, carbon management, and hydrogen. As the IRA money is awarded, we rightly applaud these projects, but these incentives will drive our net emissions down to 32-42% below 2005 levels in 2030, compared to 24-35% without it. In other words it's reducing our emissions by about 10% over what was already happening, not the 40% so often touted and that assumes we spend all the money which the Congressional Budget Office finds highly unlikely.
An ever growing list of subsidized projects is not enough. The argument that America should lead the rest of the world through example by reducing its emissions misunderstands how America works. A serious reduction in our emissions will be the natural consequence of developing industries that can help other countries navigate the energy transition by selling them our technology and services. Building and selling any product on a global scale massively discounts these products for our home market. We need to stop thinking about individual projects and think about the creation of entire industries. In the opinion of your correspondent, IRA money has been extremely well spent by the DOE in preparing their lift off reports. I encourage you to read these and pass them on to every young person thinking about their career. None of what we need to do will be possible without the raw talent and enthusiasm of the young to have a career in an industry, not on a one-off project.
On the Slate
I would love to report on something amazing that has happened in the last two weeks but alas a few continue to place their personal desires over those of our country. For the sake of context though, while this current embarrassment is nominally about spending, it’s important to note that the objective of passing the 12 appropriations bills prior to the Speaker being removed only constitutes approximately $1.5T, just 25% of the budget. All this noise and theater is over just ¼ of the budget, and the vast majority of that is for defense, homeland security, and veteran benefits. The 75% of the budget that drives our debt is not addressed in this budget debate. Like climate change this problem is measured in decades and is hard to wrap our heads around but will ultimately be our undoing unless we address it. Feel free to mention this next time you correspond with your member of Congress.
Positive Notes
The 7 clean hydrogen hubs were announced and whatever the merits of this investment and the many challenges that are to come we should acknowledge that for the US Government, this was pretty quick, so kudos to the public servants that put in the real work to make this happen.
The Action …
My last newsletter was sent to over 1,500 people and to my amazement 60% of you opened it and read it. The one piece of feedback I have consistently received is to include a little more about what BCA is doing so I shall start by restating our strategy and provide updates as we execute against this strategy.
Bipartisan Climate Action is a nonpartisan, nonprofit 501(c)(4) advocacy organization and political action committee dedicated to protecting the electoral future of members of Congress who advance meaningful and bipartisan legislation to reduce U.S. carbon emissions. Founded during the 2022 electoral cycle, BCA invests financial, political and grassroots resources to strengthen and grow the bench of Republicans and Democrats working together in Washington to address climate change.
BCA and its 501(c)(3) sister organization and advocacy partner, Bipartisan Climate Trust, convene frequent exchanges between idea makers and policy makers to highlight immediately actionable climate solutions that can win bipartisan support and create a durable foundation for more ambitious action.
BCA’s team and partners include seasoned executives and strategists deeply versed in the politics and policy of climate, the members of Congress who have the most potential to lead, and gaps in the current advocacy landscape. If you can help please reach out to me directly.