Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Economy

Biden’s Grand Energy Plan Is Finally Getting Real

For the first time, the Energy Department is charting how to build new industries from scratch — and preserve America’s energy advantage.

President Biden and energy symbols.
Heatmap Illustration/Getty Images

The Biden administration took a major step forward on Tuesday to answering one of the biggest outstanding questions about its climate policy: So, uh, how are you planning on doing all this?

The answer took the form of a new series of reports, running to hundreds of pages in total, that provide the most detailed look yet at how now-experimental energy technologies can be rapidly scaled to meet the needs of the American economy. These reports, dubbed “the Pathways to Commercial Liftoff,” focus on three technologies that will be crucial to decarbonization: clean hydrogen, long-duration energy storage, and advanced nuclear reactors. Another report on capturing and storing carbon pollution is due soon.

The reports, which were written by 13 authors from across the Department of Energy, suggest that that agency has taken a more active role in carrying out the goals of the bipartisan infrastructure law and the Inflation Reduction Act, which together encompass most of President Biden’s legislative climate policy. The department says that it will update the reports every year, potentially creating a living library that will describe — in meticulous detail — the obstacles to creating a cleaner energy future.

“What we’re trying to provide is a sort of stake in the ground,” Melissa Klembara, an author of the report and the director of portfolio strategy at the Department of Energy’s office of clean-energy demonstrations, told me. “What is our vision? What does the private sector need to believe to co-invest? What is it going to take to achieve market lift-off?”

Perhaps above all, the documents underscore the scale — and the difficulty — of the task that the Biden administration has set for itself. The United States is trying to do something with little precedent. Over the next 10 years, the government will spend hundreds of billions of dollars in line with the bipartisan infrastructure law and the Inflation Reduction Act. This influx aims to transform the chemical substrate of the $23 trillion American economy. Today, the burning of fossil fuels — ancient sunlight rendered dense and combustible by time and geology — generates 79% of the country’s energy today; the Biden administration has committed to slashing that share by 2030 and essentially bringing it to zero by 2050.

It plans to do that through what has been widely termed “industrial strategy” — policy that aims to grow a specific part of the economy or develop a new type of technology. But what exactly the Biden administration’s strategy is has remained frustratingly vague. While much of the IRA’s spending will go to uncapped tax credits, the government is also tasked with making tens of billions of dollars of targeted investments to push sectors to decarbonize faster. (In hydrogen alone, for instance, the government can spend up to $25.8 billion on these investments.)

Where will those investments go? Scholars believe that successful industrial policy must generally be tailored to the needs of the industries in question: You can’t grow the telecommunications sector, for example, by building railroads and digging canals. Industrial policy, in other words, is about the specifics. So to spend that money well, policy makers must first get to know the industries they want to help — and then they must spot, in advance, the problems and bottlenecks that will prevent that industry from flourishing.

That’s what these reports are trying to do. They are the most detailed guide yet to how the Biden administration plans to conduct industrial policy for the most advanced — and the most fledgling — energy technologies in its arsenal.

Each of the technologies in the reports could be important in some way to fighting climate change: Nuclear reactors could provide a stable, always-on source of zero-carbon electricity; long-term energy storage will help the lights stay on when the sun isn’t shining and the wind isn’t blowing; and hydrogen will help decarbonize industrial activities — such as making steel, fertilizer, and chemicals; or powering cargo ships and long-haul trucks — that now depend on fossil fuels.

The reports were written after dozens of conversations with private companies and technical experts, Klembara said. The hydrogen report alone involved more than 60 discussions, about half of which were with “capital allocators” — companies, investment managers, and venture capitalists who will decide whether to invest in the sector.

“What we’re really trying to capture with these reports is, what is that common fact base so that we can have that dialogue with the private sector on the path to commercial liftoff,” she said. Then the government “can better understand, too, where [we] can leverage our investments to buy down those risks.”

These problems can be remarkably straightforward: They are the kind of oh-yes-that-seems-obvious issues that arise from starting an industry from scratch. In hydrogen, for instance, the report identifies two big up-and-coming problems: First, hydrogen producers still don’t have good ways to move or store hydrogen once they make it; second, a stable commodity market for hydrogen doesn’t exist. In other words, even if you make clean hydrogen, you won’t necessarily have anyone to sell it to, and even if you do, you might not have any way to get it to them cheaply. (The cost of moving hydrogen often equals the cost of producing it, the study finds.)

Those are problems that, by comparison, the natural-gas industry has solved: Gas drillers can rely on the country’s existing network of pipelines, trucks, storage tanks, and vast salt caverns to move and store gas to where it’s needed; and they can take their gas to the Henry Hub, a de facto national spot market in the fossil fuel, to sell it. If hydrogen is eventually to replace natural gas, it must develop its own version of these networks.

These reports also show how the government is thinking through its own role as a steward of economic growth.

In some ways, they show that the Biden administration — or at least the Energy Department — is becoming more comfortable with America’s distinctive approach to industrial policy. While industrial policy in other countries, such as Germany or Japan, tends to be led by the government or by government-aligned institutions, America has always relied more on the enthusiastic participation — or at least the begrudging acquiescence — of private companies. These reports detail what companies need in order to easily participate in the country’s clean-energy future. (That the consulting firm McKinsey & Co. — the ne plus ultra of American management advice — contributed to the report only drives home its country of origin.)

In that light, the reports are an argument that there’s still work to be done in these sectors — and that the government specifically needs to do it. In the past, American industrial policy hasn’t only relied on companies; it’s taken hold only when lawmakers and officials believed that the market has failed in some crucial way and that private companies cannot manage that failure. These reports — which, again, were written in consultation with the private sector — basically consist of the authors saying: Look at this market failure! Now look at this one! And this one! None of these problems will fix themselves.

But in other ways they may show something else — that America is finally learning how other countries conduct successful industrial policy and copying part of the playbook. As I’ve written before, industrial-policy agencies in Taiwan and South Korea play a key information-gathering role in their national economies: They focus economic activity not only by handing out funding or issuing regulations, but by publishing a common road map that all companies can work from. That’s what the government has done here — and by promising to update these reports on an annual basis, that’s what it’s seemingly going to do going forward.

And crucially, the Department of Energy is going to do the updating. That department has emerged as perhaps the lead actor of America’s industrial policy. That makes sense — it is the agency, after all, with the in-house bank, the national labs, and the technical expertise — but it wasn’t a given; the Environmental Protection Agency, the Department of Commerce, or even the Department of the Treasury might have stepped in. But at the same time, the agency’s new role — and its importance to the government — is somewhat unstable. If the current set of officials were to leave the Energy Department, it’s not clear to me that their replacements would take up these important government functions.

Finally, it’s just a recognition of how weird America’s task is. Although Biden’s economic and climate policies are often categorized as “industrial policy,” they really consist of two different things. In some sectors, such as solar-panel manufacturing, the United States is trying to catch up to China and other low-cost East Asian manufacturers. This is “classic” industrial policy, and it has a long history: Germany, Japan, and South Korea were each able to understand and then match America’s early dominance in making internal-combustion cars, for instance. But in other sectors, the United States is trying to do something subtler than catch up. In hydrogen production or advanced nuclear power, the United States is trying to retain its early technological advantage and turn its head start on R&D and basic science into a fully fledged domestic manufacturing industry that will generate hundreds of thousands of jobs. America isn’t trying to reach the bleeding edge of technology; it’s already there, and it’s trying to push that edge forward as quickly as possible.

That’s the challenge that these reports are responding to, Jonas Nahm, a professor of energy, resources, and environment at the Johns Hopkins School of Advanced International Studies, told me. “This is how you do industrial policy at the technological frontier,” he said. Now we’ll see if the government can follow through.


Editor’s note: A previous version of this article misstated a statistic about fossil fuel energy use. It has been corrected. We regret the error.

Blue

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Texas Flood Among Worst in 100 Years
Heatmap Illustration/Getty Images

Current conditions: The remnants of Tropical Storm Chantal will bring heavy rain and potential flash floods to the Carolinas, southeastern Virginia, and southern Delaware through Monday nightTwo people are dead and 300 injured after Typhoon Danas hit TaiwanLife-threatening rainfall is expected to last through Monday in Central Texas.

THE TOP FIVE

1. Death toll in Central Texas floods climbs to 82, with more than 40 still missing

  Jim Vondruska/Getty Images

Keep reading...Show less
Yellow
Politics

The Permitting Crisis for Renewables

A fifth of U.S. counties now restrict renewables development, according to exclusive data gathered by Heatmap Pro.

Counties, clean energy, and pollution.
Heatmap Illustration/Getty Images, Library of Congress

A solar farm 40 minutes south of Columbus, Ohio.

A grid-scale battery near the coast of Nassau County, Long Island.

Keep reading...Show less
Green
Hotspots

Judge, Siding With Trump, Saves Solar From NEPA

And more on the week’s biggest conflicts around renewable energy projects.

The United States.
Heatmap Illustration/Getty Images

1. Jackson County, Kansas – A judge has rejected a Hail Mary lawsuit to kill a single solar farm over it benefiting from the Inflation Reduction Act, siding with arguments from a somewhat unexpected source — the Trump administration’s Justice Department — which argued that projects qualifying for tax credits do not require federal environmental reviews.

  • We previously reported that this lawsuit filed by frustrated Kansans targeted implementation of the IRA when it first was filed in February. That was true then, but afterwards an amended complaint was filed that focused entirely on the solar farm at the heart of the case: NextEra’s Jeffrey Solar. The case focuses now on whether Jeffrey benefiting from IRA credits means it should’ve gotten reviewed under the National Environmental Policy Act.
  • Perhaps surprisingly to some, the Trump Justice Department argued against these NEPA reviews – a posture that jibes with the administration’s approach to streamlining the overall environmental analysis process but works in favor of companies using IRA credits.
  • In a ruling that came down on Tuesday, District Judge Holly Teeter ruled the landowners lacked standing to sue because “there is a mismatch between their environmental concerns tied to construction of the Jeffrey Solar Project and the tax credits and regulations,” and they did not “plausibly allege the substantial federal control and responsibility necessary to trigger NEPA review.”
  • “Plaintiffs’ claims, arguments, and requested relief have been difficult to analyze,” Teeter wrote in her opinion. “They are trying to use the procedural requirements of NEPA as a roadblock because they do not like what Congress has chosen to incentivize and what regulations Jackson County is considering. But those challenges must be made to the legislative branch, not to the judiciary.”

2. Portage County, Wisconsin – The largest solar project in the Badger State is now one step closer to construction after settling with environmentalists concerned about impacts to the Greater Prairie Chicken, an imperiled bird species beloved in wildlife conservation circles.

Keep reading...Show less
Yellow