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The full conversation from Shift Key, episode two.
This is a transcript of episode two of Shift Key: Has Offshore Wind Finally Hit Rock Bottom?
Robinson Meyer: Hi, I’m Rob Meyer. I’m the founding executive editor of Heatmap News, and you are listening to Shift Key, a new podcast about climate change and the shift away from fossil fuels from Heatmap. My co-host, Jenkins: will join us in a second and we’ll get on with the show. But first, a word from our sponsor.
[AD BREAK]
Meyer: Hello, my name is Robinson Meyer. I’m the founding executive editor of Heatmap News.
Jesse Jenkins: And I’m Jesse Jenkins, a professor at Princeton University and an expert in energy systems and climate policy.
Meyer: And you are listening to Shift Key, a new podcast about climate change and the shift away from fossil fuels, from Heatmap News. On today’s episode, we’re going to talk about what exactly is happening in the offshore wind industry. Is it hurt? Is it dying? Is it —has
Jenkins: Has it hit rock bottom?
Meyer: Has it hit rock bottom? Is it very depressed? What’s happening? And of course, we’ll share our upshifts and downshifts from the week, and I will get better at pronouncing it.
Let’s get into it. Jesse, last year was, I think it’s fair to say, a pretty catastrophic year for offshore wind, especially in the United States. That was capped last week when Orsted, which is the world’s largest offshore wind developer, announced that it was cutting 800 jobs, a little less than 10% of its workforce, and suspending its dividend — it’s not going to pay anything to investors — and it was also exiting from a number of European markets, including Norway, Portugal and Spain. And not only that, but it has cut down its kind of internal target for how much offshore wind it wants to build by 2030. It had once hoped to build 50 gigawatts. Now it’s going to go closer to 35 to 38. And what’s interesting is that Orsted, you know, not profitable last year. But that was like, entirely driven by the U.S. So it would have made $2 billion in profit last year, but it took $5 billion in impairment charges — like it would have been profitable, except for its U.S. business. And its U.S. business took it as a firm from like $2 billion in the black to $3 billion in the red.
So, Jesse, let’s just start with, I think, getting listeners up to speed. What projects did Orsted cancel in the United States last year?
Jenkins: Yes. So they actually canceled several, most recently, a pair of projects that had sold contracts to Maryland. That followed a pair of projects in New Jersey, and another that would serve New York State. So I think it’s five projects in total and a couple phases of the same project in New Jersey. And those projects all were under long term contracts with state entities. And we’ll talk a lot more about the role of the states in driving the offshore wind industry here in the Atlantic states, but they basically sign long term, you know, purchase agreements with the states to buy power at a fixed price with, you know, a set escalation schedule. And they did that many years ago or, you know, before the pandemic, before the significant surge in inflation, the cost of goods that rose over the last few years — and then, just as importantly, before the increase in interest rates that the Federal Reserve used to try to combat that inflation.
And so you combine those two things, and it’s really a double whammy. The cost of cement and steel and concrete and labor and all of the specialty equipment they need to build these offshore wind projects is skyrocketing at the exact same time that the finance costs, the mortgage they have to take out to build these projects, is going up. And all that meant that they couldn’t honor their contracts and that, you know, it’s notable that they pulled out because in each of these cases, they had to incur several hundred million dollars of penalties for voiding the contracts with the state. So it’s not just the money they sunk into the projects that may not be complete, but it’s also very significant financial penalties for walking away.
Meyer: And how did they explain why they needed to … What did they blame?
Jenkins: I think it’s three issues that they have consistently pointed to. We talked about two already. One is the cost of goods and labor, going up with inflation. The second is interest rates, which have a huge impact on these projects. They’re almost all upfront cost, right, with some operation and maintenance over time, but no fuel costs. So once you get these wind farms up and running, they’re more or less free. But you got to take out a big mortgage, right? Just like you do when you buy a house. And you got to pay that back over time. And so the interest rate that you strike for those financing costs is a big determinant of how much you can afford to sell your power at and still make a profit.
And then the third factor is a peculiar one, which is the absence of very specialized ships that are used to install these giant wind turbines. And they really don’t exist in the U.S. because we’re just starting to build our industry here. The industry in Europe that has been, you know, going for several decades in the North Sea has a number of these vessels, you know, they’re in use there. We could bring them here, but we have this law called the Jones Act, which requires any vessel that is leaving a U.S. port for another U.S. destination to be a U.S. built and U.S. crewed ship, and we just don’t have any of those yet. There’s one coming soon. But that is a real challenge logistically for any of these projects.
Meyer: And let’s just, I think, as a final point, before we go into the discussion further, why is offshore wind, like, important at all? Why, as people who want to solve climate change, should we care at all about how specific offshore wind projects off the coast of New Jersey or Maryland or Rhode Island are going?
Jenkins: Yeah, I think for I mean, a couple reasons. One is that this is a big new industry that we’re trying to kind of give birth to in the region. These were some of the first large scale wind farms. Every 3,000 megawatts of wind power out there is roughly enough to supply the annual electricity needs of about a million households. So that’s a big sized city just in New York State alone, projects that were canceled by Orsted and Equinor totaled about 3 GW. So that’s enough energy for like, Queens, you know, one of the entire boroughs, right? So these are big deals in terms of the amount of supply they’re going to provide and the the local economic impact.
And so I think for the region at least — I mean, if you’re in Wyoming, you probably don’t care too much about what’s going on in the Atlantic. But all up and down the East Coast from North Carolina to Maine, states have made a real significant commitment to offshore wind, to be a major contributor to their local electricity mix and help them meet clean energy and climate goals. And, you know, and their megaprojects are big, you know, large-scale efforts, billion-dollar projects, you know, millions of households worth of energy and lots of jobs and local economic investment. And so when a project like that fails, you know, it’s kind of a big deal for the local economy, for the politics around it, for our progress towards our clean energy goals. And it’s a potential setback in our clean energy transition.
Meyer: There’s also — It’s economically important, but there’s also technical, I think what an electricity engineer would call resource related reasons why we want offshore wind. Is this right? Like it fits into the grid in a very useful way. Am I wrong about this?
Jenkins: Yeah, actually, I was just teaching a lecture on wind power to my students today, and we took a look at the Global Wind Atlas, which we can drop in the show notes. And what you can really see quite clearly is that the onshore wind potential in the Atlantic area is really quite poor. We don’t really have good locations to build wind power in Virginia or New York, near the coast at least, or in New Jersey at all. But the wind resource offshore is very good.
Wind speeds, you know, can move across the ocean. It’s very flat. There’s nothing that gets in the way. And you get a lot of frequent, wind patterns driven by the difference in temperature between the ocean and the land. So there’s all these localized effects that tend to produce a lot of energy in the morning, in the evening and overnight when it’s cooling off. And these are nice complements to solar power that produces mostly during the day. And you know, you can’t run your entire grid on one variable renewable resource, or even two. But having offshore wind complementary, you know, which is complementary to solar, and also to sometimes onshore wind patterns further inland that, you know, are separated from the ocean can really help you smooth out the variability that you have to deal with, make it easier for energy storage and, and flexible demand and more dispatchable generators to kind of fill in the gaps around it.
And there’s just really not a lot of other options in these states. Like, you know, if you want to have economic development and meet your clean energy goals with resources in your state, there’s just not a lot of other options. You can, you know, build solar, you can build nuclear power plants, or you can do offshore wind. Those are kind of your options for the Atlantic states, at least those without, you know, the large interior territories that New York has.
Meyer: So I want to come back to some of the like resource questions in a second. I will say, this is all very interesting — well, let me think about how I want to pitch this. I understand offshore wind being technically important, right? I understand how it fits into the solar mix. I understand it’s good economic development.
I found last year to be fairly … I wouldn’t say radicalizing, but I will say I kind of came out of last year being like, I don’t know if I see it anymore. Like I did start to feel like, man, is offshore wind more of a like, is it going to succeed exclusively in Europe and China, where there is more willingness to have a working coast, where electricity, especially in Europe, is just structurally more expensive? And so this technique, this way of generating electricity, kind of fits into their mix better. And so, what I’m going to ask you to do is just argue to me, like make a case for why that’s wrong. Make a case to me about why offshore wind … like 2023 was the catastrophic year for offshore wind, and now it’s going to come back.
Jenkins: Yeah, that’s a great question. I mean, I think it is worth pausing and noting that offshore wind in the United States was already pretty expensive, and is now even more expensive. So I think the contracts that New Jersey signed, for example, which are 20-year, you know, basically fixed price contracts — they got to go up at 2% per year, which is, you know, what we thought inflation would be, but now is maybe not where it will be over the next few years, but basically fixed long term contracts — were in the $80 to $90 per megawatt-hour range, which itself is roughly double the wholesale electricity cost in the region. So we’re, you know, we’re basically paying for, you know, twice as much for wind energy as we would pay for natural gas or coal fired power in the regional electricity mix. And that’s after a federal subsidy knocks off 30% of the upfront cost.
That sounds like a lot, right? And I think it’s fair to say that the costs that are going to be signed in the new auctions that are happening now are going to be up or above $100 per megawatt hour. So, you know, they, you know, just the interest rates alone. You know, the Fed raised interest rates by over 5% from March 2022 to August 2023. That 5 percentage point increase in the cost of capital would raise the levelized cost, or average cost of electricity alone, by about a third for any of these projects. So it’s a huge cost escalator. And of course, the underlying cost of building the projects went up by about 65%. That’s way faster, about three times faster than consumer goods went up. So, you know, we all know about how much more expensive it is to buy milk or bread or fill up at the gas pump. So, you know, that’s the case for seeing this as, you know, the bear case — that these projects are now really expensive, and maybe they’re more expensive than we’re willing to pay.
On the other hand, I think there’s three reasons that, basically every state is still committed to building out offshore wind despite those cost increases. One is that is a, you know, a historic, once in a generation macro inflationary cycle, a global pandemic with all of the supply chain disruptions that came with that, followed by a war in Europe and all of the impacts on energy costs that that, you know, brought about, you know, etc., these are really unique circumstances. You know, and so those should be behind us, right? Hopefully we can then get back on a trajectory of building out this new industry across the region, including the supply chains and the expertise in the transmission infrastructure undersea, to bring the wind onshore. That will steadily drive down the cost. And the reason to be optimistic about that is we have seen that in Europe, right? The wind industry did follow a very significant cost decline trajectory over the, you know, 15 years or so from its birth to now, in Europe. And we’re just going to have to pay a lot of those costs here because that learning and the experience in the infrastructure and the workforce isn’t really translatable.
The second reason is just there’s not a lot of alternatives for these states. You know, yes, electricity is structurally more expensive in Europe. It’s also structurally more expensive all along the eastern coast because we have high population density, population centers. There’s … these are very dense populated centers close to the coast, without access to the really good wind and solar resources that we see in the U.S. interior or the West. And so what are we going to do? Are we going to continue to burn fossil fuels? That would be the cheapest thing to do in the near term, but of course has lots of long term implications, including accelerating climate change. And all of these states have committed to transitioning away from fossil fuels. Virginia, New Jersey, York, Massachusetts, etc. have these 100% clean energy commitments.
Meyer: Assuming those states have this durable interest in decarbonization, in some ways, like, offshore wind has to have hit rock bottom, is part of what I’m hearing. Because there are just no other options. So they could go through this tear-your-hair out frustration loop, where they go try to build more solar, and then they go try to build more nuclear, and maybe those don’t work, so then they find themselves back where they began with offshore wind. But like, even with that, they’re still going to need offshore wind. So can you just get us up to speed on, like, what’s the good news in offshore wind, I guess?
Jenkins: Yeah. And I think this is the evidence that the states are going to stay committed and are moving forward, and that we probably have hit rock bottom. So, you know, yes, the news in November and December and early January was dominated by all these cancellations. And it wasn’t just Orsted. There were others up and down the Atlantic coast. But if we look at just, you know, New York and New Jersey, there’s similar stories in other states. You know, New York State has a goal of building 9,000 MW or 9 GW of offshore wind by 2035. Again, that’s about enough, to power 3 million households. So they had a third-round contract towards the end of last year. At that point, they had contracted for about 8.3 of those 9 GW, so they were kind of almost there. Then we had these cancellations: Orsted’s, Sunrise Wind and Equinor’s Empire I and II that lost about 3 GW of that. So now they’re back to about 5 GW of the nine. New York just closed another accelerated auction. And if that, you know, contracts another roughly 3 or 4 GW, like the last round, that would get them their full pipeline of nine gigawatts of projects. And again, they have until 2035 to bring those online. So it’s sort of like, you know, three steps forward, two steps back in the near term here, but they’re continuing to move forward. We could still hit those goals.
What’s going to happen is that the buildout trajectory is going to get pushed back by a couple of years, and even some of those canceled projects could have a second lease on life because they are going to be rebid into these subsequent auctions. And we think we saw that, actually, with Orsted re-bidding one of their projects into New York’s recent auction in January, and we don’t know if they’ll win that round of auction. They have to beat out other competitive bids from other developers. That’s good. They tried to get New York to just single, to bilaterally renegotiate their existing contract and give them more money. And New York and New Jersey, you know, basically, and Massachusetts, all said no to those requests from developers. They said, look, a contract’s not worth anything if we sign it and you agree to a price and then you come back later and ask for more money. So if you want more money, you’re going to have to go out and, you know, pay the fine for not honor your contract and then rebid, and, and beat out everybody else. And if you can’t beat everybody else, that’s not in the interest of the state. So they really held the line against all of the requests from the developers to try to, you know, inflate their contracts. But some of those projects will come back in this next round. We’ll just come back at a higher price and probably a couple of years delayed.
Meyer: Let’s zoom out for a second. So we’ve been talking about the Atlantic a lot, partially I think, because you and I, listeners will discover, have a shared interest in New Jersey.
Jenkins: That’s right.
Meyer: Me, having grown up in New Jersey and you currently living in New Jersey. Let’s zoom out from New Jersey for a second. Much of the Atlantic coast is not a working shoreline in, I think, ways that parts of, say, Northern Europe are a working shoreline. But we do have working shoreline in the country. And that’s not to say that like people on the coast don’t work. It’s just like.
Jenkins: It’s a lot of tourism.
Meyer: It’s a lot of tourism. It’s a very tourism dependent industry. And so anything like these wind farms, they’re going to be close enough to be seen from the shore. They were not going to be very big, but they were going to be close enough to be seen from the shore. And you really, when you’re there, you don’t see a lot of other light industrial activities from the shore. We do have a working coastline in the U.S., though. It’s the Gulf Coast. And so why are we not like filling the Gulf Coast with offshore wind farms?
Jenkins: There’s really two main reasons why that didn’t happen. One is physics and the second is politics — I think we’ll keep coming back to those two as consistent themes in the show, physics and politics. But the first is just that, unlike the Jersey Shore or New York, you know, coastline or Virginia, where we really don’t have good wind resources onshore, Texas has an incredible wind resource onshore, including even the coastal regions quite close to the shoreline. And also the Gulf Coast, wind speeds are not as high, although it does suffer hurricanes. The average wind speeds are not as consistently high as they are in the Atlantic because it is a gulf. It’s, you know, it’s not a big open expanse of ocean the way the Atlantic is. And so the dominant wind patterns are not quite so strong. So the differential, the sort of benefit that you get from going offshore is really quite modest, if anything, in the Gulf versus a good onshore wind site. And of course, anytime you’re building in a marine environment where you have to deal with the corrosive nature of the ocean and the damaging destruction of storms and the cost of servicing and equipping, and, you know, working on wind farms and deep offshore, that’s going to be a lot more expensive. So unless you’re getting a lot more energy out of that project than you would on land, it just simply doesn’t make sense to build offshore. So that’s the kind of physics and economics.
Of course, the second reason — we talked already about the commitment to decarbonization that all of those states in the Atlantic exhibit, which is really driving the ship, so to speak. Texas, clearly, Mississippi, Louisiana, they clearly don’t have the same kind of commitment, at least at this point, to those goals. And we should say that’s really important because the Inflation Reduction Act provides significant long term tax credits for offshore wind and solar and, you know, onshore wind and all kinds of other clean electricity sources. And while those tax credits have been enough to make solar and wind onshore quite economically attractive in deep red states, right — you know, Kansas, Oklahoma, Texas, all over the place are building huge amounts of onshore wind and solar just based on the economics, not because of their climate or green credentials — that’s just not true for offshore wind. The tax credits alone, again, they still leave offshore wind about twice the cost of wholesale energy. And so they’re just not going to move forward without a state level commitment. And that’s really lacking in the Gulf Coast region as well.
Meyer: That’s really interesting.
[AD BREAK]
So I want to ask — there’s like a point that keeps coming up again and again here that is, like, the states play a major role. And I do think this is interesting. From a larger policy like to kind of zoom out a bit and kind of look at this as a policy question. Normally when we think about states playing a role in climate policy, there’s like one jewel, there’s like one big star when we talk about state level climate policy, and that’s California. And that’s because California, and this is not where, I’m not talking about the electricity system here. I’m talking about kind of the whole emissions picture. California has a special carve out under the law, under the Clean Air Act — like it’s written into the text that Congress passed, that California can set higher standards for certain pollutants than the rest of the country, and that any other state can join into its standards. And California does do that for a number of pollutants, including right now for carbon dioxide. I think right now about 13, 12 or 13 states sign on to its standards.
But other than that, other than California having these special powers to, like, regulate the vehicle fleet and various other things, we don’t talk about — at least I don’t think about states as being major players at the level of shaping what their resource mix looks like. Is that because I, is that because I just don’t know things? Or is that like, is that because I’m ignorant? Or is that because there is something kind of unique and interesting about offshore wind, or maybe unique and interesting about where state’s decarbonization goals are going to have to take governments?
Jenkins: I think in some ways it’s sort of a back to the future kind of thing. Yeah, I guess it changes who’s, like, who’s in the driver’s seat, right? Historically, we had vertically integrated monopoly utilities, and in much of the country that’s still the case, like in the Southeast and much of the West. But in about, you know, 60% of the country, fairly recently, like around 2000, in early 2000s, we basically restructured the markets to say, you know what, for at least generation and wholesale large power plants, and maybe also for retail sales, like who signs you up as a customer and, you know, does your billing and provide some other services, we’re going to open that part of it up to competition, and we’ll keep the wires part the network utility because that makes sense. But we’ll let the generators all compete with each other. And now the market is in the driver’s seat. And what does the market build an enormous amount of natural gas.
Meyer: I was gonna say, the market the market falls over itself to build natural gas. Yeah. The market goes to sleep and wakes up, and it’s just surrounded by extra natural gas plants that it made while it was sleeping.
Jenkins: Yeah. And bankruptcies.
Meyer: And bankruptcies. Yes. Exactly. Yeah.
Jenkins: So the wisdom of the market overbuilt a huge amount of gas in an attempt to get regulated utilities for to stop overbuilding a huge amount of nuclear and coal plants. That’s a cycle we went through. And then states, again, around similar times, like, start to get more and more concerned about climate change and clean energy and reducing their exposure to what, at that point, we talked about in the last episode, were increasing natural gas prices right in the early, in the mid 2000s. And they say, you know what, we should actually take a little bit more of a hand here and shape how the market works. And they still did it in a relatively hands off way through what are known as renewable portfolio standards.
So these are basically laws that say to the utility, okay, you get to, you know, the market can shape the mix, but you have to buy a certain amount of your electricity from clean resources or a certain qualifying renewable resources. But you decide: offshore wind, onshore wind, solar, whatever. And then what changed, really, is these resource-specific procurements that we’re now seeing. And wind is the most salient, but also we’re seeing procurements of utility-scale solar in certain states.
And actually, I think the most, the most interesting one is, is the recent law passed in North Carolina by the legislature, which is basically like a resource plan in law. You know, build this many megawatts of this shut down this many megawatts of coal, build these many megawatts of offshore wind, 50% of that the utility gets to own, this much has to go to market. It’s like the legislature taking the driver’s seat now and writing through law what they want the resource mix to look like. And that’s, I think, the thing that has shifted, right. It’s the legislature driving resource procurement. And that is, that is new.
Meyer: And I think there is, like, a “Just when I got out, they pulled me back in” aspect to all of this, I think. Where, it seemed like, for reasons having to do with broader ideas floating around about how markets were smart and how what often seemed like the very corrupt nature of the kind of state regulatory and monopoly utility interface that these, you know, the states were very corrupted by the utilities, the utilities were very corrupted by the state. But I guess what I’m saying is that there was this move toward markets, and that since then, and then even with the RPS, as you said, there’s still this kind of market technology neutral, well, we’re open to all kinds of portfolios. And what we’re discovering is for reasons that mostly, I think have to do with physics, you wind up — states kind of wound up right back where they started, where it’s like, okay, well, now we’re actually. it’s just easier if we plan this.
Jenkins: I do think there’s still I mean, I think there’s some of that, I think. I think there’s a lot more politics going on here. I would shade into the story.
Meyer: By all means, yes.
Jenkins: Yes. There is some local opposition to offshore wind. There is a lot of economic, salience or political salience to being able to say to some of the working shoreline communities — which we did have long ago, right? And being able to go there and say, we’re going to build a $500 million revitalization of the port of New Bedford in Massachusetts or New London in Connecticut or Staten Island in New York or Brooklyn, where they’re building these terminals and drive a huge amount of employment and investment and revitalization in these communities. That’s why the politics of offshore wind is so attractive.
Also, because the components are so big and because the state is shaping it, they can add these riders about local benefits in manufacturing. A lot of the manufactured components for these turbines are also coming from the area. So there’s the steel piles you have to drive into the ground, called monopiles. The towers, the blades, the turbines, they’re all getting built in New York and New Jersey and Virginia and elsewhere, and creating manufacturing jobs in communities that were previously depressed. And, you know, politicians can go to ribbon cuttings and point to their legislation and say, we did this right.
So I think that’s a big piece of why the legislatures are so attracted to offshore wind, is it does create a lot of jobs and a lot of investment and a lot of local manufacturing activity. And I think that’s part of why the legislature has basically decided we’re willing to pay a lot more for offshore wind than we would be for, say, a transmission line to wind in a state inland is that it might be a lot cheaper.
Meyer: Is that a good thing? I mean, I guess I just —
Jenkins: Yeah, I don’t you —
Meyer: You know me, like, I love industrial policy blah blah blah. However, I will say when you look across the U.S. and you look at projects that have been considered to be drivers of economic development in a direct way instead of an indirect way, by which I mean, like when you look at these big public projects where some of the stated top line benefits of these projects are like, creates many jobs, creates, helps three dozen small businesses. You don’t … it’s not exactly a record that like covers itself in glory. Like, you know, California high speed rail remains unbuilt. But the director, you know, like people involved with California high speed rail, sometimes they’re like, well, it’s actually been very successful because we’ve supported all these jobs and we’ve supported all these businesses. And it’s like, still, you know, this, all this economic activity. But of course, the thing hasn’t been built yet, actually doing the thing that we wanted to do, which is move people quickly from L.A. to San Francisco. Is it good that we’re looking at that? Legislatures look at offshore wind and they’re like, oh, look at all those jobs in it rather than like … yeah, yeah.
Jenkins: Yeah. I mean, let me go on the record and say, I am not a fan of resource planning by the state legislatures. I mean, I think that, you know, as a deliberative democracy, you know, democratic body or representative body, right? They have a role in representing the combined stakeholder interests. But, you know, when it comes to, when it comes to making energy policy, we all know that there are certain stakeholders who have a lot more access and a lot more influence in, you know, state legislatures than others, and are likely to sort of shift things in certain directions. And so what I have counseled — and I’ve been asked to advise state legislatures and, and policymakers in a number of contexts. And what I have advised is to say, look, you are balancing real goals here, right there. There are several different objectives we’re trying to achieve. Right? We want to reach a cleaner energy mix because we’re trying to combat climate change and reduce air pollution and improve environmental justice, and all those goals. So we want a clean mix, but also, I’m sure we’ll do an episode on this later, the electricity sector has to play a much bigger role in powering our lives in a cleaner future, right?
Meyer: Load must go up.
Jenkins: Electric cars and other industries … Yeah, yeah, there just has to be a lot more electricity generated, period, to electrify so many different things, from EVs to heat pumps to industry. Yeah. And if you do that, you know, not putting aside, you know, so that even from the climate concern, you have to worry yourself about affordability of this transition, as well. If you make electricity prices two or three times more expensive, that’s going to make it a lot harder to electrify all those industries. And it’s going to make, you know, energy costs for low income and fixed income residents go up and, you know, there’s justice implications of that. It’s going to make your small businesses and competitive businesses or businesses and competitive industries less competitive, you know, with other states. So there’s an affordability concern that’s always front and center in these conversations. And then there’s this economic development concern.
Obviously, state legislatures are historically interested in driving economic investment and in development in their state. That’s a big part of what they do. And so you’re balancing these three things, right. You know, affordability, clean energy and climate goals and in-state economic development. And I have simply recommended that you focus on the ends and not the means. So if those are your goals, let’s write into the law that you know, we’re going to have X percent clean energy and we want y percentage of that to be in state because of economic development goals. And we want to put a cost containment provision in here that says we won’t build those offshore wind or those in-state projects if it costs more than Z, because that’s how much we’re willing to pay for that insane development. And then go let the utilities or a state agency contract for whatever the cheapest way is to meet that goal, right, to maintain your affordability goals. And maybe that’s offshore wind in certain places, and maybe it’s not.
Meyer: I’m going to really mangle this concept because it is not exactly creative to describe this, but there was a Hungarian anthropologist and political economist named Karl Polanyi. It’s also a name I’m probably not saying correctly. Yeah, I’m choosing to pronounce his name like he’s a Chicago guy. Karl Polanyi, you know, down by Wabash.
Jenkins: He’s a good guy, he’s got the pizza shop.
Meyer: He, he, he has this idea of fictitious commodities, which are kind of things that you have to treat as a commodity to make the whole system work, to make the whole economy work, but are not themselves commodities. They don’t really work like actual commodities. And his big three examples are land, labor and money. He was writing during the 1940s, but it feels like electricity is one of them. I’m like, I’m, I’m adapting this idea to a situation that was not designed to apply to, but it does feel kind of like to describe the whole nature of how we think about electricity, which is this extremely important thing that mostly remains kind of mired in technical discussion, but nonetheless makes the whole world work.
Jenkins: Yeah, no that sounds about right. And I think that describes sort of the pendulum swinging back and forth. And so, you know, where I, where I do think we have opportunity here is to say, look, we have public objectives. We can, we know that these are high upfront cost, you know, capital intensive projects that once you build them, are just going to produce cheap energy for a long period of time. Right? Their marginal costs are low, and so the cost of capital is really important, and the cost to build the project is really important. Right. Those are the two determinants of how much a wind farm is going to cost. So we can use long term public contracts to drive down the cost of capital by basically guaranteeing revenue to developers so that the risk is low and they can get a low-cost loan from a bank and build the project. That’s what we’re doing with all these procurements at the state level. And we can use competitive forces like auctions to ensure that the cheapest projects are the ones we’re going to buy. And I just think we should open that up from offshore wind specifically, or rooftop solar specifically to whatever resources are built in the state that can meet our climate goals and deliver some economic development benefits at the lowest cost. And so it’s just a question of like, how do you define that market goal and harness those competitive dynamics to deliver the public policy goals? That’s what the auctions are doing.
Meyer: That’s kind of like in some ways, related to this change that is going to happen and how the Inflation Reduction Act conducts its subsidies, right? Which is since the 1980s, we’ve been in a situation where, like, we, the U.S. tax code incentivizes certain types of technology. And then starting in 2025, I believe the U.S. tax code will just incentivize all kinds of zero carbon electricity instead of calling out certain technology. It’s just saying, however you can do it, we’re going to pay you the subsidy. Yeah.
Jenkins: And also layering on a couple of other economic development objectives. Right. You have to meet prevailing wage and you have to it if you build domestic content, you get more money. And if you build energy in communities that we want to help transition, you get more money. So yeah, it’s an interesting example of that where you’re sort of layering these multiple objectives on, but still relying on the market to go deliver the lowest cost, most competitive ways to do that.
[AD BREAK]
Meyer: Let’s do downshifts first because I think we should end on an upshift.
Jenkins: That sounds good. Let’s end on the up note. So my downshift, speaking of utilities and regulation, and actually tying back to last episode winners and losers from trade, my downshift is a recent report by the Energy and Policy Institute, which is a public interest watchdog that keeps an eye on state utility regulation, on how a number of monopoly utilities, particularly those in the Southeast, where they are still vertically integrated, so they still own transmission and generation, have been routinely pushing back against efforts to build more long distance transmission, and also to organize into larger regional markets that can, you know, expand the footprint of trade across a wider area — something that’s happened in all of the competitive markets in the state and the country — in order to basically protect their turf, right? So customers in their territories would benefit from access to cheaper resources further away, and the transmission lines that could bring that power to those customers. But the utilities in these areas make their money, like most utilities, by investing capital and getting a return on those investments. And they don’t get money in somebody else’s generator. And this is an area where unless the state regulators are really acting in the public interest and leaning in here and making sure that the utility is not kind of basically abusing its control of the network to act as a monopoly, then there’s every economic incentive for the state or for the there’s every economic incentive for the utility to do that. And that’s exactly what we should expect.
Meyer: My downshift is, so we’re coming up on the first anniversary of Heatmap — that’s not my downshift.
Jenkins: It’s been that bad, huh, Rob?
Meyer: I’m very excited about that! No, no, no, my downshift is, it turns out that, as Neel Dhanesha wrote for Heatmap today, Heatmap’s first 12 months in existence more or less co-existed with the first 12 months where the Earth was 1.5 degrees Celsius above pre-industrial temperature. So from February 2023 through January 2024, the average global temperature was 1.5 degrees C higher than what we think of as kind of the 19th century baseline. And that’s according to the Copernicus Climate Change Service, the EU climate data service. Now, I should say that just because we’ve had this 12-month period where temperatures were more than 1.5 C above the pre-industrial average, does not mean we have passed the so-called 1.5 C threshold, which also, we should be clear, is not a physical thing. It’s more kind of like a construct. It’s a political construct that we use to talk about when climate change starts to get very bad. So we have not passed that threshold. It is not a point of no return.
Jenkins: But it is nonetheless an ominous signpost.
Meyer: It is nonetheless an ominous sign. And of course, we pass it this year because because of El Niño, which has caused additional atmospheric warming on top of what we’re observing with climate change. But it is nonetheless, exactly, an ominous signpost.
Jenkins: Well, my, my upshift is on heat pumps, so maybe that’s why you named it Heatmap, too. Yeah. My upshift today is, is about heat pumps. Heat pumps are a magical device that allow you to move way more heat around with small amounts of electricity through the magic of the thermodynamic cycle.
Meyer: We should do an episode where you just explain how heat pumps work.
Jenkins: Magical gnomes.
Meyer: Like, how does the thermos know whether to keep the liquid hot or cold?
Jenkins: Yeah. So heat pumps are magic. There are like, 300% to 500% efficient, effectively, because you can use a little bit of electricity to move, you know, two, three, or five times as much heat around. And so that makes them a really great way to both improve energy efficiency and shift from burning fossil fuels in our basement, in furnaces, oil or gas boilers or furnaces to a clean electricity source. So that reduces air pollution. And of course, if we can produce all that electricity with clean resources, we’ve helped decarbonize home heating. So it’s a central technology in any decarbonization and environmental justice strategy, I should say, because it’s a big source of air pollution. And so my upshift is from Michael Thomas, who writes a newsletter called Distilled and is active on Twitter and shared a great thread today compiling some data on recent heat pump trends in the U.S., where he found that heat pumps have been outselling gas furnaces for the last two years in a row, in 2022 and 2023. And that I thought, most interestingly, the share of homes in the U.S. with heat pumps has gone up in 48 of 50 states over the last decade, and the most rapid progress has been driven by states that have recently taken policy action to try to accelerate adoption of heat pumps.
Maine is probably the most exciting story. They basically doubled their heat pump adoption rate in just two years. And if they kept that up, that’s crazy to hit. Yeah, and they’re actually on track to hit, yeah, to get heat pumps in every home in Maine by 2050. And there’s a reason for Maine to do this: because Maine is not on the natural gas system. So there, people in Maine are mostly heating with fuel oil and propane, which has gotten incredibly expensive over the last few years, and obviously does that periodically because of all those ups and downs and global oil prices that we mentioned on the last episode. So, yeah, Maine is an interesting case. It’s cold. A lot of people don’t think heat pumps can work in cold climates. Well, that’s definitely not true. There’s huge heat pump adoption in Scandinavian countries and in Canada. And now in Maine. You just have to design them, right? And probably also do some energy efficiency improvements to seal up your home when you do it. But yeah, we’re moving in the right direction on heat pumps.
Meyer: Home heating oil is so crazy because it’s like, imagine heating your house with gasoline.
Jenkins: Yeah, exactly. Diesel. But dirtier.
Meyer: Right. It’s so interesting. My upshift. Is that a new analysis in Carbon Brief from Lauri Myllyvirta, who is kind of one of the leading analysts of China’s greenhouse gas emissions. And he found, basically, China’s emissions may have peaked last year. That kind of, if you look at all the factors in their economy, it’s very likely China’s emissions will go down this year in 2024 compared to 2023. That, now, that’s partially — and I would say, this is suboptimal. This is not the upper part of the upshift. That’s partially because of just very soft economic activity in China. As we record this, the Chinese stock markets have basically been falling apart over the past few days. It’s that kind of softness of industrial activity matched with this massive, massive build out of renewables that is going to that that in his analysis is going to peak, lead China’s emissions to decline in 2024, and may cause them to permanently kind of subside.
And I think the other interesting aspect of this is at the same time he sees this, he also sees, I think, what people tend to notice more, which is that China’s continuing to build coal overcapacity in its power grid. It’s continuing to build a lot of new coal plants, and it kind of talks about how there is this clash coming up between the cleaner parts of the economy and the cleaner subsectors, or the new energy subsectors, versus the kind of old fossil subsectors, both of which are building, but eventually their needs will directly conflict.
Jenkins: That’s fascinating. Yeah, we should definitely do an episode on what the heck is going on in China. You know, one of those major signposts that we have to pass if we’re going to get the world on track for net zero, is peak emissions in China the world’s biggest emitter? And until China turns the corner, you know, we won’t be able to turn the corner globally to get emissions on a downward trajectory either. Most likely. So yeah, I’d be really fascinated to see are we are we nearly at that peak. That’s some encouraging signs, but we’re not quite sure yet. All right.
Meyer: Let’s, yeah, let’s …
Jenkins: Let’s leave it there and let’s come pick up the China story again in a future episode here on Shift Key.
Meyer: Here on Shift Key. You want to share your friend’s line about what our next podcast should be called?
Jenkins: Let me find that. Yeah. So a friend and early listener said, are we going to start a recurring section about emissions trading called Caps Lock? I think we have to.
Meyer: And California has to re-up its emissions trading system pretty soon, or it’s going to try to do it pretty soon.
Jenkins: So maybe we’ll have a special issue.
Meyer: Special Caps Lock edition of Shift Key. Well, thank you for listening to Shift Key. And we’ll be back next week. And in the meantime, subscribe. And please, if you have a friend, an ally, a coworker, a nemesis, a jilted lover who you think would enjoy the stimulating discussion and intelligent conversation of Shift Key. Please. Share the podcast with them and ask them to subscribe.
Jenkins: See you next week.
Meyer: Shift Key is a production of Heatmap News. The podcast was edited by Jillian Goodman. Our editor in chief is Nico Lauricella, multimedia editing and audio engineering by Jacob Lambert and Nick Woodbury. Our music is by Adam Kromelow. Thanks so much for listening and see you next week.
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On the COP16 biodiversity summit, Big Oil’s big plan, and sea level rise
Current conditions: Record rainfall triggered flooding in Roswell, New Mexico, that killed at least two people • Storm Ashley unleashed 80 mph winds across parts of the U.K. • A wildfire that broke out near Oakland, California, on Friday is now 85% contained.
Forecasters hadn’t expected Hurricane Oscar to develop into a hurricane at all, let alone in just 12 hours. But it did. The Category 1 storm made landfall in Cuba on Sunday, hours after passing over the Bahamas, bringing intense rain and strong winds. Up to a foot of rainfall was expected. Oscar struck while Cuba was struggling to recover from a large blackout that has left millions without power for four days. A second system, Tropical Storm Nadine, made landfall in Belize on Saturday with 60 mph winds and then quickly weakened. Both Oscar and Nadine developed in the Atlantic on the same day.
Hurricane OscarAccuWeather
The COP16 biodiversity summit starts today in Cali, Colombia. Diplomats from 190 countries will try to come up with a plan to halt global biodiversity loss, aiming to protect 30% of land and sea areas and restore 30% of degraded ecosystems by 2030. Discussions will revolve around how to monitor nature degradation, hold countries accountable for their protection pledges, and pay for biodiversity efforts. There will also be a big push to get many more countries to publish national biodiversity strategies. “This COP is a test of how serious countries are about upholding their international commitments to stop the rapid loss of biodiversity,” said Crystal Davis, Global Director of Food, Land, and Water at the World Resources Institute. “The world has no shot at doing so without richer countries providing more financial support to developing countries — which contain most of the world’s biodiversity.”
A prominent group of oil and gas producers has developed a plan to roll back environmental rules put in place by President Biden, The Washington Post reported. The paper got its hands on confidential documents from the American Exploration and Production Council (AXPC), which represents some 30 producers. The documents include draft executive orders promoting fossil fuel production for a newly-elected President Trump to sign if he takes the White House in November, as well as a roadmap for dismantling many policies aimed at getting oil and gas producers to disclose and curb emissions. AXPC’s members, including ExxonMobil, ConocoPhillips, and Hess, account for about half of the oil and gas produced in the U.S., the Post reported.
A new report from the energy think tank Ember looks at how the uptake of electric vehicles and heat pumps in the U.K. is affecting oil and gas consumption. It found that last year the country had 1.5 million EVs on the road, and 430,000 residential heat pumps in homes, and the reduction in fossil fuel use due to the growth of these technologies was equivalent to 14 million barrels of oil, or about what the U.K. imports over a two-week span. This reduction effect will be even stronger as more and more EVs and heat pumps are powered by clean energy. The report also found that even though power demand is expected to rise, efficiency gains from electrification and decarbonization will make up for this, leading to an overall decline in energy use and fossil fuel consumption.
Ember
The world’s sea levels are projected to rise by more than 6 inches on average over the next 30 years if current trends continue, according to a new study published in the journal Nature. “Such rates would represent an evolving challenge for adaptation efforts,” the authors wrote. By examining satellite data, the researchers found that sea levels have risen by about .4 inches since 1993, and that they’re rising faster now than they were then. In 1993 the seas were rising by about .08 inches per year, and last year they were rising at .17 inches per year. These are averages, of course, and some areas are seeing much more extreme changes. For example, areas around Miami, Florida, have already seen sea levels rise by 6 inches over the last 31 years.
“As the climate crisis grows more urgent, restoring faith in government will be more important than ever.” –Paul Waldman writing for Heatmap about the profound implications of America becoming a low-trust society.
That means big, bad things for disaster relief — and for climate policy in general.
When Hurricanes Helene and Milton swept through the Southeast, small-government conservatives demanded fast and effective government service, in the form of relief operations organized by the Federal Emergency Management Agency. Yet even as the agency was scrambling to meet the need, it found itself targeted by far-right militias, who prevented it from doing its job because they had been led by cynical politicians to believe it wasn't doing its job.
It’s almost a law of nature, or at least of politics, that when government does its job, few people notice — only when it screws up does everyone pay attention. While this is nothing new in itself, it has increasingly profound implications for the future of government-driven climate action. While that action comes in many forms and can be sold to the public in many ways, it depends on people having faith that when government steps in — whether to create new regulations, invest in new technologies, or provide benefits for climate-friendly choices — it knows what it’s doing and can accomplish its goals.
As the climate crisis grows more urgent, restoring faith in government will be more important than ever. Unfortunately, simply doing the right things — like responding competently to disasters — won’t be enough to convince people that the next climate initiative will do what it’s supposed to.
The number of people expressing faith in government today is nearly as low as it has been in the half-century pollsters have been asking the question. That trust has bounced up and down a bit — it rose after September 11, then fell again during the disastrous Iraq War — but for the last decade and half, only around 20% of Americans say they trust the government most of the time.
It’s partisan, of course: People express more trust when their party controls the White House. And the decline of trust reaches beyond the government. Faith in most of the key institutions of American life — business, education, religion, news media — has fallen in recent decades, sometimes for good reason. The net result is a public skeptical that those in authority have the ability to solve complex problems.
Changing that perspective is extraordinarily difficult, often because of the nature of good and bad news: The former usually happens slowly and invisibly, while the latter often happens dramatically and all at once.
Take the program created in the Energy Department under George W. Bush to provide loans to innovative energy technologies. If most Americans had heard of it, it was because of one company: Solyndra, a manufacturer of innovative but overly expensive solar panels. Undercut by a decline in prices of traditional panels, the company went under, and its $535 million loan was never repaid. Republicans made Solyndra’s failure into a major controversy, claiming that the program showed that government investment in green technology was corrupt, ineffective, and wasteful.
What few people heard about was that the loan program overall not only turned a profit at the time (and for what it’s worth, it still does), it also provided help to many successful companies, even if a few failed — as any venture capital investor could tell you is inevitable. The successes included Tesla, which used its federal loan to ramp up production of the sedans that would turn it from a niche manufacturer of electric roadsters into what it is today. Needless to say, Elon Musk does not advertise the fact that his success was built on government help.
More recently, the hurricane response has shown how partisan polarization can be used to undermine trust in government — especially when Donald Trump is involved. Trump took the opportunity of the hurricanes to accuse the federal government of being both political and partisan, delivering help only to those areas that vote for Democrats. Soon after, he promised to do precisely what he falsely accused the Biden administration of doing, saying that if he is president again, he will withhold disaster aid from California unless Gov. Gavin Newsom changes the state’s water policies to be more to Trump’s liking. “And we’ll say, Gavin, if you don’t do it, we’re not giving any of that fire money that we send you all the time for all the fire, forest fires that you have,” Trump said. And in fact, in his first term Trump did try to withhold disaster aid from blue states.
What sounds like hypocrisy is actually something much more pernicious. As he often does, Trump is arguing not that he is clean and his opponents are dirty, but that everyone is dirty, and it’s just a question of whether government is in the hands of our team or their team. When he says he’ll “drain the swamp,” he’s telling people both that government is corrupt, and the answer is merely to change who gets the spoils. If you believe him, you’ll have no trust in government whatsoever, even if you might think he’ll use it in a way you’ll approve of.
We’ve seen again and again that people want government to perform well and get angry when it doesn’t, but they don’t reward competence when it happens. Which is why making sure systems operate properly and problems are solved is necessary but not sufficient to win back trust. Government’s advocates — especially those who are counting on it to undertake ambitious climate action both now and in the future — need not only to deliver, they have to get better at, for lack of a better word, propaganda. Policy success is not its own advertisement. And despite his ample policy achievements, Joe Biden has not been a charismatic and effective messenger — on the role of government, or much else.
Ronald Reagan used to say that the most frightening words in the English language were “I’m from the government and I’m here to help”; the oft-repeated quip was at the center of his incredibly successful effort to delegitimize government in the eyes of voters. To reverse the decline of trust so people will believe that government has the knowledge and ability to tackle climate change, the public needs to be reminded — often and repeatedly — of what government does well.
Touting past and present successes on climate — and disaster relief, and so many other ways the government solves problems every day — is essential to building support for future climate initiatives. Those successes are all around, it’s just that most people never hear about them or take them for granted. But promoting government as an engine of positive change should be as high a priority for climate advocates, including those who hold public office, as discrediting government was for Reagan and is for Trump.
After a decade of leadership, voters are poised to overturn two of its biggest achievements. What happened?
Twenty years ago, you could still get away with calling Redmond, Washington, an equestrian town. White fences parceled off ranches and hobby farms where horses grazed under dripping evergreen trees; you could buy live chicks, alfalfa, and Stetson hats in stores downtown. It wasn’t even unusual for Redmond voters to send Republicans to represent their zip code in the state legislature, despite the city being located in blue King County.
The Redmond of today, on the other hand, looks far more like what you’d expect from an affluent (and now staunchly progressive) suburb of Seattle. A cannabis dispensary with a pride flag and a “Black Lives Matter” sign in the window has replaced Work and Western Wear, and the new high-performing magnet school happens to share a name with one of the most popular cars in the neighborhood: Tesla. But Washington is a state full of contradictions, and among Redmond’s few remaining farms is one registered under the winkingly libertarian name of “Galt Valley Ranch LLC.” It belongs to a multimillionaire who has almost single-handedly bankrolled the most significant challenge yet to Washington’s standing as a national climate leader.
Andrew Villeneuve, the founder of the Northwest Progressive Institute, a left-wing think tank also based in Redmond, told me he’s struggled to get voters to pay attention to ballot measures in the past. “I’ve had no such awareness issues this year,” he said. “Nobody’s like ‘Who’s Brian Heywood?’”
A hedge fund manager, multimillionaire, and recent California transplant, Heywood has in short order made himself the supervillain of Washington’s left. His Joker arc into politics involves fleeing the liberal dystopia of the Golden State in 2010 for the no-income-tax refuge of Washington, only to discover that Olympia was progressive, too. This year, he set out to personally “fix stupid things” in his adopted state by spending $6 million out of pocket on a signature-gathering campaign that ultimately landed four conservative initiatives on Washington’s general election ballot. (His campaign, Let’s Go Washington, is also allusively named, although Heywood toldThe Seattle Times that he is not a MAGA supporter.)
Two of the four ballot measures Heywood has willed before voters this November address standard small-government gripes: One would repeal the capital gains tax, and the other would allow workers to opt out of the state’s long-term care payroll tax. Others, however, will ask Washingtonians to vote directly on whether to repeal the state’s landmark cap-and-invest carbon-trading program (I-2117) or block its transition away from natural gas (I-2066).
“We’ve faced initiatives like these before,” Villeneuve told me, “but what is different is how many of them are coming at once.”
As in many Western states, it’s relatively easy for a motivated individual with means to collect the roughly 320,000 signatures needed for a petition to end up on the ballot in Washington. (Contract workers are paid up to $5 per signature, and they often descend on ferry lines, where bored motorists can be talked into putting down their names as they wait for the next boat.) But while rich activists have leveraged this system in the past — Washingtonians may remember the name Tim Eyman — the outcome of the ballot measures before voters this fall will be closely watched by other states and legislatures to gauge how directly popular bold climate progress really is.
“What happens in Washington will certainly have an impact on what happens around the rest of the country,” Leah Missik, the Washington deputy policy director at the clean energy nonprofit Climate Solutions, who also serves on the executive board of the No on 2066 campaign, told me. She added, “If these [laws] are in any way repealed or weakened, that is a sign to other states, and I think it would be incredibly damaging and incredibly unfortunate.”
Though politics in Washington have long been conservation-minded and, shall we say, crunchy (I grew up in Redmond), the state really began to stand out as a leader in progressive climate policy with Governor Jay Inslee’s election in 2013. During Inslee’s tenure, Washington committed to one of the most aggressive 100% clean energy pathways in the country, passed a wide-ranging building emissions law that RMI described as “significantly [raising] the level of ambition on what might be possible for other states,” and in 2023 enacted its landmark cap-and-invest program, called the Climate Commitment Act, which has generated over $2 billion in state revenue so far for transit projects, decarbonization initiatives, and clean air and water programs. Washington has even been credited with inspiring some of President Biden’s climate actions in office.
With Inslee, a Democrat, retiring at the end of this term, Let’s Go Washington’s campaign begins to appear designed to dismantle his legacy while proposing little in the way of alternatives. Hallie Balch, the communications director, denied this allegation in an emailed statement, telling me the initiatives “promote choice and affordability.” The cap-and-invest program, for example, “has not done what the governor said it would do,” she said, and “there are no metrics in place to track [its] success.”
Though the CCA’s cap covers about 75% of the state’s total greenhouse gas emissions, it’s true that we’re still a few years away from having a clear picture of the program’s results. (The law’s first compliance deadline for polluters isn’t until this November.) “The CCA has only been around for almost two years at this point, and so we haven’t yet seen the big emissions declines,” Emily Moore, the director of the climate and energy program at the Sightline Institute, a nonpartisan sustainability think tank that does not take an official position on initiatives, told me. “But what we are seeing,” she added, “is the money that it has generated for a whole suite of climate-friendly and community-friendly projects.”
There isn’t a revenue source remotely comparable to cap-and-invest available to fund the state’s transit, infrastructure, and community projects if the program goes away, meaning a repeal would have a dramatic impact on everything from bus service to salmon recovery projects to local heat pump and induction stove rebates, with most likely getting the axe. The program is also one of the main levers Washington has to reach its goal of reducing emissions 95% below 1990 levels by 2050. As one person involved in crafting the CCA described the upcoming vote on I-2117 to me, it’s “life or death for climate action in Washington.”
That’s partially because I-2117 wouldn’t only repeal the CCA; it would also bar the state and any municipality therein from implementing a new climate tax or cap-and-invest program at any point in the future. When asked what an alternative might be last week during a debate at Seattle University’s Department of Public Affairs and Nonprofit Leadership, Heywood vaguely proposed “something that works.”
“We always knew we were going to have to defend this program at the ballot box,” Joe Fitzgibbon, the majority leader of Washington’s House of Representatives and the chair of the House Environment and Energy Committee, who helped create the CCA, told me. He admitted that he’d expected such a defense to take the form of legislative elections, but 2022 came and went without a single backer of the CCA losing their seat. “I guess in hindsight, I thought we were out of the woods,” Fitzgibbon said.
Let’s Go Washington has labeled CCA a “hidden gas tax” and, bundled with its other initiatives, is running on the slogan “vote yes, pay less.” I-2117 is already the most expensive ballot measure campaign of this election cycle — and the most controversial, with Heywood campaigning at gas stations offering discounted gas, which opponents say violates vote-buying anti-bribery laws. But opposition to the initiative has also rallied a remarkable and unprecedented coalition of strange bedfellows in defense of the CCA, including over 500 businesses, environmental groups, health care organizations, faith leaders, tribes — as well as more than 30 breweries, “a very important coalition member in the state of Washington,” as No on I-2117’s communication director Kelsey Nyland quipped to me. Jane Fonda recently swung through the state to stump for I-2117; the ‘no’ campaign even has the support of the Green Jobs PAC, whose contributors include Shell and BP.
Almost all the advocates I spoke to about I-2117 were feeling optimistic ahead of Washington ballots going out at the end of this week, with the most recent Cascade PBS/Elway poll on the initiative showing support has dropped slightly since May; 46% now say they would vote no, over 30% who would vote yes. (Heywood has pointed optimistically to the number of undecided voters this leaves.) Still, it seems pretty unlikely that Washingtonians will repeal their cap-and-invest program.
I-2066 is a different story.
To the immense frustration of its opponents, Let’s Go Washington touts I-2066 as “Stop the Gas Ban.” The measure was only certified for the ballot in July, compared to January for 2117, meaning that organizers have had much less time to mobilize — several major national green groups, including Defenders of Wildlife and the Environmental Defense Action Fund, confirmed to me that they’d endorsed No on I-2117 but not considered a position on I-2066 — and are on the back foot to combat misinformation.
For one thing, there is no gas ban: I-2066, rather, would repeal parts of a Washington law directing its largest utility, Puget Sound Energy, to consider electrification alternatives before installing new gas pipes; scuttle a pilot effort to promote thermal energy networks as a gas alternative; and, most starkly, it would bar cities and towns, as well as Washington’s energy code, from “prohibiting, penalizing, or discouraging” gas appliances in buildings. “Discouraging” does a lot of work here. For example, Seattle’s building emissions performance standard, which doesn’t ban gas but nudges large developments toward a 2050 net-zero emissions target, could be in jeopardy.
Still, all of this is a lot to expect voters to sort through in the few minutes they might spend filling in the bubbles in their ballot, especially when Let’s Go Washington is making out its message to sound like one simply about energy choice. Add the opaque triple-negative climate campaigners have to sell (“vote no on a ban on banning gas”), and the messaging headaches grow more severe.
Earlier this month, the editorial board for the largest media outlet in Washington, The Seattle Times, endorsed a yes vote on I-2066, arguing for a slower transition away from fossil fuels that leans more heavily on natural gas. “Unfortunately, we are up against a network of fossil fuel corporations and their allies who have a lot of money and who are very invested in the status quo because it perpetuates their wealth and their influence,” Missik, who’s involved with the No on I-2066 campaign, told me, pointing to the Building Industry Association as well as Northwest Natural, National Propane Gas Association, and Koch Industries, who have backed the other side. I-2066 is also polling much better than I-2117; as of September, 47% of voters said they would vote yes, compared to 29% who said they’d vote no.
Rather than interpret those numbers as the electorate’s backlash to Washington’s climate progress, advocates argue they indicate how fossil fuel groups have successfully capitalized on the door propped open by Heywoods’s signature-gathering campaigns. It’s “because one guy opened his wallet; it is that simple,” Villeneuve, the founder of the Northwest Progressive Institute, said. “There is no grassroots movement to overturn these laws; it doesn’t exist. Brian Heywood brought this entire thing into being.” Or, as Missik put it: “Most Washingtons do believe in climate progress, whether or not this will be overridden by money. I sure hope not.”
All of this ultimately brings us back to the question of what Heywood’s whole deal is. With the singular exception of I-2066, his $6 million initiatives seem mostly doomed.
Some I spoke to floated the idea that Heywood and his allies are using Washington as a testing ground for dismantling climate action and seeing what sticks. “If it can happen here, it can happen anywhere: It can happen in California, it can happen in Colorado, it can happen in New York, it can happen in all these states that have passed really strong climate policies,” Caitlin Krenn, the climate and clean energy director of the nonprofit Washington Conservation Action, told me.
But there are other rumors, too. The Washington State Standard’s Jerry Cornfield recently quoted a local GOP chair calling Heywood’s initiatives “a powerful tool” that will “help get Republicans elected” — essentially, a turnout generator. (“We certainly want to see as many people as are eligible to vote exercise their right to make their voices heard, but our top priority is to educate voters about what's at stake with the initiatives this November,” Balch told me in response.) And then there is Heywood’s ranch. Republicans have long cosplayed as rural farmers and cowboys to tap into the masculine conservative fantasy of rugged individualism (what Texas Monthly once called “authenticity drag”). It’s essentially an image-building exercise — perhaps not so unlike positioning yourself as the guy who tried to rein in the state’s runaway Dems.
So far, Heywood has dodged questions about whether he plans to run for governor, and his campaign told me he “isn't using the initiatives as anything other than a way to bring broken policies directly to the people to vote on.” But with this year’s ballots going out to Washington voters today, it’s also a question for another time.
Regardless of what happens, many of the organizers I spoke to rejected the framing of Washington voters cooling on climate. One went as far as to tell me that the time, attention, and money Heywood has spent trying to roll back Washington’s progress is the highest compliment of all. “This is part of the process of doing big things,” Isaac Kastama, who was involved in enacting the CCA and now works for the advocacy group Clean and Prosperous Washington, told me. “If it’s not big and if it goes undetected, that probably means you’re not doing something serious enough.”
Editor’s note: This story has been updated to clarify the scope of I-2117 and correct what Let’s Go Washington has termed a “hidden gas tax.”