Jon Powers: Lisa and Ethan, thanks so much for joining me at Experts Only. Lisa Jacobson: Oh, it’s great to be back with you, Jon. Jon Powers: So excited again to be talking about the Sustainable Energy in America Factbook. But before doing that, really want to take a moment and allow you to talk about the incredible organizations you run. Lisa, you’re the president of the Business Council for Sustainable Energy, and for folks that don’t know or aren’t members, can you just talk a little bit about your work? Lisa Jacobson: Sure. The Business Council for Sustainable Energy is a US-based trade association. We represent companies and other trade associations in the clean energy transition sectors. Our core sectors since our founding about 30 years ago, have been energy efficiency, natural gas and renewable energy. But now our members span many different technology areas including storage, sustainable transportation, and other decarbonization technologies. Let’s say carbon capture and storage or hydrogen. I mean, the list goes on and they’re all working together in an integrated fashion in the marketplace. That’s a big change and we’ll probably get into that in our conversation. It’s very exciting and together we work on federal policy, education and advocacy. So the Factbook is a big part of our mission and our collective work together. Jon Powers: How have you seen your membership change and grow over the last decade as more folks are being socialized to this issue and more leaders are stepping up in the corporate side? Lisa Jacobson: Well, there’s definitely more players and the business council is kind of a unique organization. We’re not a primary trade association for any one sector. We’re really a consortium and we focus on things that sometimes take a number of years to deliver on. And clearly the legislative successes that we’ve had in the past couple years are because of a decade or more of work. Jon Powers: Yeah. Lisa Jacobson: Not all companies can afford to invest in that kind of education and advocacy, so we’re a unique group. And also our members really share this collective vision of a portfolio of technologies. It’s going to take many technologies, many of which our members represent today and that are readily available to go, but there’ll be technologies and innovations that we can’t anticipate. So we have to make sure that in our education and advocacy, we’re developing policies that can be flexible over time to really deliver on the results in the public, private partnerships that we’re going to need. Jon Powers: And clearly this Factbook helps make that … That helps educate those conversations, for sure. Ethan, the first time I interviewed you, I actually use this quote a lot. You talked about how the industry went from people with long hair ponytails and jeans, to suits, right? And you’ve sort of seen the evolution of the industry, but BloombergNEF has been a critical part in collecting the data and building the argument of where things are going. Can you for folks that are not familiar, can you just talk a little bit about the organization and the history of the organization? Ethan Zindler: Sure. Well, first, thanks for having us back and thanks for still considering me an expert. I appreciate that. Jon Powers: Of course. Ethan Zindler: BloombergNEF is a division of Bloomberg that provides market research and analysis and insights on what we call the energy transition. And that is defined across all the different technologies. We certainly started in renewables, but we expanded out into batteries, electric vehicles. We focus a lot now on some of the technologies that I think folks are hopeful are going to come along and make a bigger difference in the future like hydrogen and CCS. And we also do a lot of research around more conventional fuels because they are certainly part of the picture as well. So yeah, no, we’ve seen an enormous evolution of the industry in the time that we’ve been around. We started life as a firm called New Energy Finance all the way back in I think 2004, 5, and then grew and were acquired by Bloomberg and have been doing this for about the last 13 years for Bloomberg now. So yeah, it’s a fascinating time, but kind of always is, and that’s kind of the nice thing about our industry. It’s always changing and expanding and with new things happening. Jon Powers: Lisa, the thing I love about the annual sort of Factbook rollout you guys do is you’re really laying out the foundation of what so many people need to make the case, both in the policy side that you guys are doing, but honestly also in the corporate side as we talk about where the trends are going, where the industry is going. What was a catalyst to get this going and how have you seen the Factbook change over time? Lisa Jacobson: Well, I mean, it really started from a board meeting where we were lucky to have Ethan join us. We were aware of the amazing work that he did, and it was really like best in class, especially for tracking renewable energy at the time. And we wanted to better understand what was going on in our industries. And we knew that there were changes occurring and changes occurring much more rapidly than they had been in the years before. And not just in renewables, but also in energy efficiency, clean generation and things that we could see that maybe small were poised for a lot of growth, and we couldn’t find a resource that looked at some of those smaller areas but also knit them all together and tried to provide a holistic view. And actually that still isn’t happening. I think the Factbook really is one of a few places where the story is told collectively as well as providing the individual components. So it was really out of that need. And then we had a conversations with BloombergNEF, and we came up with the Factbook. Jon Powers: Yeah. I think it’s really interesting to me when I go through all the different data you highlight, there is someone who works on the electricity side, specifically in solar and storage. I’m often laser focused on that, so I’m constantly seeing updated numbers there. But when you start looking at EVs, you start looking at the natural gas, you start thinking about the investment piece, you guys really comprehensively bring together the data around not just the clean energy transition in general, but the climate transition as well. So thank you for thinking of it holistically. Ethan, with the ’23 Factbook coming out, a lot of the trends that have been developed over the last few years, the solutions are starting to get hardwired into the American cautious and the American marketplace. What are the most exciting things that you saw coming out of this year’s Factbook? Ethan Zindler: So yeah, I mean, I think that’s sort of the theme that we tried to at least portray a little bit is that there’s a certain inevitability about this transition that is certainly taking hold. And the, look, for lack of a better way to describe it, last year was the most kind of normal year that you could say that we’ve had in the last several given the issues with Covid. And yet it was unusual and challenging year specific to the energy sector because of the war in Ukraine of course, and continuing pressure on prices as we came out of Covid and supply chain constraints started to ease. So there were some unique things that made life more challenging within our sector, which I think you probably well know, Jon. But nonetheless, overall the results suggest that there’s a sort of inevitability to the kind of success that we’re now starting to see in the industry. I mean, particular, I kind of look at the bottom line, which is sort of the rate of adoption in the most literal sense. And if you look at the volume of renewables now, about 23% of total generation in the United States last year came from renewable sources. If you include nuclear, then you have a zero carbon chunk of the US energy power supply that is about 40% zero carbon. If you throw natural gas in there, you’re up to about 80%, and coal now below 20%. So we are seeing lower carbon technologies really take over in many ways the power sector and that kind of transitioning is well underway. One other little tidbit that I’ll just throw- Jon Powers: Can I pause you for a second, Ethan? Ethan Zindler: Yeah. Jon Powers: There’s a color coded graph in the report every year, and I steal it and use it in a presentation I do that shows red, blue, whatever. You see the level of coal over the last 10 years and it just absolutely gets squashed and each of those levels as you hit 20% for renewables, there’s folks a few years ago never who would have never thought we’d reach that threshold. And here we are today just in the verge of not just passing it, but blowing through it. Ethan Zindler: No, it’s amazing. We’ll probably if we have another decent year this year, we’ll probably get to about a quarter of our power source coming from renewable energy potentially by the end of this year, which is pretty remarkable when you think about where we came from. Jon Powers: Yeah, absolutely. Ethan Zindler: And basically almost all of the delta, we went from about 10%, 12% in 2012 to now almost all that the addition has been wind and solar with some geothermal and biomass and other stuff as well, but it’s been mostly wind and solar. Jon Powers: Yeah, so I’m going to take it with Ethan for one more question, I’m going to come back to Lisa. Specifically. I’m I wanted to focus on the investment side, Ethan, for a second. And years ago, Ceres put out a report that we needed a trillion dollars of investment to keep ourselves below the two degrees centigrade threshold. And again, for a long time people were thinking this would never happen and we may never get there. We hit that target this year for the first time in a unique way, maybe not as comprehensively as Ceres lays out, but the numbers of billions of dollars, hundreds of billions of dollars moving into this marketplace today is pretty monumental. Can you talk a little bit about what you saw this round and how this changed? Ethan Zindler: Yeah, it is remarkable. And to put some numbers with that, we saw $1.1 trillion in what we would call energy transition investment last year worldwide. Some interesting trends sort of beneath that, but overall, when you look at the kind of growth rate we’re talking about, you know, we were at a number closer to about $200 billion about 10 years ago. So a quintupling more than that over that period of time. That’s the great news. And then put some US numbers out there too, about $141 billion in investment in the United States up from about $30 billion 10 years ago. So again, more than a quadrupling in the US specifically. So there’s been incredible progress and that’s the great news. The less great news is that it’s still definitely not enough. So even if a trillion used to be the right number, it’s definitely not the right number now. In our view, and we’ve been looking at the various forecasts that are out there from the IPCC and others, and to get to a net-zero scenario, you need to be probably averaging about 4 trillion a year by 2030 and- Jon Powers: 4 trillion. Ethan Zindler: Yeah, and we’re definitely not there yet, but there is the potential for a lot of growth. And one of the reasons is to go be beneath the hood for one sec, literally and figuratively about the numbers, about half of the investment, or a little less than half I should say, was invest in what we we would call, we’re calling it investment, but it’s actually revenues generated from the sale of electric vehicles. So in the US we sold almost a million EVs last year. And so that number could continue to rise very quickly going forward as the number of EVs around the world rises very rapidly. And we project that will happen. Jon Powers: And we are, look, we’re definitely seeing way more, it’s clean capital, right? We’re seeing way more competition in the equity markets coming into assets. You’re seeing clean tech VC funds, [inaudible 00:19:33] growing every year. There’s a lot of money. It’ll be interesting to see with the current situation with the banks, how the debt markets continue to tighten and whether when and debts being provided, where are those dollars going to, and hopefully we can continue to make the argument it should be coming into these assets. But I think this year in particular, it’s going to be really interesting to see what role that plays on deals and capital flow. So, Lisa, as you know, you guys have been making these arguments for years to policy makers. The last year was the third most costly year because of climate disasters. Does that resonate with policymakers or they don’t even think about things in those terms? Are they more worried about where their dollars are going to, or do they recognize that the demand from the cultural side of this issue being driven by things like disasters is really pushing them to be more aggressive? Lisa Jacobson: Well, I think it’s shifted. I think a few years ago, you mentioned Ceres. I mean, Ceres and other groups, if I go back five, seven years ago, let’s focus on the cost of inaction. There was a big movement to discuss that and we knew there was a lot of expense and taxpayer dollars going to help communities after a disaster. But that was a new idea, right? In policymaking you have to factor in the cost of inaction. Well, now I think that is factored in and the scale of it just unfortunately continues to rise. But I think it’s much more the community impact that people are seeing all over the country. Jon Powers: Yeah. Lisa Jacobson: I think we had over 3 million people had to be evacuated according to government data due to disasters just last year. It’s happening everywhere and people are seeing it much more visibly. And then obviously with social media, it takes, it’s a second to see kind of flooding in a street and cars and people stranded. It’s just unfortunately it’s horrible and it’s more visible to policymakers, and the disruptions to the business community. And obviously we’re all more sensitized now to disruptions because of Covid. I mean, we’ve had the most significant disruption to our lives than anyone would’ve dreamed we would’ve experienced. So I think people have a natural tendency now to think of readiness. So I think for all those reasons, policymakers are definitely more attuned to it and are concerned, because we just don’t have the time and the capital readily available to be making these really significant rebuilds and infrastructure improvements, so it’s important. Jon Powers: Interesting. Yeah. So to stick with the policy piece for a second, what’s interesting for the great trends in this report, we’re not even starting to see the impact yet of the IRA, the inflation Reduction Act, which I always combine with the Bipartisan Infrastructure Act, like that was passed, all passed last year, but the dollars are just starting to flow. The framework for the policy for those dollars are just starting to flow. How do you see that steroid injection over the next few years of infrastructure into the grid, electric vehicle infrastructure for incentives to do more renewables and energy efficiency and natural gas? What do you see that steroid injection doing for these trends over the next few years? Lisa Jacobson: Well, I could just maybe talk about the policy for a minute and then let- Jon Powers: Yeah, please. Lisa Jacobson: … Ethan go into maybe more of his perspective on the trends. But we’ve wanted a broad-based policy that was in sync with the business cycle of these industries and now we have it and we have it in multiple parts. You mentioned the Infrastructure Investment and Jobs Act, the most expansive research development and deployment investment from the federal government than we’ve ever had. And again, it’s not just for one or two technologies. It probably spans 20 plus technologies. And then they can integrate together through programs focused on modernizing our grid or transportation as you said. So they’re really thinking about value chain and there is a really good graphic in the Factbook that shows you the breakout of different technologies and how much money are from these two bills. And then you have the inflation reduction act, which- Jon Powers: Can I pause you? I think people think of one or the other. That was the first time I’ve seen them in a really wonderful explanation of how they combine. This is the impact this is going to have. It’s not we have one good bill, and then is there’s a different bill. These are actually a partnership, right? Driving the transition change. Lisa Jacobson: Definitely. I mean, that’s the hope, right? And that’s the period we’re in now is making them partner and leverage each other. But then as you said, the Inflation Reduction Act is largely 270 billion I believe, Ethan, right? In tax credits. And again, for many technologies and over a period of time where they can be used and businesses can plan. So that to me is the most significant aspects of these particular bills. And I think that we can’t really predict the dynamic impacts they will have. Right now it’s a little messy because we’re still waiting for guidance in a number of areas that will set the rules of the road. But that will all settle out in the next few years. And then we’ll start to see really the vision of where this could go. But I’ll stop there and let Ethan comment. Jon Powers: No, that’s helpful. Ethan Zindler: Not too much to add other than this is certainly without question the most, I mean, I would argue that the IRA on its own was the most meaningful piece of climate legislation the US has ever passed. But if you combine that with the IIJA, it’s really quite a remarkable achievement. And now as Lisa says, it’s all about implementation and how the rules get written and where we go from here. But one look at the devil or the angels will be in the details coming up in many cases. But nonetheless, we’re already seeing market impact. One thing we didn’t get in the Factbook, but we’ve been tracking it at BNEF, is that just since Biden put pen to paper and signed the law in August of 2022, we’ve seen $52 billion so far in new manufacturing announcements for batteries for EVs in the United States. Those are real announcements. Let’s be clear, I imagine some of them may have been in motion before the law was passed, but nonetheless, it’s really impressive how much activity we’ve already started to see. Our view is that it does, assuming that the rules get written generally correctly, it does represent a step change in terms of the amount of new build that we’re going to see for renewables going forward and for battery adoption, especially given some of the specific help that it provides for batteries. And we think we see a substantial amount of growth. I would say the only caution I would say is that if we, again, and [inaudible 00:26:57] mean to sound like a downer here, but it’s always about the ultimate goal, which is we want to address climate change, we really need to be building about twice as much. Just in the renewable side we need to be building about twice as much stuff a year as we are. We’re averaging about 35 gigawatts of capacity build a year, somewhere in that neighborhood, 30 to 35. It needs to be probably 70 to 80 if you want truly decarbonize the power sector by 2035, which is the Biden administration’s stated goal. So there’s a lot of work to be done, and we think this represents the step change going forward. And so it is a pretty remarkable achievement. And obviously it wasn’t easy and congratulations to those who made it happen. Jon Powers: Yeah. It’s interesting, I mean, as we are putting projects in the ground, we are seeing today the supply chain challenges of deals that we’re ready to fund today that we can’t get transformers on for 12 months, or we’re looking at the tariff prices that are being talked about coming back and we’re all excited about American manufacturing, but those facilities are just being announced. They’re not going to be putting product out for at best two years. So this is a really interesting gap we’re in right now where these phenomenal announcements have made, the policies are coming, the dollars are flowing. But getting that to projects in the ground is still a few years out. But I think luckily the industry’s no longer in, are we going to make it this year? And we’re all looking out, right? And investing out long term. So with that, Lisa, thinking about your members and how they look at this data and think about what they’re doing in their own operations, some of the conversation around the electrification of everything and the digitalization of everything, I had a conversation with a warehouse owner recently because we were looking to do some solar with them and they leased to a major company most folks know of who are also electrifying their vehicles. And he said, “The challenge we have is we can’t get enough power to this warehouse, not just for the operations, but then to run to electric vehicles too on top of that. It’s just a whole different change to the demand.” How are your members starting to think through these trends and how it affects their operations? Lisa Jacobson: Well, I think number one, you hit the most important part is they’re thinking about it. Jon Powers: Yeah, that’s true. Lisa Jacobson: And it’s not just companies around the business council’s table who in many cases have been very forward-leaning on net-zero targets, or corporate procurement of renewables, or they’re very active in supplying and helping industry do this. So it’s really spreading out into our economy and there’s many drivers for that. And just to go back to the Factbook for a moment, you just made a really good point about some experiences you’re having with some of your clients and things that you’d like to do as a company and some of the challenges you faced. But even with that corporate procurement figures, we had another record-breaking year last year, and you’d say, “Well, how is that possible?” And yes, we still have some of the tech leaders, but it’s a growing diverse group of players that want to get involved. Jon Powers: Every quarter we’re seeing new folks come in. It’s amazing. Lisa Jacobson: Right. I mean, that’s really exciting. The challenges that you described are there. I hear that around our leadership table. Every time we have a board meeting, we take time to kind of, okay, what’s going on? And you hear about supply chain challenges and issues with pricing and how it’s hard to close deals given a range of factors. So that’s all there, but it hasn’t changed the direction. And actually that’s what they’re asking us to do, both to policy makers and to the public in our work is we’re committed to the transition, but it’s not going to be a linear transition. It’s going to be a little bumpy along the way. And that’s irrespective of getting guidance on things like the Inflation Reduction Act, irrespective of that, given where we are with our markets and kind of what we need to accomplish in these next two or three phases with infrastructure, with integration, with sustainable transportation, all these things coming together, it’s a lot of change. And so it’s going to be a little bumpy sometimes, but that doesn’t mean that we’re not still headed towards that goal. Jon Powers: Yeah. Again, when we started talking about the looking back 10 years ago when we, versus looking forward a little bit. The fact that those companies you’ve talked about actually have dedicated energy procurement shops today, none of those existed 10 years ago. They just all paid their utility. That shift to how we are buying power and managing power at the corporate level is amazing, and I think will help continue to accelerate all the stuff we’re doing forward. So I do, as we’re getting close to the end here, I just want to look out now, and I’m not going to ask you to make predictions for next year. I think I’ve done that in the past. [inaudible 00:32:00] another episode, but I don’t do a good job of going back and holding you accountable for them anyways. So I’d rather look out to the end of 2030 and think with the work that you’ve been doing for the last decade and the trendlines that have been created, what needs to change going forward so we can hit the goals we need to hit for 2030? Is there any specific things you hope to see in place in the coming years on a policy side, Lisa, that could help thrive, or do we have the foundation in place because of the IRA in the infrastructure bill, for instance, to do that? Lisa Jacobson: Well, those are extremely important foundations and in the absence of that, there wouldn’t probably be the impetus to do the other things that we need to do. And I’ll just name a couple. I think we still need to transform our market structures as it relates to the energy system in the United States. We still are not really valuing the full benefit of certain energy services and it’s not easy to procure them and use them in an interactive way. So you mentioned electric vehicles or we could talk about grid efficient integrated buildings and demand response and just being able to activate that part of our energy economy when we need to. And actually when we have had markets that allow that, like looking at California last summer and to some degree Texas, when you put that call out and people respond and then we get more batteries and storage in place, we can manage a lot of very tight situations, but we don’t have that uniformly and it doesn’t have to only be in a crisis. We could be using that as a resource. So, I mean, there’s lots of aspects of our regulatory structures that are largely driven at a state level that need to be updated and we’ve been talking about that for 10 or 15 years, right? Jon Powers: Yeah. Lisa Jacobson: So more needs to be done there. And then secondly, we need to be able to move faster to build infrastructure in the United States. And that’s not just a federal issue. It is federal, state, local, then back up again, local, state, regional, federal. There needs to be better alignment and more streamlined processes to ensure both the communities are heard and that we are protecting our environment. But we can’t take 5 to 10 years to build out individual pieces of infrastructure. We’re never going to get to our goals unless we change that. And so we’re working on both of those areas at the business council. Jon Powers: And Ethan, so same question to you. Looking back at the phenomenal trends you guys have been able to, I think both assist in creating but also clearly track with the Factbook, what do you see that’s critical for us to get to our 2030 goals here the next couple of years? And is it capital, is it technology? Is it just implementation and getting [inaudible 00:35:02] in the ground? Ethan Zindler: I think it’s probably, it’s some combination, but the volumes of capital have been pretty remarkable. So I don’t mean to say, like, “Okay, we’re done there.” But there’s plenty of money at the moment compared to historically. Again, thinking in terms of the number of funds that have been raised and the amount of capital that now is trying to get deployed. That to me at least doesn’t feel like the [inaudible 00:35:30], though Jon, you’re closer to it than I am. I would say that the concern that I have as a bottleneck is transmission and permitting. And we’ve looked at, you know, we’ve done our projections and our potential forecasts around renewable build. And we do see a step change thanks to the IRA, assuming that the rules all get written in a reasonable way, but we see a limiting factor in terms of how much can get built. Let’s put it this way, the limiting factor of how much will get built in the US over the next seven, eight years will have less to do with the cost competitiveness of renewables and much more to do with whether or not you can actually just get on the grid. And that is a substantial issue and is the one area that if you were to kind of pick on the IRA and even the infrastructure law where you could have said there could have been more to support transmission. There was no tax credit to support transmission in an open-ended kind of way the way there is … There is money in the infrastructure law, but it’s not, to be honest with you, it’s kind of peanuts compared to the size of the challenge that’s out there. So that’s an area that I think we look at as a potential limiting factor. But nonetheless, again, we see really strong growth. I think it’ll be hard to hit some of the goals that have been set, but not impossible. And the last thing I would just say is that we’ve talked obviously a lot about the power sector today. There has been incredible progress being made in transportation. If you look at about a million EVs sold last year or a million cars sold with a plug I should say. That’s both pure EVs and plug-in hybrid EVs. We sell somewhere between, I don’t know, 14 to 18 million vehicles per year in the United States. So that’s coming up on a decent, it was about 7% of cars sold last year. We think that continues to grow. So ultimately emissions from the transportation sector are due to start to continue to decline. And emissions from the power sector have declined very dramatically over the last 10 years because of the trends we talked about earlier. Industry is really the area now and ag, but industry in particular is an area that I think we really need to all focus on. And there are some really important supports within the IRA around thinking about hydrogen and CCS. And in some ways, from my mind, from a policy perspective, those might be the most interesting because look, extending the ITC or the Investment Tax Credit or the PTC, the Production Tax Credit for wind and solar is great. It’s very effective. It’s not really complicated policy to implement, right? Jon Powers: Right. Ethan Zindler: You just lengthen the line. These are new things. So there are some new stuff in the IRA and how those get rolled out is really going to be important. And given that we have seen basically very little progress on decarbonizing the industry, that’s the one that I feel like I really hope we see some real progress on going forward. But the progress both in power and in transportation, those seem to my mind almost certain to continue and accelerate over the next seven or eight years. Jon Powers: Yeah. One thing I tell you to watch out for is being talked about all over the industry right now, it’s transferability and how that gets implemented and what that’s going to do to accelerate the tax credit work. Because I feel like there was a continued the last few years of anxiety about how much actual capital there was or tax credits there were to go out there into this space. And that will be a really important catalyst, I think, to getting more things in the ground. Ethan Zindler: Yeah, I think that the rules are to be written about that. Jon Powers: Yeah, for sure. Ethan Zindler: I think there’s a early announcement from Treasury the other day about a registry of some sort, but there’s a lot to be determined and yeah, given that basically there are so many tax credits within the IRA and we were focusing on the ones which are around building large scale wind and solar projects, but there are a bunch for manufacturing as well, which are [inaudible 00:39:51] the volume of so-called tax equity that could be required to fund all this is potentially enormous. Jon Powers: Yeah, I totally agree. Totally agree. Well, listen, I could talk to you guys all day about this. So first of all, thank you so much for the time and thank you for doing this every year and helping educate folks. You can go to bcse.org to get the latest 2023 Factbook, and always sign up so you get it every year and become members of BCSE if you’re not. So we really appreciate the incredible work and the data you guys put out every year, and thank you so much for coming back. Lisa Jacobson: Oh, thank you. Ethan Zindler: Thanks, Jon. Happy to be here. Jon Powers: And want to thank the teams at both Business Council Sustainability Energy and BloombergNEF for helping to put this together, not just the Factbook, but the episode. And to our producer, Colin Young. You can always get more episodes at cleancapital.com. Look forward to continuing the conversation. Thanks. Lisa Jacobson: Thanks.