Jon: Lisa and Ethan, thanks so much for joining me. Ethan: Thank you. Lisa: Thanks for having us. Jon: Yeah. And so this is our third handled coverage of the Factbook. Lisa, I was hoping you could just step back for a second and talk about just the history of the Factbook, what it is briefly and what you guys have seen it do as a tool for the industry. Lisa: Well, Jon, thank you so much again for inviting the business council for sustainable energy and BloombergNEF to share the findings of the 2021 sustainable energy in America Factbook, we are in our ninth edition. I find that staggering but also really exciting for what you’re hoping I’ll explain. I mean, we started the Factbook again almost 10 years ago, knowing across the sectors that BCSC works with, so that’s energy efficiency, natural gas, renewable energy, energy storage, sustainable transportation. We knew we were on the cusp of some very significant changes, but we didn’t really have an accessible resource that put it all together. And again, did it in a way that both our industries could understand, but also policy makers. We wanted policy makers to understand. Lisa: So we didn’t really know where the data would go and where the markets would go when we started. But we did a 10 year retrospective with the 2020 Factbook and we found significant structural changes in our energy economy. And we saw energy efficiency, renewable energy, natural gas, new sustainable transportation technologies really dominating the energy economy in the United States. And we’re getting very significant benefits. So we wanted a factual historical review of what’s happening in the marketplace. Lisa: We wanted to look at US energy as a whole, but then we also wanted to look at areas where we might have, right now relatively small deployment in technology, but we think that they are poised for growth. So we wanted to have it again a factual base record of a transformation that might occur going into the future. So it’s very practical and it’s meant to be a foundational resource for policy makers and certainly industry and other stakeholders that might be interested in understanding US energy markets. Jon: You can actually access it from a link when the podcast is hosted for all the folks in the audience. But Lisa, for folks that aren’t familiar with the business council for sustainable energy, and you guys are a rockstar organization. Can you talk for a second about what you guys do? Lisa: Thank you for that. Yes. The business council for sustainable energy is a policy advocacy coalition. We represent companies and trade associations in the sectors I just mentioned, so renewable energy, energy efficiency, natural gas, transportation, storage and we come together to focus largely on commercially available technology, and putting forth policies that will deploy us cost effectively and quickly and increasingly to look at what the scientific community is telling us we need to do with regard to climate change. How do we get on pace with the trajectories to reduce emissions and also prepare our economy for the impacts of climate change. So addressing resilience and adaptation too Jon: Excellent. And then Ethan, Bloomberg New Energy Finance. You’re the head of Americas. You guys are really the go-to… We’re talking about a Factbook, you guys have the data and have been able to put these facts together for a decade now, but for folks that are not familiar with BNEF, can you talk for a second about what you all do? Ethan: Sure. So BloombergNEF is a division of BloombergL.P. which is the financial information provider pretty well known, obviously news division as well, but we were about a 250 person unit within the much larger company that just focuses on what we would call the energy transition. But we also look at other areas where, of the economy now that are transitioning to lower carbon technologies and investment includes materials, and includes we would call it the circular economy overall and includes industry. And we’re also starting to look a bit at agriculture as well. But basically now we do fundamental research on this entire transition towards a lower carbon economy. Jon: So I think Lisa, you mentioned this last time we talked, it was last year’s Factbook and it was looking back over the last decades, and some of the fundamental changes that have happened leading to a really fundamentally strong marketplace, but obviously 2020 was a transformational year on so many levels for the economy. Maybe Ethan, you can talk for a second about some of the shifts that we saw, both in transportation and how our electricity and where electricity was being delivered, and in any thoughts on any of those shifts are here to stay or we sort of revert back to status quo up to those changes. Ethan: So I was joking with Lisa when we finished the project this year. Last year was useful cause it was the end of a decade, and we looked back over 10 years of all this extraordinary change and decarbonisation and transition and whatever. And I kind of thought, okay, well, 2020 it’s going to be kind of more of the same, but it’ll be incremental. Little did we know it was going to be the weirdest year in… I mean, literally one of the weirdest years in history, and it had all kinds of major ramifications, as you might imagine for the energy sector. Ethan: Total energy consumption in the US bar estimate was down by about 8% last year. So, that’s a huge decline bigger than we even saw during years like the great recession. But the decline was not even in particular use of energy around transportation, as you might imagine, was down the most, which is 14 and a half percent. And that was largely because at certain points of view, no one traveled at all on airplanes, almost at all at all. Jon: I haven’t been in an airplane in a year Ethan: Exactly me too, what I wouldn’t do to get on an airplane and get some peanuts. But the electricity segment of our use of energy actually only went down by about 4%. And that is probably not even that surprising because look, I’m not sitting here talking to you at my office, but I am here at home and we’re using a lot more electricity during the week here at home than we would have. So the residential segment basically helped to offset the declines in some of the other segments overall in terms of electricity, but overall energy usage was down. And that had all kinds of ramifications really across the whole energy sector. Jon: Interesting. And we did see a shift, continued shift Lisa in terms of generation. So, I love the fact actually in here that coal plants slipped to 19% from 45% a decade ago. And there’s so many factors that led to that shift, but we’ve seen a growth in renewables or growth in natural gas production. What are some of the continued trends that we’re seeing in the generation side that we hope to continue here in 2021? Lisa: Well, I mean, I’m sure Ethan will want to comment on this too, but let’s just look at renewables. I mean, we’re talking record setting year, nearly 34 gigawatts built, this is 50% above the previous annual record year. And when you look at where renewable sit with other generation in our mix, it’s basically tied with nuclear and… Lisa: Yeah, one fifth of our power generation in the country last year. So in a very challenging year where we basically had a very chaotic, at least a couple of months for large scale, renewable energy projects, we still had this tremendous growth. And some of it may be in just the policy uncertainty with tax credits and kind of a previous year or two ramp up. But I think it shows overall the bigger trend is that this is what customers want and it’s cost effective. Lisa: And I think that’s a structural change. We also have built in many years and continued investment in energy efficiency, while the energy efficiency picture for 2020 was a very unusual, basically our energy productivity rose, which normally would be a very good sign. It rose significantly, but it rose mostly due to economic contraction and as Ethan was saying the changes in the way we used energy. Lisa: So even though we had this positive metric if you look under the hood, it’s not for the reasons that we would want to see, but nonetheless, some of it is due to these long-term sustained investments in energy efficiency and they keep happening there they’ve continued and they are delivering however, energy efficiency industries and some of the project work has definitely been stalled much more than other areas in the clean energy marketplace. Lisa: Residential energy efficiency in particular is still not nearly back up to the pace that it was in a normal year. And, I think some of the latest estimates show at least about 400,000 clean energy jobs that have not been restored since the pandemic and many of them are in the energy efficiency, residential space. So we have- Jon: Could you talk about that for a second. I actually gave a presentation last week to an HR conference that we’re looking at sort of the next industries. And I specifically use the information from the data, the Factsbook, and there’s an amazing slide there that shows energy efficiency, jobs in pink versus… it’s like a hockey stick of energy efficiency jobs, and then all the other jobs below it is solar, coal and it’s really easy for people to think about a solar job or a wind job. But when you raise energy efficiency, if you don’t know the industry equivalent what is that? So how would you define just for folks that aren’t familiar with an energy efficiency job? Lisa: Right. Well, I mean, just to be clear, the data we’re using in the Factbook is the data from the US energy employment report that comes out each year and the lead researcher for that is a BW research. And so they have some pretty specific definitions, but generally speaking these are anything from contractors to energy efficiency financers, people that work in ESCOs, people that work in utility efficiency programs, efficiency equipment manufacturers. So like the whole supply chain of energy efficiency, and they have to work at least 50%. Many of them are full-time, but there are some challenges with methodologies as it relates to energy efficiency, workers in the contracting field, but there are established methodologies, and I think the important thing is the same methodologies are used every year. So it is a benchmark that’s worth looking at, even though it may be imperfect, but energy efficiency jobs are everywhere, right. There’re some people say there’s certain power… Well, anyway, I’m going to want to go off in too much of the weeds here, but energy efficiency jobs are everywhere and they are sustained day in and day out employment opportunities. Lisa: So this is an area that’s already was the largest segment really of the US energy workforce. And it was over 2.3 million jobs at the beginning of 2020. And there have been some losses and furloughs, but this is an area for continued growth, for sure. Jon: Absolutely. Ethan there’s been obviously some significant shifts and changes to the market in 2020. Some of the trends we were seeing for instance on corporate PPA is slowed down just because people weren’t signing PPAs last year as much, but we did see major commitments on climate and other renewable goals by companies. And we also saw just a dramatic shift in the global supply chains, as you know, so much was affected by COVID, of those trends, all those shifts we saw in 2020, what do you sort of see correcting itself in 2021? And what do you see that some of those will just be a continued shift? Ethan: Good question. I mean, I would say, yeah, it wasn’t a spectacular year in the grand scheme of things for corporate power purchase agreements, but it was a very good year in terms of corporate commitments on procuring more renewable energy and science-based targets to reduce CO2 emissions from companies. So that, to my mind, foreshadows a rebound in corporate PPA activity going forward, because if you want to actually hit these targets, you’re going to actually have to procure that clean energy. So I think that was probably a bit of a short-term thing. Ethan: We also had a bit of a boom, I would say 2019 was probably particularly good years for corporate PPAs as well in part, because there was a huge pipeline of projects coming online in 2020. And as Lisa mentioned, I mean, it was a record where 34 gigawatts of wind and solar built last year, and first let’s note that that’s remarkable. Jon: Remarkable. Ethan: Given that it was a super weird year, and that there were some real challenges to people actually getting their jobs done. As you know, during parts of the year, particularly on the residential and commercial photovoltaic side, it was not easy to get into people’s homes or onto people’s roofs, or do any of that kind of work or to market your services door to door, which is what a bunch of these companies Jon: Can we get permits done on town councils that weren’t meeting… Ethan: Exactly. Jon: so many weird, weird hiccups though. Ethan: That build was remarkable. It was like basically 50% higher than the second best year we’ve ever recorded. It was in part the factor, partly that drove that was it there a lot of money that was invested in 2019, and it takes time for that to then manifest itself and projects completed. And that was a record we saw for investments in 2019. The other thing was concerned around tax credits expiring at the end of 2020. And that really front-loaded some stuff into the calendar year that maybe would have gone a little further, although it’s hard to see how it would not have been at record, because it was such an enormous amount of stuff that got built over all. So obviously whatever impact those projects come online, that’s going to be long-lasting and they’re going to operate for the next 20, 30 years, whatever that is. But I think Jon: On the tax credit piece for a second, the extension obviously is fantastic. The industry looking at other work that you guys have done just sitting in the finance side, the tax credit space is exciting from a return perspective. It’s super challenging from a supply perspective. There’s just not that much a bunch out there. I mean, do you guys still consider that to be… Or what is your view on what choke hold that will play in continued growth here? Ethan: Well, that’s a really good question. And that was actually one of the other sort of question marks slash challenges of 2020, was it about April, May started to hear sort of rumblings about people saying things like, well some projects will get financed, but more adventurous projects may not have sort of code name, I think for. Yeah great example. Jon: So many things, Ethan: Yeah, anything that wasn’t like a standard Vestus wind turbine or your project, I think even PV plus storage was considered slightly weird. And so that wasn’t great, obviously. But look, the click that the proofs is somewhat in the pudding clearly is enough tax equity to get 34 gigawatts of wind and solar bill. Right. So if it’s been done once, presumably it can be done again. I think people are more confident about earnings from the banks and others now than they certainly were in April and May of 2020. So, I mean, I generally feel pretty good, but the point still remains on tax equity, which is that it’s just a fundamentally stupid way to try and subsidize the industry. It’s just the one that we happen to use in this country because it’s politically acceptable. Jon: Yeah, Lisa when we look back at the beginning of the last week, we went back to the last Factbook, you go back to sort of the Obama administration coming in and our money coming forward with the idea of shovel-ready projects. This industry was so nascent at the time. Even I remember our first interview, you talked about the shift in the industry from folks in jeans and ponytails to suits at conferences, right? It was just a shift that really happened over the last decade. Ethan: We’re onto man bonds now just. Jon: Yeah that’s right. Ethan: I don’t know I can’t Jon: But the reality is there was a major pour, a major outpour of public sector dollars that came in and has really helped accelerate bringing down the cost of technologies, bring efficiency to the workforce and really scale. But now looking at the last two years, even with the COVID, but the fundamentals of the industry are really strong. Jon: The private dollars are coming in like never before, but now we’re beginning of another new administration Lisa being in DC, that’s super supportive of what we want to get done here to solve the climate crisis. What should folks begin to expect? I’m going to get to the sort of stimulus side of this in a moment, but just in terms of other policy changes over the next year to 18 months, that will help continue to sort of push the trends we’re seeing in the Factbook forward. We’d just love your thoughts on sort of where the new administration is going to play there. Lisa: Well, I think, yeah, the new administration has been very clear about its concerns about climate change and the need to reduce our emissions globally, to meet the tests that the scientific community has set. We need to dramatically reduce our emissions. We also are seeing, and we’re recording this just a week after the blackouts and the grid challenges in Texas, Oklahoma, and a number of other states, but 2020 was a year and you’ll see this in the Factbook. We had very expensive and broadly felt natural disasters throughout the country, wildfires, droughts, floods. It was very expensive for our economy, but most importantly, really harmful to communities. So this new administration has also put a marker out there on resilience and resilient infrastructure. But I think when I look at taking a step back what’s going to influence deployment and investment. Lisa: I look kind of at the highest level. And then I also looked down at the more operational policy level at the highest level, we rejoined Paris. We are sending a signal to the market for this administration, that global engagement on climate change is critical, essential, and we want to be in, and by doing that, we’re going to set high level directional policies, that signal markets to low and zero carbon investment. And we want the US business community to lead in that. And we want to provide our technologies and services here at home, but also globally. So that’s kind of at the highest level, like this is a directional shift, and we’re doing it in a way that the Obama administration wasn’t able to do with that time. It was much more incremental conversation then, doesn’t mean that this will be easy, but that’s where they are. Lisa: And then there’s a whole suite of policies that are being looked at that both trying to improve our economic condition post COVID, but also simultaneously ensure that when the federal government spends money, it’s doing it consistent with the climate and resilience goals while creating jobs and meeting other tests that they set for themselves. So it’s a very ambitious agenda, but it also is trying to take a holistic approach. So at the highest levels of what the US government is projecting here at home and to the world and what they’re trying to implement on the ground. Jon: I feel like they have to… the last round, it was a need for the federal grant to really lead the way and drive and create space. And now the markets are so aligned to support what we want to get done. Some of it is just really enabling that and putting in place the incremental changes and some monumental changes, but to keep the private capital really going forward. Because I think either in the capital side, there’s nothing better for, for the capital than certainty and policy certainty and establishing some of that. And that leadership again, is going to be really critical to open the doors. And part of that is we are going to see a massive, hopefully we’re going to see a significant stimulus or folks are calling the green stimulus. We’d love your thoughts on how that will affect what we care about in the clean energy industry. Ethan: It’s a good question. Maybe first, just more broadly on the policy question, it does here in the power sector, which is mostly what we’re going to talk about. We’re talking about so far decarbonisation has a certain momentum to it right now. And the reason why coal the achieved 19% of generation last year down from 45 a decade ago is, it’s just not cost competitive. It’s just bucket by gas, which is cheap and renewables, which is a zero marginal cost. Ethan: That trend we think can basically continues over the next five years. It doesn’t list to be clear. It doesn’t get you to a zero emission picture, but it does create a lot of momentum. Ethan: It’s the other sectors of the economy that just, aren’t going to click aren’t going to decarbonize themselves and particularly rotation. And that’s where just such a massive difference between the Trump administration and potentially the Biden administration, the regulations around corporate average fuel economy standards. This is just a hugely important. Jon: having a Superbowl commercial electric vehicles. Ethan: Absolutely. I mean you see corporate bonding, right? Automakers that were dragging their feet and, fighting California tooth and nail are now suddenly promising to abolish internal come on jet engines and yeah, running great ads about how, not always our enemy because 30% of their sales or EVs or whatever it is. Ethan: So there’s, there’s a lot the administration really can get across in other areas. Last thing I’ll just say on Paris and I agree with Lisa that I think it sends a good signal. I’ll go one step further, which is, I also think that getting back into Paris actually puts important pressure back on the Biden administration itself to do something material between now and when the next cop takes place. Ethan: Because I think unfortunately the global lesson that a lot of people have taken away from the last four years is that unless the US legislates a real commitment to reduce its emissions, then you really have to be concerned that they won’t continue to follow through on their commitments because basically the Trump administration just sought to water down and walk away from everything that had been pursued in the prior eight years. So I don’t think it’s unfair of the rest of the world to expect us to pass legislation that enshrines these goals in some fundamental way. And that in turn means that the by administration has to put this at the top of their list this year. They can’t get back burnered into it . Jon: And so can you paint a picture Lisa like when people talk about a green stimulus, what are we expecting coming out of Washington? and what type of timeline are we expecting it? Lisa: Well, there’s a lot of talk about once this first COVID relief package gets passed, which we’re now being interviewed, where we were at the end of February. So maybe by late March, early April that will pass. And that could certainly slip, but I think there is an interest in trying to get it done before the end of March, because of some of the critical support programs to families and others that will expire. Lisa: So then the tables will turn to what comes next. And I think there’s a lot of conversation about a large infrastructure package, which would include a lot of investment and perhaps research development, deployment dollars that would support clean energy technologies. And we look at what they did and what Congress has passed, really over the last six to eight years, it has been a mix of investment in research development and deployment and tax policy. Lisa: So I think when a relatively conservative view of what congress might accomplish this session, or by the end of the Congress in a couple of years, there’s an expectation that that is kind of the center of the bullseye. You have some kind of a tax set of set of tax initiatives and clean energy would be part of it. And then it researched development deployment set of investments. What comes beyond that? Things like the clean energy standard, or some kind of carbon pricing or other legislative activity, we really just don’t know. And obviously there’s a lot of speculation procedurally, how you would do that. And we have very tight margins in both the house and the Senate, so we could have a whole podcast on that, but I think there will be action. It will include clean energy. And we have an administration that supports that. So what we didn’t have congress passed these before was kind of a forward-leaning supporter in the administration. Now we do. And so that’s kind of a base of operation. And then let’s see what we can do beyond that. Ethan: Which is just tax cuts. I certainly complained about them earlier, but they in terms of being an efficient use of subsidizing an industry, they are politically acceptable. It would appear to Joe Manchin, who is the… And as a result, it does look like that leads the conversations, at least we’re hearing here in Washington, is it, that’s the type of support that we’re going to see potentially going forward. Jon: Do you see that thing both for energy storage and then possibly the cash grant they’ve been hearing a lot about, Ethan: I haven’t heard as much about the cash grant so much as just the energy storage and for renewables, and maybe even some thought about how to subsidize anything that’s zero carbon. I mean, it is worth noting that we have an interesting state where, a fifth of our power from coal, a fifth of our power is from renewables. And a fifth of our power is from nuclear. And those plants, if you want to get to zero carbon, you got to keep those online and they’re not doing so great financially. So that very well may be part of some tax credit discussion as well. Jon: Lisa, what message you want to give to the audience of something they can do to help push some of these things forward in Washington. What would you tell them to do, other than reading the Factbook? Of course, that’s step one. Lisa: Well, I mean, engage locally with your members of Congress, and if you have a clean energy story to tell don’t take that for granted. I mean, I just mentioned, we have a sister organization under the BCSC called clean energy business network, and they represent small and medium sized businesses in clean energy sectors all over the country. One of the things they do when we released the Factbook is that they do a complimentary campaign called Faces Behind the Facts where they profile business leaders and to do just that, to tell their story. And I still think that these constituent relationships matter, especially in places where climate change may not necessarily be the number one talking point that politicians, speak about when they do town halls or other things. So I really think getting the local message out that clean energies, reliable, affordable, practical, and it is happening in our area wherever I live and sharing that is really important. Jon: Yeah. I think some of the strongest advocacy, both in Washington and locally, as we can tell your own story, but back it up with these facts, right? So I think people get nervous about the story they can tell it’s for the audience, the personal story is a powerful, but the work is done for you. Both Ethan and Lisa and her team have done the work to help you put the facts together to help push the policies we need forward. So get on it. And then Ethan, we come back to do this next year. What should we expect in terms of the trends? Ethan: Gosh, a good question. I mean, I think one of the points we did try and make in the Factbook this year was look, 2020 was super weird we all know that. And so for instance, US CO2 emissions felt 9% year to year. And from 2019 and 2020, it’s an incredible drop. Let’s put it this way, if emissions don’t take back up, then we’ve got some other big problems, which is that our economy is still really going to be we’ll have really been stalled out. So it’s almost in my mind that now there are a lot of things that go into emissions and weather, whatever, but if emissions don’t take back up again then we’ve got a really deep recession. I think they will take back up because the economy does seem to be recovering. Ethan: So overall in the macro sense, energy usage almost certainly will go up again. Let’s actually hope it does go up. But the larger trends that we’ve seen, which is improving energy efficiency decarbonization of the power sector, that stuff will continue. I have less confidence about becoming more efficient and fuel efficient and less submitting in the transportation sector, just because I think they’re not under the same kind of pressures economically, or even from regulation, but hopefully that will change by the end of the year as well. Jon: Yeah. Interesting. I remember pictures going around in April and may have some of the capitals around the world and how clear they were from smog. Right. And just a realization like that’s unfortunate. It’s not going to stay the same Lisa: And no cars on the road. Remember the rush hour shots of LA, DC, Chicago. There was nobody on the road and other capitals around the world. We were not obviously the United States. We weren’t the only ones. So the traffic coming back, unfortunately. Jon: Yeah. Well thank you both for the time and challenge everyone to go get the Factbook, give it a read, use it as much as you can in an advocacy. And if you’re writing our it’s just a great thing to link to. And thank you both for the incredible story that you’re helping to tell for our industry. Lisa: Thank you so much. Ethan: Thanks for this opportunity. Lisa: And stay well, stay healthy stay safe. Jon: You too. And thanks to the teams at the business council for sustainable energy and BloombergNEF producers, Colleen Young and Carly Battin for helping to put this together, you’ll always get more episodes @cleancapital.com and look forward to continue the conversation