Transcript: Ben Tracy and Kevin Book on "Face the Nation" on Jan. 1, 2023
The following is a transcript of an interview with Ben Tracy and Kevin Book that aired on Sunday, Jan. 1, 2023, on "Face the Nation."
MARGARET BRENNAN: We now want to go to Ben Tracy, senior national and environmental correspondent out in Los Angeles. And welcome Kevin Book, an energy analyst and currently the managing director of ClearView Energy Partners. Ben, I want to start with you because I don't want to just admire the problem. I want to talk about how to plan for what's ahead, and what is being done. And I know out in California, you've had for a long time concern about drought in the west, then you have these predictions from NASA, about flooding here in the east, really at record levels. So, so what is happening? What do people need to plan for?
BEN TRACY: Well, when we talk about climate change, you're basically talking about extremes, right? So the extremes get more extreme. So as you said, out here, in the west, we're talking about hotter and drier, and that's created this 23 year long, mega drought that we're suffering through. And then in the east, as you mentioned, there's flooding. And so you're seeing when you get these rain storms are often kind of supercharged, and you're getting more flooding out of that. Out here in the West, the real plan is how do you kind of forecast and deal with water supplies when you're talking about hotter and drier as the long term trend. So when you get more rain and less snow, you have less snowpack up in the mountains, and that is creating this crisis out here with reservoirs, with the Colorado River, and that's really impacting millions of people when it comes to the water supply. So it's hard to plan for but you now have the federal government coming out here in the west and saying, okay, states, you gotta get together and figure out how you're going to use this water supply, or we're going to start imposing some pretty significant cuts on you if you don't do it yourselves.
MARGARET BRENNAN: But at the federal level, Ben, we saw this historic investment, $369 billion. What difference is it going to make?
TRACY: It is a huge investment. And it could make a huge difference. The analysis of the bill shows that this really could get us to about a 40% cut in US emissions by the year 2030. So that's-that's huge. And so much of that comes from these investments in the power grid and in renewable energy. And in fact, the International Energy Agency came out and revised their forecasts and said that the- that the transition is actually accelerating, that we're going to see renewable.
MARGARET BRENNAN: Kevin, you look at this, from the perspective of investment and planning. So what is the biggest change that's coming in 2023? I mean, we hear all about this money being spent on incentivizing people to buy electric vehicles, for example, is that the upshot?
KEVIN BOOK: It's a big topic right now, because Europe is not happy about the incentives we're giving domestic manufacturing. But really, we're coming into 2023 on the heels of big energy security changes, big risks to the existing capacity. When you talk about the Inflation Reduction Act, one of the parts of the bill is that it keeps existing nuclear capacity on stream. The challenge is to keep clean electricity on the grid as you're adding new clean electricity to the grid and not losing it.
MARGARET BRENNAN: And nuclear being clean.
BOOK: And nuclear is a clean emissions free resource. And so there's no- there's no equivalent by the way for hydro, you can't use a tax credit to make it snow in the Sierra Nevadas. But in the meantime, we have to make sure we don't go dark before we go green. And so existing fossil resources are very front and center as we go into the year. Russian fossil energy exports, about 5% of global consumption, are now being shunned by the West. And that's on top of an investment wave that is slowed considerably after the demand collapse of the pandemic. And so we're going into the-the year short on conventional resources. That's a big challenge.
MARGARET BRENNAN: But one of the criticisms of some of this legislation is that the payoff would be so much further down the line to something that Ben is describing as an immediate crisis. But you also hear from people who are in the marketplace that some of it just wasn't written well.
BOOK: Well, fast drafting of big spending is hard. And actually, that was also hard. What's ahead is harder still, they have to spend a lot of money and do it really fast. If Republicans take over Washington in 2024, some of the unobligated balances could be targeted. Now, the tax credits, about $270 billion of the $370 billion that are in the bill, if you look at history, the last long term extension of solar tax credits was in 2008. And it was projected by the- the Joint Committee on Taxation at about $3 billion over 10 years came in at four times that amount. The credits a lot of them in the IRA are uncapped, there's no limit on them. And when the government hands out, free money usually gets a lot of takers. So no, not an immediate result, but potentially much bigger than forecast.
MARGARET BRENNAN: But Ben, when you talk about climate change, it sounds like it's one little box. But what you're talking about is financial investment. We're talking about geopolitics, we're talking about local government. It's a huge beat you have here, Ben, but on the sliver of it with geopolitics, talk to me about why this spike in prices for gas and-and oil in the wake of Russia's invasion of Ukraine hasn't actually led quickly to going green. In fact, it made for dirtier energy investment, right, with coal.
TRACY: Yeah, exactly. There's a lot of tension there because as those natural gas supplies were lessened in Europe, they had to turn to other forms of energy. So you did see a ramp up in coal use. There's actually a lot of analysts who are saying this eventually will more quickly accelerate this clean energy transition, because you now have Europe looking at Russia and saying we can't count on this in the future. So we need to more quickly transition to other forms of energy, like renewables, so solar and wind. You guys mentioned nuclear power, and that's a really interesting one, because you've had this real reconsideration of nuclear power because it is a form of clean and reliable energy. Here in California, you've actually seen there's one nuclear plant still operating in this state, it's called Diablo Canyon. And that was going to be mothballed. And they've reversed that decision, the governor came out and said, we need this, because we don't have enough renewable energy yet to make this transition off of fossil fuels.
MARGARET BRENNAN: But that's a difficult local government problem, because people in this country often.
BEN TRACY: You're gonna have this real tension all over this country, if we want to mine these things, domestically, these critical elements for the future of energy, they are going to be in somebody's backyard, they are going to be in places where people may not want them. The question is, is that a trade off versus getting it from a place like China and having them control that supply chain? So that's a real tension.
MARGARET BRENNAN: President Biden wants to go green, But not only is coal and natural gas cheap. But when you go green, it also makes us in some ways dependent on China, as Ben just said there for the elements that go into, for example, electric vehicle batteries. Kevin, how does that shift actually happen? How do you convince Americans that the drilling needs to happen in their backyard versus bringing these in from other places in Africa and China?
BOOK: Well, Margaret, that's a question mark, whether we can. Indeed, a lot of what we're looking at right now for the Biden administration is a tension between rapid deployment and the development of a domestic industry. And so solar panels are a big example of this. A lot of them come from China, and a lot of the solar material that goes into those panels comes from a region where there's forced labor allegations that are quite serious. And the question will be–
MARGARET BRENNAN: Human rights concerns.
BOOK: How are we- How are we going to balance human rights with the green agenda? And the-the administration has been struggling with that. But the other part of it though, is that how are we going to get development inside the borders of the United States? Globalization made it easier to tighten environmental laws, because industry went overseas. Now we're trying to bring it home. And the question will be, how can we do that in a way that is compatible with our stricter environmental rules?
MARGARET BRENNAN: And just to underscore your point, the Department of Energy reports China controls 80% of rare earths, those are the ingredients Ben was talking about, And within production and refining, that goes into generators for wind turbines, China controls 61% of global lithium refineries for battery storage and electric vehicles. You can't go green right now without China.
BOOK: It's true and deglobalizing was inflationary enough, buying new stuff was inflationary. If you're going to put new infrastructure in place, it has a financial cost. How are we going to do this without going through China? Well, the answer is we can't, not right away.
MARGARET BRENNAN: I want to ask you about pricing. We had these nightmare scenarios, going back to fossil fuels of oil at like $125 a barrel in the new year. Are we past that? Are we still in in that potential for real severe spike?
BOOK: We are stuck in the middle of a structural shortage, Margaret. Not only do we have underinvestment, but the shunning of Russian energy that we're doing now is leaving a hole in the supply picture. If gas isn't going into Europe on pipelines that it used to traverse, it's coming off the water from other countries. What are they burning instead? Well, some of them were burning oil. In other words, energy is tight everywhere, because there's less of it in the world right now. As we look ahead, you ask well, what's going to change, and we're seeing new infrastructure risks, new risks that whether you're looking at it Iran attacking Saudi infrastructure, the Nord Stream pipeline sabotage this year, the Colonial Pipeline hack here in the US, or just the matter of fires, floods and freezes getting in the way of production. These challenges to supply are starting to mount and so it's a pretty good expectation that we're going to be living in a time of scarcity for a while, it's changing our thinking. But slowly, we bought a lot of big cars when energy was cheap.
MARGARET BRENNAN: And scarcity means high prices.
BOOK: I do mean high prices.
MARGARET BRENNAN: All right, Kevin Book, great to have you here. Ben, thanks for joining us. We'll be right back.