Energy Capital Podcast

Over a hundred years ago, the monopoly business utility model emerged as the one that could attract sufficient capital to electrify everything.The monopoly utility business was championed by Thomas Edison’s protégé and early leader of ComEd in Chicago, Sam Insull.It worked. By mid-century, most Americans had power.But today, competition for generation and retail have shown that monopolies are not necessary. Texas is a poster child for for competition but even Texas has little competition on the distribution side — and the cost of distribution is skyrocketing with no ability for competitors to offer alternatives that could save consumers money.The monopoly model literally rewards utilities for spending more capital, even when smarter, cheaper options exist.In my conversation with economist Lynne Kiesling, we traced the arc from Insull’s vision to today, and talked about where the system is showing serious signs of distress. And we discussed how that could change…How We Got Here: Edison’s MachineEdison designed complete systems, from generators to the lamp in JP Morgan’s house. Insull scaled that model in Chicago, betting on economies of scale (bigger plants) and scope (serving factoreis, homes and electric trolleys together to increase system utilization and load factors).That became the vertically integrated monopoly: a single company, fully integrated, would keep costs low. Legislatures around the country formalized it, spreading the monopoly-utility model far and wide.It was the right model for the time. America needed electrification, and investors needed stable returns.“Economies of scale and scope… that’s your natural monopoly right there.” - Lynne KieslingWhy It Worked Then and Why It Doesn’t NowThe framework assumed three things:* Bigger plants are always cheaper.* Vertical integration and central planning are essential.* Utilities should earn guaranteed returns on new capital.That fit a world that wasn’t yet electrified and needed massive centralized power plants. But two revolutions were disruptive to the monopoly model:* Gas turbines: By the 1980s, combined-cycle plants made smaller, flexible generation competitive and lower cost than bigger centralized plants. The “dash to gas” in the 2000s proved it.* Digitalization: Sensors, controls, and standards cut transaction costs. Coordination no longer required vertical integration.Price Discovery: The LinchpinEconomist Friedrich Hayek described prices as a “system of telecommunications.” ERCOT proves it daily. When scarcity prices spike, batteries discharge, generators ramp up, demand response kicks in. Investors see those signals and commit capital for more resources.“Markets are a discovery procedure… trial and error with your own capital is how we get the most benefit.” - Lynne KieslingEvery bet on future conditions shapes tomorrow’s incentives. That’s why Texas leads in storage growth, retail innovation, and is attracting new gas peaker plants, too.But here’s the catch: we don’t allow price discovery work at the distribution level.The Last Monopoly MileTransmission and distribution remain monopoly domains. Under today’s rules, utilities earn more by spending more. Propose a $50 million substation, get it approved, earn a return. But what if a portfolio of distributed resources (e.g. batteries, EV charging, demand response) solved the same problem for half the cost?In most states, including Texas, that option isn’t tested. Regulators just green-light the $50 million.That’s why Lynne calls for “quarantining the monopoly”: keep exclusive rights to the poles and wires, but open competition for solutions at the grid edge.Final ThoughtsTexas already showed the world that wholesale competition works. Volatility spurs investment, spreads risk to investors, and drives down long-term costs.The next frontier is distribution. If we quarantine the monopoly to the wires while opening structured competition for everything else, we’ll see faster innovation, more reliability per dollar, and lower bills.That’s the Texas way: pragmatic, innovative, and willing to lead.This is just Part 1 of my conversation with Lynne Kiesling. Next week in Part 2, we’ll dive into data centers, AI demand, and why risk allocation will define the grid’s future.Timestamps* 00:00 – Introduction* 02:30 – Why history matters today* 05:00 – Edison’s vision for a fully integrated electric system* 07:30 – Insull’s bargain: regulate us but grant a monopoly & don’t municipalize* 10:30 – Was monopoly the right solution then?* 16:30 – Natural monopolies: economies of scale and scope* 20:00– Outdated assumptions, Texas competition* 22:00 – Rate-of-return regulation, capital bias, and technology innovation* 26:30 – The changes brought by combined-cycle gas plants and digitalization* 30:00 – Quarantine the monopoly, price signals* 31:30 – Do conservatives still support competitive markets?* 33:00 – How and why arbitrage lower prices* 34:30 – Distribution system efficiency and utility incentives* 37:00 – “Markets are a discovery procedure”* 40:00 – Let volatility speak, Texas choices* 42:00 – What’s the next frontier of competitionResourcesGuest & Company• Knowledge Problem (Lynne’s Substack) • Lynne Kiesling (Northwestern, Personal site, Santa Fe Institute, Books & Articles Discussed• The Merchant of Power: Sam Insull, Thomas Edison, and the Creation of the Modern Metropolis• Power Loss: The Origins of Deregulation and Restructuring in the American Electric Utility System by Richard F. Hirsh• Hayek: A Life, 1899-1950 by Caldwell and Klausinger• Competition as a Discovery Procedure, F. A. Hayek (QJAE translation)Related Substack Posts by Doug•Why Are Energy Bills Rising So Fast? A Conversation with Charles Hua • Creating a Distributed Battery Network with Zach Dell• The Energy Capital Podcast, Episode 1 with Will McAdams• Texas’ Load Growth Challenges and Opportunities, with Arushi Sharma FrankThe Texas Energy and Power Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a paid subscriber.Doug’s Platforms• LinkedIn• YouTube• X (Twitter)TranscriptDoug Lewin (00:05.356)Welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. My guest this week is Lynn Kiesling. There are few people in the electric industry I like reading and listening to more than Lynn. I'm kind of ashamed it took me this long to have her on the podcast, but better late than never. She is the director of the Institute for Regulatory Law and Economics at Northwestern University. She is a non-resident senior fellow at AEI, the American Enterprise Institute.The reason I wanted to have her on the podcast is I think she is sort of the academic expert par excellence on markets. She really understands markets inside and out. She has been as influential talking about transactive energy, talking about distributed energy resources and how they can participate in markets. She's been talking about these things more than just about anybody, talking about them eloquently.and really kind of pushing the envelope on what needs to happen in electric grids and electric markets for innovation. Obviously, with a focus on Texas and the electric market there, we split this into two parts. In the second part, which you'll hear next week, we got into all kinds of different stuff about data centers and their impact on electric grids, what they'll mean for competition. This was a ton of fun and a very wonky, deep conversation that I think you're going to enjoy. And more importantly,learn a lot from. Lynn is just a fantastic teacher and it was great to spend this 90 minutes with her. So you'll have 45 minutes today, another 45 next week as we go deep into the roots of electric competition and what it means for energy transition, affordability, reliability and all of that. So with nothing further, here's Dr. Kiesling.Doug Lewin (01:51.82)Lynn Kiesling, welcome to the Energy Capital Podcast.Thank you for having me, I'm glad to be here.I love reading your articles on Substack and knowledge problem. You obviously are an economist par excellence. are doing just great work on electricity systems and the evolution of electricity systems, competition, technology. You hit on all the things. Before we get into all that though, I think it helps to kind of ground people in like the, some of the history of all this and you're, you're an economist.but you're also a bit of a historian. So before we start talking about data centers and DRs and electric vehicles and all these cool technologies, you've written a lot, and I think just really eloquently and clearly, and I think you've done a great public service with that, about how the system of regulation we have, which is now well over 100 years old, is kind of showing some of the signs of its age. And is it quite keeping up with the technology and maybe needs to evolve?So can you talk a little bit about where we came from, sort of how we got that system, what defines that system, and where it's just kind of not fitting with where we're at right now?Lynne Kiesling (03:06.52)Well, thank you. I appreciate that. And I like the metaphor, you know, feeling like as I get older, my joints are creakier. And I think that's true about our institutional framework. Yeah. It's not just bodies. It's, know, the, kind of organic metaphor is relevant here. And for folks who, and especially maybe for students who are thinking about career paths, you know, I'm an academic by temperament and by career choice. So.You know, my fields in graduate school were industrial organization, because I went to graduate school to study electricity and with John Panzer at Northwestern. But then I got there and just got gripped by the love of economic history. And so I kept studying technology, but I actually worked in economic history. And then my other field is mechanism design, which is where the market design stuff comes in. So yeah, I have a love of history andand it's been part of my professional work. This industry has, I think, some of the most fascinating history and it helps think both industry professionals, but also policymakers and regulators if they understand some of the history of the industry that they are engaged in. And it's definitely something that I get a lot of good feedback on, which we can talk about in a second. But the late 19th century,in a lot of places, well, in Britain in particular, but in the US especially, the late 19th century is this cauldron of innovation. And we think of it as this kind of great man history of the iconic titans of Alexander Graham Bell running to the patent office so that he could patent the telephone and all of these things. And that's pretty much the dynamic between Bell and Edison, Thomas Edison was in all of these different technologies.It's like the race to patent, race to patent. And so you get this really vibrant, rivalrous innovation. And at the same time, you get these iconic approaches to innovation and how innovation should proceed and what the goal should be. And so Edison in particular was really committed to number one, developing electric lighting as a commercial service and as an engineered system. And number two,Lynne Kiesling (05:31.714)developing it as an integrated system. And so, you know, some people today when they're sort of snarking about the lack of innovation in regulated utilities, they will say, well, you if Thomas Edison came back today, he'd recognize the system we have. And, you know, yeah, I guess that's true in kind of a snarky way, but in a really profound and meaningful sense, he envisioned the design of power systems asfully integrated systems where you put the fuel in the generator all the way through to Edison Electric owning the lighting fixtures in your home, in his first customer's home, which was JP Morgan. JP Morgan, right. And so that integrated system from a systems theory and an engineering perspective, Edison really brought that to the party. We've had the path dependence from that. has shaped the business model. It has shaped how we've designed regulation.And it was a success. One of the folks who worked for Edison was Sam Insull, who he sent to Chicago or, well, Sam took himself off to Chicago and said, I'm going to turn Edison Electric into something big in Chicago. And he famously interacted with the progressive era, the formers of the time, because the way power systems were getting built in cities was through getting a franchise from the city council.It was kind of notoriously corrupt. And so the progressive era reformers said, well, we have to counter this corruption. And this is the big is bad, trust-busting era. And so they countered this and said, well, we need to municipalize all these. These should be public utilities, publicly owned. And Edison and Insull and this growing investor-owned utility industry thought differently.And he gave this famous National Electric Lighting Association speech, I think in 1898, where he basically says, the private investor owned electric utilities, we should accept regulation so we don't get municipalized. But the other thing that I think a lot of people don't think about when they think about this era is that the investor owned utilities really benefited from regulation.Lynne Kiesling (07:55.95)because it got them out of having to pay a lot for their debt service. Because how do you get a consolidated Edison in New York or a Commonwealth Edison in Chicago? You buy out all your competitors. And turn of the century, in Chicago, there were like 34 competing electric utilities and all the wires. And when you have that cost structure with economies of scale, there's no way all 34 of those companies are going to be able to hang in that industry.And so someone's going to go bankrupt. Who's going to buy them up? It's going to be Sam Insull and fire sale prices. And that's how you get this. So they were insulating themselves from having to pay more to get more debt to buy up their competitors, while also insulating themselves from expropriation from those who want to municipalize them. So that kind of foundation is important.Yeah, Insull is one of my absolute favorites because he's such a fascinating, first of all, historical character, the whole arc of his career coming over as a young man from the UK and becoming Edison's right hand man. Like literally in the first day off the boat, Edison recognizes this guy has a mind for organization. And Edison was that like stereotypical like absent-minded genius. Like his business affairs were a mess. Insull got all that organized, works for him for decades. Does really well.has like huge opportunities to make way more money, but goes to Chicago and is like, I'm betting on myself and builds this into this huge massive empire, which then all collapses in the depression. He dies penniless in the subway. So like that's the 62nd version. There's so much detail in there that is so fascinating. But one of those is the way he kind of broke those franchises with the, with Chicago city council, which, know, like they were not just gonna let him.come in and do his thing, they were trying to strong arm him out. And when they tried to strong arm him out, he went out and bought up all the patents for all the equipment. And then it was like, hey guys, you want to give me a franchise now? Just total baller stuff. Like it's really wild to read about. But I think the main point for this conversation, right, is that monopoly utility business model that he made a speech about in 1898 and I think was able to...Doug Lewin (10:16.974)with ex-suit in 1907 somewhere right around there or something like that in Illinois. And then like wildfire right over the next six, seven, eight years, like basically every state in the US or something like 44 or 45 states, something like that within a period of seven, eight years had done the same thing. And you have this monopoly business model. So is it fair to say, I was gonna state this, but I'm gonna ask it as a question, because I'm actually really curious what your answer is. If you have a different perspective, I truly would love it, because I really...admire the depth of your intellect on this stuff. I usually say that that was the right business model for the time because of exactly kind of just what you said, right? Like to not have a super high cost of debt, you want to be attractive to capital markets. Well, if you have a monopoly, that's pretty attractive thing. And the whole point in the 1910s, 20s, 30s, all the way through 50s and 60s, because people forget, I had Rick Perry on the podcast once and he said,when he was born in the late 1940s, early 1950s, they didn't have electricity at his house. Like people forget this, but like it took a long time to electrify. So you want to attract capital. Was that the right system for the time? And then I think more to the point, like why does it not fit today? In what ways does it fit? And in what ways does it not?Oh, I love that. Yeah. And Insul, there are some ways that I think Insul has really got dealt the bad hand of history. His bankruptcy, the whole 1930s New Deal, the holding companies. I think Insul's very underappreciated. So I agree with you on that. And to his credit, I will say the kind of big progressive era movements, right? The Sherman Antitrust Act and the Grange movement and all of this, you know, big is bad, robber baron.rhetoric. It does paint this picture that these companies are rapacious and just in it for what they can get. And they forget that economics is about exchange and exchange is really about mutually beneficial cooperation. know, give me that which I want, you shall have this which you want. Right? That Adam Smith, you know, if I'm going to succeed in making a living by selling something to you, I have to get in your mind and think about what you want.Lynne Kiesling (12:34.08)And Insull was really good at that in addition to his tactics about patents and intellectual property. And he flat out said throughout his entire time, we want to grow by enabling universal electrification. And if we price electricity too high, that's not going to happen. And so we want to make electricity affordable for everyone so that everyone will have electricity. And there is an embedded assumption in there aboutprice elasticity of demand. But over time, we have evidence that the price elasticity of demand for electricity is pretty low. And so really, the way to make the most revenue is by having a higher price. So it's not clear that he got his elasticity estimates right.Well, wait, I want to double click on that one. So like in the early days, right? What Insull did was he, and he was starting to figure this out when he was working with Edison, but he really brought it to fruition in Chicago. He came in, I think with this very much in mind when he started in Chicago. We'll say you got all these fixed costs, right? And like that time, right? The peak on the system was when the sun went down, cause was like, it was all lighting pretty much, right? And so you have this system that like could accommodate.power demand 24 hours a day, but it's pretty much being used two or three or four hours, sun goes down and people are sitting around talking or reading their books or whatever, and they don't have to burn kerosene indoors and all that kind of stuff. But then he starts going to the factories, the traction companies, like the electric trolley companies and all that stuff. Yeah, and saying, hey, how would you like power for less than what it costs to...The Chicago Transit Authority.Doug Lewin (14:19.854)maintain the horses that are pulling the trolleys, or less than what it costs to burn the coal on site at your factory, or whatever the thing was. I mean, that was like the early days of industrial rates, right? I mean, it was just like it was a system utilization thing. So maybe it's not the same as elasticity of demand, but it's related, right?Exactly. And you are getting to one of the things that was really genius. And I will say the commercial and the engineering development of power systems was far ahead of the actual economics, right? The economics came, you know, a decade, 15 years later. Insole, first of all, he's definitely gutsy. You know, he sends a telegraph, I assume, to GE in New York and says, Hey, I want to build an enormous coal-fired power plant.what was outside of Chicago and is now Pilsen neighborhood in Chicago. And I want it to be this big. Can you build me a generator for that? And the engineers at GE are like, dude, there's no way we could build anything that big. And he's like, come on, you're engineers. You could do this. And so then they do. And they build Fisk power plant, which was at the time the largest power plant ever built. And so he's out there with these really gutsy moves. one of them is the, go into the traction company and go into the Chicago Transit Authority and saying,I hear you guys are talking about electrifying and building your own generation, which was pretty common at the time for urban railways to do. Rather than you incurring that cost, just buy from me and I'll cut you a deal. And so these two moves, right, building FISC and electrifying the CTA, illustrate the two conceptual pillars of the economics.Because the theory that underlies regulation is called natural monopoly theory. And the two pillars are economies of scale, right? Build that massive honkin power plant and keep it running as much as you can given maintenance and whatever. And that just drives down the average cost per unit. There's your economies of scale. Economies of scope is the other pillar. And that's where you use a set of assets to produce two different products and that the combinedLynne Kiesling (16:35.502)cost of producing those two from that set of assets is lower than the cost of producing one with one set and the cost of producing the other with another set. so economies of scale and scope put the two together. You know, got your chocolate, you got your peanut butter, and that's your natural monopoly right there. And to your question, it certainly was the right business model given the technology. And I thinkA lot of business models and technologies and regulations are co-determined, right? And so there's a historical determinism to the path that we end up on. And so I think given the way that technology developed, it was useful. And as you say, through the 1940s, 50s, and then plateauing in the 1960s, there's a great book. Have you read Richard Hirsch's book, Power Loss? Yeah. I'm full of book recommendations for everyone.No.I love it. I love that. Yeah, that's great.But the first recommendation I always make to everyone is Richard Hirsch. He's a historian of technology at Virginia Tech. I think he's emeritus now. And this book is Power Loss. And he has really good data on essentially how the power systems hit a technological plateau in the 1960s. And then you get the weirdness of nuclear. And what he's doing is he's building the backstory to why PURPA was passed in 1978, know, with all the oil crisis and everything in the 70s.Lynne Kiesling (18:01.708)and then the impetus for restructuring in the 1990s. And so if you're interested in why we end up restructuring, he's your man.Okay, definitely. I will read that. Anything you recommend. I should be careful because I know you got a lot of books. It may take me a while. All right. So you wrote a great piece called The Invisible Price Tag of Yesterday's Regulation, about exactly all of this. And I'll just read a little bit from it. Early 20th century regulation was built for a capital intensive centralized grid designed for universal service and exploiting economies of scale and scope. Three outdated regulatory assumptions now hinder innovation. So this is where kind of we're getting into likewhere it doesn't quite fit. So whether or not it was right for the time, we could talk for endless, infinite amounts of time about that. But I think it would be inarguable that it at least did what it needed to do in the sense that we were electrified. mean, the United States with a few rare Native American reservations of colonias in South Texas, there's still some places that it's still problematic, but like 99 % or even 99.5%, right?electrified, it kind of did what it was supposed to do. Of course, you could talk about co-ops and TVA and LCRA and all that as there's public power as part of that discussion too. But now we're in an era where the utility business model of spend a dollar, earn 10 % or 12 % or whatever it is, this, what you call embedded asset bias, that there is a bias to spend more.Again, in the early days, really useful because you needed a whole lot of capital spending and you needed to raise that capital. Now we're in an era where like with all the data center conversations, there's certainly a whole lot of money being spent. But I think there is this question that is being begged. I'm begging people to ask this question. We have seen competition, I believe, certainly we're all products of our experience and our environments and...Doug Lewin (20:01.836)working within Texas for the last 20 years, I have seen firsthand how competition certainly in wholesale has worked really well. Retail, think it's a little bit more of a mixed bag, though we are seeing a lot of innovation, the base powers and the octopuses and the David energies and all these companies that are coming even like NRG, like the big legacy of Houston light and power when it was split up and then became.Reliant like they're doing virtual power plants and offering customers different kinds of rate products for so you're seeing this innovation in the retail and I think there's this important question here as to what functions within the regulated model and I'm speaking about Texas. have monopoly transmission distribution utilities. Are there functions that they have that might make sense to actually have some form of competition even if it's some kind ofregulated, simulated competition, but something to have a price discovery as to whether or not the dollar the utility is going to spend is the most efficient dollar. I know this is something you've thought about a lot and written about a lot. So let's talk about that a little bit.And I'm glad you used the phrase price discovery because I think that is the linchpin for all of this. know, a lot of people are like, well, why markets? You know, when we had it, everything vertically integrated, it was easy with unbundling and markets and having to worry about resource adequacy and accreditation. And this is all very complicated. Why? And the linchpin is price discovery. So starting at the capital intensive end and then moving forward.This is a industry with rate of return regulation and rate of return regulation started as a feature has now developed some characteristics that I think are bugs. And those bugs have to do with incentives to innovate incentives for new technology adoption. And there's a lot of assumptions that go into rate of return regulation. The first is that you have economies of scale and scope. The second assumption is the vertically integrated structure.Lynne Kiesling (22:11.278)which for our purposes goes generation, high voltage transmission, low voltage distribution up to the meter. And I think it was the Energy Policy Act of 2005 maybe that defined the metering function as belonging to the regulated utility. Because at the time, in the early 2000s, we were having this conversation about precisely your question andThere's a lot of analogizing that goes on between telecom and electric because they're on similar trajectories from the 1880s onward, but there are differences. And so at the time we're like, well, we all have these and if the value proposition to the customer, if you go to get a mobile phone is sign it to your contract with me and you'll get a free phone. And why can't we do that with meters? And why can't we haveinteroperable revenue grade meters, but that maybe is another conversation. But that decision got made by Congress that that's not going to happen. The metering function is part of the regulated footprint. So we start with this vertical integration and rate of return regulation means that the utility's revenue requirement is its operating costs plus its asset base, the capital it invests in, in order toprovide the goods and services that it does to its customers, plus a market benchmarked rate of return. So in theory, that little r, that rate of return, is just completely market benchmarked on some typical market opportunity cost of capital. Because it's meant to be, okay, I'm going to spend $100 on capital in this industry. What's the return I would get if I were to go use that $100 and invest it somewhere else?And that benchmark is what we are supposed to be using in rate of return regulation. So in theory, it's that little R.Doug Lewin (24:13.58)supposed to be. Are we using it? can't. Go on. Keep going where you were going to go. Don't let me derail you. OK.could talk about that.Lynne Kiesling (24:20.918)I am not the person with the evidence on that. are others who are doing work on that that I would recommend you to. So that's the theory. And it does work great if you're trying to build out a capital intensive network to electrify a large country. That's the right set of incentives. And I think we did succeed. But the capital bias does have consequences when you have technological change. And I think we are really learning.right now just how technologically contingent our regulations are. And the regulation that was designed for the asset class that we had in the 1920s, 30s, 40s is much more contingent on those assets than we thought. That iron in the ground, you go to a regulator, you say, want to build a power plant. Here's the design, here's the spec, here's the cost.We've built a billion of these, here are the kind of transformers. And so if there's any kind of cost creep, it's going to be contained by the fact that the actual technology class has a fairly narrow scope. But now we have technological change that is qualitative in nature, is qualitatively different. And it has two categories, right? One is generation. And so not onlyAnd this is not only renewables, right? We could talk about renewables, but we can also bracket them and put them to the side. We can leave renewables out of this discussion and it would still be relevant because the pivotal technological change was the combined cycle gas turbine in the 1980s. And what that did was it really made that economies of scale and generation much less monolithic. And so the combined cycle gas turbine makessmaller, more nimble natural gas power plants competitive with hydro and coal and nuclear. And they have different cost structures, but they can compete because they do things differently. And if you have market rules that allow for price discovery and you see the different prices over the course of the day,Lynne Kiesling (26:41.666)those different assets will express their different relative values and be able to make money.Which is by the way, Texas has like 40 to 50 gigawatts of gas combined cycle all 25 years old because when wholesale market competition happened, those rushed in because they were the dominant technology. Like that's what the market chose. Yeah.Yep, dash to gas. so, yeah, for two decades, the wholesale supply stack in ERCOT has been really long natural gas. And then that's even before fracking, right? So before the shale revolution, the shale revolution amplifies that and then extends it to other parts of the country because of natural gas pipeline networks and fracking in other places. Like I'm from Pittsburgh, so I'm a Western Pennsylvania booster.And so, know, Marcellus Shale has made something similar in Pennsylvania. then the second category of technological change that's been qualitatively different is digital. And so all of the digital technologies are like the connective tissue. And so we can use it within an existing utility footprint for distribution automation, right? So you put sensors in your substations and they send information back to the control room.or sensors so that when a line goes out, you know, when a line trips, you find out and it doesn't have to be me calling you to tell you that my power is out. And then around the grid edge, digitalization enables the kinds of connectivity and interconnectivity that we've experienced with the internet and these things. So all the mobile devices havingLynne Kiesling (28:25.822)Interoperable technology standards and common interfaces means that, you and this is a bit of systems theory here, what used to have to be a tightly coupled integrated vertical system from generator to wires to meter, because it was all run by the same company and each piece of technology dependent on the other. But now with digitalization, we can have these common interoperable standards.And that reduces the costs of having different parties actually own and operate the different parts of the system. Or in econ speak, this reduces transaction costs in a major way. And so this is the economic argument for why the regulated footprint should shrink to just the wires. Is that, know, generation is competitive. I mean, we see that in ERCOT and other places, but I would argue ERCOT is the better example.You know, Texas is also the example of retail being able to be competitive if you let it. And there's a paternalism there around, do customers really understand the value proposition? And it's a really complicated system. And so we have to pay attention to that and make sure that customers do understand and that retailers create goods and services and contracts and offerings for them that they can understand and benefit from.and that any role for regulation is going to be in the background there providing the backstox for the credit checks, the anti-fraud, the consumer protection stuff. So that's my argument too in my favorite phrase, quarantine the monopoly. That the economies of scale and scope are still in the wires and the wires have the network economics aspects as well.I want to talk about that more. So quarantine the monopoly is an interesting phrase and I think you've described it well. Just to kind of like summarize, you basically like, because monopolies don't have that price discovery aspect to it, there isn't market competition. There isn't the ability to say, we're going to spend this $1 here. Let's figure out if there'sDoug Lewin (30:43.702)a way to do it for 50 cents or 75 cents or 90 cents or whatever. You could do that on the generation side. You had this great quote in your piece called Markets as Minds where you quoted Friedrich Hayek as describing prices as a system of telecommunications, which I find really... Have you read the new Hayek biography, the one that just came out a year or two ago? I bought it the other day and it arrived and it's like a thousand pages and I'm really intimidated. I do want to get to it.but maybe I'll let you read it first and you can. Probably, it's like out just in the last year or two.Tell me.Lynne Kiesling (31:18.946)Yeah, even better, that's volume one. And it only goes up to like 1960.I really want to understand Hayek, I don't know if I could commit to a multi volume. Okay. Well, stay tuned, dear listener.I'm not just saying this because Bruce Caldwell is a friend of mine, but it is very well written. And if you are interested, and I generally don't read biography, but really well written biography that tells you something about the social and economic and the political history of the time, as well as telling you about the person.Yeah, I am really fascinated by that because the book he's most known for, right, is Road to Serfdom, right? And it's this whole, like, I think there's a really fascinating thing right now in conservatism, right? That like, because he's one of the founders of conservatism, and it was this like very anti-authoritarian and free market thing kind of mixed together. And we're in a weird time where I can't really tell if conservatives still believe in that or not. I don't know.Yeah, that doesn't really map anymore. And I mean, he's got this famous essay and is, think, actually at the back of Constitutional Liberty, which he wrote in 1960, this famous essay called Why I Am Not a Conservative. Oh, wow. And so it's interesting and it's still contested, right? Because does he mean he's not a conservative in the European, you know, like the German historicist sense or in the American sense, which is more kind of British wig historically? And so the political theorists will stillLynne Kiesling (32:54.176)have conversations about this. But yeah, if you're interested in those kind of questions.We should talk. I will read it eventually. I've got a long stack of books. I'm more ambitious in my book buying than I am realistic. it's okay. Ambition's not a bad thing. So Hayek describes prices as a system of telecommunications. So we have that right now, right? In Texas, particularly in the wholesale market, in the retail market, there is this very intense right now on a day-to-day basis, right? Anytime you open upthe ERCOT app or just go to ERCOT.com and look at the dashboard. You could see the prices on there. When there's a very intense communication going on and people trying to figure things out, know, it really struck me. You know, you get these moments where, and I'm very sympathetic to legislators, particularly in Texas, where they're part-time legislators, they're paid $600 a month, they've all got other jobs or they're retired in some cases, but most of them are working other jobs. They've got a thousand different issues they're dealing with. So I'm sympathetic.But there was this whole discussion around arbitrage in the market and they made it sound like it was the worst, most evil thing. The legislators were like, you mean that they're like buying low and selling high, like you're, you know, selling at higher prices when they're buying it lower and like, and I understand that instinct cause it does sound bad, but you have this great core. say every act of arbitrage flattens price volatility, reshaping tomorrow's market conditions and incentives. Right? So we've seen this in Texas whereTwo summers ago, and even last summer, a lot of days of really high prices, signals to build more particularly storage, but a lot of gas, not a lot, some gas peekers and a whole lot more entering the queue. Our queue for gas peekers is 150 % larger than it was one year ago. And that's because of this system of telecommunications. There is literally a signal that is coming through the noise to generators that like.Doug Lewin (34:47.938)hey, these prices are high. Well, now they're lower. So now there's another signal and you have this kind of give and take that is happening there. I want to hear your thoughts on all of that and for you to explain more about why arbitrage is actually a good thing and all those things. Where I was going with this though is we don't yet have that on the poles and wires side of things, particularly on the distribution side of things. And there are examples, you wrote about an example in New York.I can't remember exactly, maybe you can describe it. was a while ago you wrote about it, but it's top of mind for you. But it's something along the lines of like, I think it was Con Ed got some kind of performance incentive bonus for actually integrating DERs into their systems such that they were spending less money. So the regulator says, you're going to need to spend, and I'm making up numbers isn't the actual example, but you're going to need to spend like $50 million on this set of upgrades in the distribution system.But if you go out and find that there's EV managed charging and storage in people's garages and energy efficiency and all of these things that can be done, and you wouldn't need to spend that 50 million, you could provide incentives to customers which lower their bills. And then it only costs just picking a number 25 million. So it's like half as much. So even the non-participants are benefiting from that. Then we would give the utility a bonus on that of whatever the number is, five million, seven million.Still, the total of that 25 million spent on the distributed energy resources plus their incentive would be far less than what they would have spent on that infrastructure. But where we are right now in Texas and I think in the vast majority of places is that system of telecommunications doesn't exist. We can't discover if there's an alternative to that $50 million, so we just spend the $50 million.I think that's exactly right. And you've got so many things going on in my head.Doug Lewin (36:38.016)A lot of plates spinning in the air right now.lot of plays. So the price discovery and one of the ongoing conversations that we have in electricity economics, energy policy regulation is around these questions of market design. And I think that we've got a lot of evidence showing that the move to wholesale power markets has been beneficial for consumers, generated a lot of consumer surplus.generated a lot of producer surplus, right? There's been profits. Although, as with anything else, with that dash to gas, right, the marginal return on the next additional investment in a gas turbine is going to get lower and lower the more and more of them you have. And so you had bankruptcies as well. But that's one of the features of markets. Sure. Not a bug, a feature, is that people risk their own capital and not rate payer capital.Bingo.to figure out what the right amount. And of course, you're never gonna know that in advance, right? Markets are a discovery process. Well, discovery procedure is Hayek's exact language, but markets are a discovery procedure and you figure things out and it's trial and error because the world is very dynamic and systems are very complex. And so trial and error and risking your own capital is how we have the best potential for flourishing.Lynne Kiesling (38:04.238)And of course, there are institutional design details that matter around consumer protection and fraud and all of that. But high-level broad brushstroke, know, Marcus says discovery procedure are really important. But that's one reason why I think an important piece of the conversation we have, a little less so in ERCOT, but much more so in the other RTOs, is about price fidelity. The only way this really shows up in ERCOT isthat we have these federal production and investment tax credits for wind and solar, the PTC and the ITC. And of course, those are slated to sunset fairly aggressively. So we'll be doing the experiment to see just how much of an impact.Any predictions, Lin?No, I'm not. I'm with Yogi Berra. Predictions are really hard, especiallyabout the future. Yeah, no, I get you. You're too smart for that.Lynne Kiesling (39:01.646)But in like PJM, for example, a few years ago, you know, they had this enormous controversy because some of the states in the PJM market were implementing renewable portfolio standards and implementing state policies that were favorable to wind and solar. And that was having distortionary effects in wholesale price formation. And soThe PJM put in this maximum offer price rule, MOPR, which was very unpopular and very poorly designed, and they've repealed it. But it does reveal an important fundamental truth, which is the fidelity of that pricing system, that telecommunication system, those price signals, is really important. And so we should figure out ways to implement our policy objectives that don't interfere with prices.Yes.Doug Lewin (39:55.758)Well, and you wrote about that in that same Markets as Mine piece, where you had a lesson for regulators, and the number one lesson you had on there was let volatility speak. Price spikes are not market failures. They're distress signals that mobilize flexible resources. And it's interesting because Texas really is, I I give just a ton of credit for Texas policymakers. A lot of times people say to me, it's amazing that Texas has got all these renewables and battery storage.without the policy to support it. And I'm like, well, okay. There was a renewable portfolio standard back in 99. It was increasing to five. it was satisfied a long, long time ago. think by 2010, we'd reached it. But it is a policy choice to have a market. It is a policy choice to have a market that has a very high price cap. That is a policy decision. And I think it's the right one because it does...Like you said, it puts the investor dollar at risk instead of putting all that burden on the rate payer. And I do believe that is one of the reasons we have lower costs here is because that price discovery continues to happen and that volatility has been allowed to work. It certainly hasn't been smooth, right? There's lots of times where that gets called into question, but I think time and again, it has proven itself and then prices drop real low.and then investment starts to slow and then they get high again. It's this whole process of communication. And here's one of the things that I think is most important about this and I think is high Echean and you can correct me if I'm wrong, but it's like, there is no human being that is smart enough to figure all this out. This is the fundamental flaw in central planning, right? And it's why markets work better is because as clever as we are, we're pretty clever species, none of us is...wise enough, smart enough, has perfect information enough to say, this is the exact, I see these conversations all the time. One of the most common like Twitter comments and LinkedIn comments is, we should build more nuclear. It's like, well, do you know that? Like, have you done all the price discovery? Like in some of them, to be fair, like some people are entrepreneurs with nuclear companies and they are putting investor capital at risk and taking, and that's great. And I don't have the wisdom to say,Doug Lewin (42:12.812)that's a smart investment or that's a dumb investment, that's what markets are for, right? And I just think that sometimes, particularly in the systems where they're fully vertically integrated utilities, you are putting the regulator in a position where they have to be perfect and they cannot do that. That's why central planning doesn't work. So what I'm trying to figure out is what is the next evolution of competition? Thanks for tuning in to the Energy Capital Podcast.in the cute.Doug Lewin (42:40.204)If you got something out of this conversation, please share the podcast with a friend, family member or colleague and subscribe to the newsletter at douglouen.com. That's where you'll find all the stories where I break down the biggest things happening in Texas energy, national energy policy, markets, technology policy. It's all there. You could also follow along at LinkedIn. You could find me there and at Twitter, Doug Luhman Energy, as well as YouTube.Doug Lewin Energy, please follow me in all the places. Big thanks to Nathan Peeby, our producer, for making these episodes sound so crystal clear and good, and to Ari Lewin for writing the music. Until next time, please stay curious and stay engaged. Let's keep building a better energy future. Thanks for listening. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe

In this discussion, Charles Hua, Director of Powerlines, sheds light on the alarming surge in energy bills across the U.S. He reveals that rising costs stem primarily from transmission and distribution infrastructure, not from renewable energy generation. Hua emphasizes the need for consumer participation in regulatory processes to ensure fairness and affordability. With utilities focused on capital investments that drive profits, he advocates for modernizing regulations and exploring energy efficiency solutions to help alleviate financial pressures on households.

This is a free preview of a paid episode. To hear more, visit www.douglewin.comThis is my recent presentation on the latest trends in Texas energy and power for subscribers called the “Texas Power Rush,” followed by a Q&A.

This is a free preview of a paid episode. To hear more, visit www.douglewin.comSan Antonio is one of the fastest growing cities in the country and have requests to interconnect AI infrastructure and data centers that would triple their size. With that growth comes a simple but daunting challenge: how do you keep the air conditioning on while growing the economy and keeping bills affordable?CPS Energy, the nation’s fifth largest municipally owned utility, sits at the center of this challenge. Rudy Garza, CPS’s president and CEO, has spent the last two decades in Texas energy. In this episode, we talked through retiring old coal units, acquiring 1.7 gigawatts of gas plants, adding renewables and batteries, leveraging demand side resources, and preparing for a wave of new demand from AI data centers.As Rudy put it, Texas needs it all right now. The question is how to balance affordability, reliability, and growth in a rapidly changing landscape.A Utility in TransitionCPS Energy serves 1.4 million customers and maintains some of the lowest combined electric and gas rates in Texas. They return hundreds of millions of dollars each year to the city budget, while also managing 6,000 MW of peak demand and a portfolio of about 10,000 MW of generation.That portfolio is shifting fast. CPS retired its Deely coal units in 2018, is converting one of the Spruce coal units to gas by 2028 while closing the other, and has plans to retire the aging Braunig and Sommers units within five years. These changes create both opportunity and risk. As Rudy said, you cannot run 1960s-era plants forever and expect reliability.By the numbers* Customers: ~1.4 million total; ~1.0 million electric, ~0.4 million gas* Peak demand: roughly 6,000 MW, growing ~150 to 190 MW per year* Portfolio today: ~8,000 MW dispatchable plus ~2,500 MW renewables* Recent acquisition: 1,700 MW of gas at roughly $500 per kW versus $2,400 to $2,700 per kW to build new* Solar: 730 MW contracted or in construction, with another 500 to 600 MW in the pipeline* Storage: 520 MW secured, tracking toward more than 1,000 MW* Wind: 400 MW request for proposals in market* Demand response: about 250 MW per event, split roughly half residential and half commercial* Customer reality: about 60 percent low to moderate income; CPS targets modest, occasional asks near 5 percent when neededIf this was useful, share it with a colleague or neighbor. It helps more Texans find practical solutions.

Sometimes I get to bring you a conversation that really feels like a turning point.This week, I sat down with Bill McKibben, one of the most respected voices in climate and energy. His new book, Here Comes the Sun (out today! order it here), is different from his earlier work. Bill has long been known for sounding the alarm. But this time, he’s bringing something else: optimism.Why? Because solar and other clean technologies are no longer “someday.” They are scaling now — all around the world — faster than anyone predicted.Solar’s Exponential TakeoffIn 2009, The Economist predicted it would take 20 years for solar to scale up by an order of magnitude.It took six.Today, the world installs 230–240 gigawatts of solar every six months. That’s two massive coal plants’ worth of clean energy every single day.This isn’t fringe. This isn’t boutique. It’s mainstream power.Think Costco, not Whole Foods. Bulk, cheap, ready-to-go.Everywhere from Pakistan to Texas: A Global StoryThe shift is happening everywhere.* In Pakistan, rooftop solar grew so fast that in just 8 months, citizens built the equivalent of half their national grid. Farmers led the way, cutting diesel use by 35 percent in a single year.* In Texas, oil and gas operators in the Permian are connecting to the grid or tapping wind and solar because it is cheaper than running diesel generators.When energy is more affordable, more reliable, and easier to deploy, people adopt it. That is true from Karachi to the Concho Valley.The Texas Energy and Power Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.No Longer “Alternative Energy”We’ve used the phrase “alternative energy” for wind and solar for decades. Now it means something different: natural gas and coal are the alternatives and renewables + storage are the most common, even dominant, resources.Last year, 90% of new power plants built worldwide were clean energy.Oil and gas remain vital and will continue to play an important role, but the growth is in clean energy.Leading With People’s Needs, Not Just ClimateHere’s the pivot that excites me most.If we lead with “climate crisis,” people shut down. Either they don’t agree it’s happening and check out, or they get it and feel depressed and stressed out.But if we lead with better lives and lower bills, people listen:* Half of Texans report they are choosing between food, medicine, and electricity. Renewables lower costs.* EVs aren’t sacrifices. They are smoother, faster, and cheaper to fuel.* Heat pumps aren’t compromises. They reduce stress on the grid, make homes more comfortable, and lower consumers’ energy bills.When we talk about clean energy in terms of savings and resilience, people connect. And those benefits also happen to reduce emissions.This is not about jerseys or tribes. It’s about abundance.Land, Liberty, and Local BenefitsOpponents often argue renewables take up too much land. But the math tells a different story:* 1 acre of corn for ethanol → fuels an F-150 for ~25,000 miles.* 1 acre of solar panels → powers an F-150 Lightning for 700,000 miles.That’s not even close.And the benefits are tangible:* Ranchers and farmers are keeping land in the family thanks to wind and solar leases.* Rural schools are funded by clean energy tax revenue.* Cattle graze happily under turbines, even using them for shade.This is energy independence at the community level — red state, blue state, doesn’t matter.A Race Between Challenge and OpportunityWe’re living two stories at once:* Bad News: By June 2023, Earth had entered the hottest 12-month stretch in 125,000 years.* Good News: That same month, humanity began installing over a gigawatt of solar per day.The race is on. The question is not if we transition. It’s how fast.The outcome depends on how quickly we build. We now have the tools to create cleaner, cheaper, and more reliable power. The question is whether we will use them fast enough.Bill put it bluntly: “We can’t stop global warming. But we can stop it short of breaking civilization.”Why Policy Still MattersThe economics are overwhelming, but politics can slow things down.* Texas became a leader in wind power because of transmission investments made two decades ago.* The oil and gas industry poured $500 million into lobbying and ads last year.* Rooftop solar in the U.S. still takes months to permit, compared to days in places like Australia.* And yet, local politics in Texas are shifting as communities fight for renewables that pay their bills.This is where action, at the state and local level, can accelerate the inevitable.The lesson is clear: smart policy can clear barriers so Texans can benefit sooner.The MomentAfter 700,000 years of burning things for fuel, humanity is finally learning to power itself directly from the sun.That’s not just about climate. It’s about freedom, prosperity, and better technology.Bill McKibben’s new book, Here Comes the Sun, captures this moment with story after story of how fast change is happening. It’s out now, and I can’t recommend it highly enough. He’s also helping organize a national day of action called Sunday on September 21st. Learn more at sunday.earth.If you got value from this, please share it with a friend, colleague, or family member and consider subscribing. The more people who see clean energy for what it is, the future, the faster we’ll build it.Transcript* 00:00 – Introduction * 02:30 – Why Bill is uncharacteristically optimistic* 04:30 – Very few people understand how much progress has been made: renewables are no longer “alternative”* 8:00 – The story of Pakistan’s solar surge* 11:00 – We’re in a different world because from steep learning curves for renewables and storage* 14:00 – Energy as a service instead of a commodity* 17:00 – Is the oil and gas industry getting what they wanted out of President Trump?* 20:00 – China is adopting clean energy and dominating those industries* 23:00 – Why leading with climate change is not a leading strategy* 26:00 – Leading with benefits of new technologies in this “epochal moment”* 29:00 – Not everyone can strike oil, but everyone can strike wind or sun (or both)* 30:00 – Agrivoltaics: “shade is a valuable commodity” * 34:00 – Sun Day: September 21* 37:30 – June 2023: hottest month on record to that point AND first month when world installed one gigawatt per day* 39:30 – Is it time for progressives to embrace permitting reform?* 43:00 – Is progress more likely at federal or state & local levels?* 48:30 – Closing Thoughts & Call to ActionResourcesBill McKibben’s Work* Book: Here Comes the Sun by Bill McKibben - (new release on the global solar revolution, packed with stories and stats).* Substack: The Crucial Years: Bill’s ongoing essays on climate, energy, and activism.* Sun Day! On the equinox: September 21Articles and Essays Referenced* The New Yorker (2025): Published an excerpt from Here Comes the Sun, surprising even seasoned climate experts with how fast solar is scaling.* Telegraph article on Texas, including John Davis, former Texas Republican legislator, who said he “struck wind” on his Menard ranch — wind leases now account for 40% of his income.* Mother Jones. Yes in Our Backyards — why it takes months in the U.S. but days in Australia.* Dallas Federal Reserve Quarterly Survey: Candid insights from Texas oil and gas executives on drilling economics and policy.Global and National Examples* Pakistan rooftop solar boom: Citizens added the equivalent of half the national grid in just 8 months (Google Earth images showed rooftops filling with panels). Diesel sales dropped 35% in one year.* California: Used 40% less natural gas for electricity than it did two years ago in summer 2023, evidence of rapid scaling of renewables.* China: 1/2+ of all cars sold last month came with plugs. EVs there now cost as little as $12,000, far below U.S. prices.* Australia: Rooftop solar installed as low as ~50 cents per watt vs. $1.50-3 or more in the U.S. due to faster, simpler permitting.* Vatican City: Building a solar farm outside Rome to become the first fully solar-powered nation.Concepts and Data Points* “Costco vs. Whole Foods” analogy: Solar has shifted from being a premium product to being the cheapest and most abundant option.* Agrivoltaics: Using solar arrays alongside farming. Examples include:* Cattle grazing under turbines and sheep around solar panels.* French vineyards report 60% higher grape yields with panels providing shade and moisture retention (pv magazine).* Corn ethanol vs. solar comparison:* 1 acre of corn for ethanol = ~25,000 miles of fuel for a Ford F-150.* 1 acre of solar panels = ~700,000 miles in an F-150 Lightning EV.* Balcony solar in Europe: Millions of apartment dwellers in Germany have adopted “plug-and-play” solar panels. Legal in Utah as of 2024 thanks to bipartisan legislation.Organizations and Initiatives* Texas Energy Poverty Research Institute (TEPRI) — Community Voices Survey found half of Texans are choosing between food, medicine, and power.* Sunday: National Day of Action — September 21, 2025 (Fall Equinox). Learn more at sunday.earth.* Conservatives for Clean Energy (Southeast U.S.): Helped persuade Florida Gov. Ron DeSantis not to block rooftop solar.Podcasts and Media Recommendations* Ezra Klein Show: Episode with Jesse Jenkins and Jane Flegal on energy transition and permitting reform (highly recommended).* Energy Capital Podcast: Previous episode with Octopus Energy CEO on new utility business models.TimestampsDoug Lewin (00:06.722): Welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. My guest this week, I'm very excited to tell you, is Bill McKibben. I've been reading things that Bill has written for literally decades. One of the smartest guys out there talking about issues related to energy, the environment, and climate literally for 40 years. And he has written a great book called Here Comes the Sun. By the time this comes out, the book will be available for general purchase wherever you buy books.Do get it, I think you'll really like it. It's actually a pretty easy read, a couple hundred pages, not super long, but just absolutely dense, full of great vignettes and stories of Bill's travels to different places around the world and what he's seen going on with solar. Just a quick little stat that he drops into the book: The Economist in 2009, when we had 23 gigawatts of solar around the world, predicted it would take 20 years to increase that by an order of magnitude. It took six. And this year, well ahead of that 2030, we are installing that much solar, 230, 240 gigawatts every six months globally. Not only did it not take 20 years, we're deploying that much twice per year. This book is just full of all kinds of stuff like that. Pretty much every concern when they say or argument you hear about solar, there's too much land, it's not recycled and ends up in landfills. He takes on every single one of those in individual chapters. Really love this book. Do order it. But first, listen to my conversation with Bill. We obviously on brand talked a whole lot about Texas, but we talked about Pakistan and China and all sorts of places and aspects of the solar story around the world. I hope you enjoy it.As always, please, please, please leave us a five star review wherever you listen. It really does help grow the audience. Please share this with friends, families, and colleagues. And with that, please enjoy my conversation with Bill McKibben.Bill McKibben, welcome to the Energy Capital Podcast.Bill McKibben (02:11.49): Doug, what a pleasure to be with you and to get to say thanks in person for the amazing work you've been doing these last few years.Doug Lewin (02:19.0): Bill, that means so much coming from you. I've been reading your stuff for years, even decades. You're just a tremendous source of knowledge and wisdom and really appreciate you taking time to be on the podcast and appreciate you writing this fantastic book. Here Comes the Sun, which we'll talk about a lot of different things, but obviously we're going to talk about the book. I can't recommend it highly enough. It is just a great shot in the arm, but kind of a shot in the arm, not shot out the arm. Let me correct that. Shot in the arm of optimism and sunny optimism. I gotta say though, this is like maybe a little out of character for you. So like what's going on? Why are you so hopeful and excited?Bill McKibben (03:00.342): Well, it is true. You know, I had the, some ways, maybe the bad luck to write the first book about what we now call the climate crisis, what we then called the greenhouse effect back in the 1980s. So in some ways, my career over 20 subsequent books has been professional bummer outer of people for which I make no apologies. This is the most important thing that's happened in the course of our species' existence on the planet. And we need to understand it.Finally, right now, even though from my point of view, there are many, many, many big bad things happening in our country and on our planet. In certain ways, I never remember a moment more fraught than this one. I am saddened by what's going on in our nation. And I have the interesting task at this moment of helping bring people news of the one big good thing that's happening on planet Earth. And that's finally, finally the breakout of clean energy, the thing that we've been waiting for and hoping for and working for for a very long time. And now a combination of activism and engineering has brought us to a moment when there's this extraordinary thing happening. And my experience is that almost nobody knows about it. You know, a cut from this book came out in the New Yorker earlier this summer, long chunk. And I heard from person after person, and I'm talking about people who've been very active in the energy climate world for a very long time. And they were saying the same thing over and over again. I had no idea that this was happening. I had no idea how fast this was going. And I think that it's one of the really important points that we have to get across right now for all kinds of important political reasons is this stuff is no longer alternative energy. We should toss that framing far away. We should tear down the walls of that particular ghetto. This is the common sense, straightforward, obvious way to power the planet going forward.There's a very good reason that 95% of the new generation capacity on planet Earth last year was clean energy, sun, wind, batteries. And I mean, you're close to a big part of that story in the Lone Star State, which in some ways, as I say in the book, is the most amazing part of that story, since it's happening literally in the hydrocarbon capital of planet Earth. And yet the economics are so remarkable that even without what should be all kinds of obvious reasons to support it environmentally, it's nonetheless making its case. So it's not that I think we're out of the woods. It's not even that I think we're necessarily going to do this in this country. It's that for the very first time in the four decades where we've been worried about climate change, we have something that's scalable in ways that'll make a difference. The fact that California is using 40% less natural gas to produce electricity this summer than they were two years ago is the single most optimistic statistic that I've heard. Those are the kind of numbers that if they spread around the world, start to knock tens of a degree of how hot the planet eventually gets. And at the same time, they're liberating lots and lots of people from their dependence on expensive and precarious sources of energy is a beautiful part of that story too.Doug Lewin (07:10.87): Yeah. You know, look, I think one of the things that I think is so interesting about this moment, and you just hit on it directly when you were talking about the New Yorker article, right, that like, I still feel like this is not known. When people talk about alternative energy, they still generally mean wind and solar. We really do need to turn that upside down. Like gas is becoming alternative energy. Doesn't mean it's not valuable and we won't use it sometimes, but it's kind of the alternative. And then the economics, which I think, I think it was chapter four, which was probably my favorite chapter because I'm such a nerd and I love the economic stuff and you just lay it out so well. And I think the chapter right after that, you get into can the rest of the world afford it? Because you hear that all the time, right? This almost like trope that's rolled out all the time. They're like, well, there's no way Africa is ever going to get to the level of prosperity that we have unless there's fossil fuels. And it's like, that's crazy. It's exactly upside down because you need big centralized infrastructure in the world has failed over and over and over again to build that kind of scale in Africa, but decentralized, like the move we made in telecom to mobile phones, like that actually has a chance of working. Let me, it looks like you want to say something. I will let you respond to that. There is a question in there, but go ahead and respond and then I'll ask.Bill McKibben (08:26.926): I just want to say, I think you're absolutely right. And you can tell because people, as it were, voting with their feet or with their rooftops. The story that really just blew my mind was what happened in Pakistan over the last year or so. About a year ago in Pakistan, energy analysts started saying something weird is happening because demand for electricity on the national grid is dropping. As you know, as an energy analyst, humans never use less energy. Demand number always goes up, they say. So the fact that it was dropping was befuddling what was happening here. And then good analysts started looking at pictures on Google Earth. And if you looked at the rooftops of Lahore or Karachi or Islamabad, you could literally watch solar panels spreading like mushrooms after a rainstorm in the woods.The growth was literally week to week. In the course of eight months last year, Pakistanis built the equivalent of half the country's national electric grid by themselves. And when I talked to people and said, how did people even manage to do it? Obviously, the key component was cheap Chinese solar panels coming across the border with China. But how did they put them up? Well, it turns out that there are three or 400 great TikTok videos with Hindustani music in the background where people explain how to snap this stuff together and how to put it up. DIY. And the bottom line there, the number that killed me was that, I mean, I've spent some time in rural Asia. So I know that the soundtrack of Village Asia is diesel generators humming along to pump those deep tube wells that were the residue of the Green Revolution in the 60s.That diesel is usually the biggest input for farmers. It's expensive. Farmers were the first people to really start doing this in Pakistan. They often lack the money to build the steel supports that we're used to seeing for solar panels. They're just buying them, laying them on the ground, pointing them at the sun. Diesel sales dropped 35% last year in Pakistan. In one year, those are the kind of numbers that change the world.Doug Lewin (10:53.814): Absolutely. And I, you know, I had a sense that we were quote unquote winning. And I want to talk about what winning means in a minute, because I don't mean that, you know, team jerseys, like it's not a zero sum game. Humanity, all of us are winning. When I started to hear more and more that oil and gas operators in the Permian basin were trying to hook up to the grid as fast as they could to abandon those diesel generation, gensets and units, because it is more expensive to use those and the input cost of producing a barrel of oil includes the cost of the energy it takes to actually, so it was kind of like, I mean, I had seen all the numbers and I knew solar was coming, but that was one of those moments where I kind of went, s**t, this is really happening.Bill McKibben (11:36.384): It is just fascinating. And it's going to take us a while to wrap our heads around it because we're so used to the idea of energy as commodity, as something that you go discover and put in reserves. But the idea that energy now is going to be more than anything else, kind of the product of human intelligence. The fact that the learning curves are so steady and so steep for these technologies, that they get cheaper and cheaper with each passing quarter. Most of the global warming era, we lived in a world where fossil fuel was cheap and clean energy was expensive. That's why so much activism had to be about trying to put price on carbon, trying to divest from fossil fuels so that the cost of capital would rise, trying to slow the expansion of fossil fuel infrastructure on and on. But sometime about five years ago, we crossed that line, that flipped, and now we're in a different world, and the parameters of that world are going to keep shifting in the same direction. Fossil fuel is not on a learning curve. Fossil fuel was always pretty cheap, but if anything, it gets more expensive because now you have to go deep beneath the ocean or down and frack the subsurface geology or whatever it is to get at it. I mean, the coal is further back in the coal mine and it takes more effort to get. This stuff just gets easier all the time. The one real critique of the economics here, I think, is that it's almost so cheap that it's difficult to make a big profit on it. And so it's going to be more difficult to mobilize some of the investment if that's sort of how we're doing it. You've seen Brett Christopher's good book about this, The Price is Wrong, but the price is so cheap that I think places like China are quickly figuring out that the whole world looks different on the other side. Manufacturing, like just the daily cost of living, like all the things that we do in this world with energy become so radically less expensive once we've built this out, that it's as if you're living in a different world.Doug Lewin (14:04.556): Yeah, it's interesting. I still think there's going to be plenty of opportunities, entrepreneurial opportunities. It just, it is, I think, a move away from the commodity, as you talked about a minute ago, and more to services. And this was the most recent podcast I just put out was with the CEO of Octopus. And I did one with Base Power. These kinds of companies that are starting to think of, what do people really want beyond the commodity? Because if the commodity becomes so cheap, which it might. It's happening. It's still, I think, debatable whether or not that happens, right? But certainly the evidence is pointing that way. So then it kind of becomes what are the services you can offer and how do you actually...Bill McKibben (14:45.688): There was an instructive story in the paper yesterday about one of the big Australian utility coal firms making a huge investment in batteries, just saying, clearly one of our markets is disappearing and another is emerging. I think in general, not to sound too hippy-dippy about all this, but I do think that there's something fascinating about imagining a world that runs on energy that can't really be hoarded over long times held in reserve. It's a fun mental game to play to try and think what the geopolitics of planet Earth would have been like over the last 50 years if oil was not a particularly valuable product. I mean, human beings are good at fighting about things, but even human beings are going to have a hard time figuring out how you fight a war over sunshine. So there are some big interesting differences emerging.And of course, I'm not the only one that realizes that, nor you. Much of American politics over the last year is explicable by the fact that people in the oil and gas industry looked at the fact that California was suddenly using 40% less natural gas and panicked. It was just about exactly a year ago that candidate Trump was saying, give me a billion dollars and you can have anything you want to the oil industry. They ponied up more like half a billion when you add in all the advertising and lobbying and direct donations. Clearly that was enough, but they're getting everything that they wanted. But my...Doug Lewin (16:28.546): Well, sort of, no, actually it's really fascinating. Yeah, they're getting some of what they wanted, with some of like the, well, some of them, not to paint with too broad a brush with the IRA repeals and some of that kind of stuff. But I think this is a really important, but like the drill baby drill stuff does not work to them to your whole point of like, you need some scarcity for higher prices. And one of the things I love and I recommend it to anybody who's interested in energy is look at the regular reports that come out of the Dallas Federal Reserve, which really tracks oil and gas. And they do a quarterly survey and they publish the comments they get. And the comments are withering, you know, like oil and gas executives just saying the policy of this administration towards oil and gas doesn't make sense. I think there's some buyer's remorse. And we heard this before the election. Exxon CEO said, gave an interview on CNBC and said, I don't know what drill baby drill is a policy actually means because once you drill enough, then the prices go down and what happens when the prices go down, people don't drill as much. So you get caught in a quandary there.Bill McKibben (17:31.606): Well, yes. And truthfully, I think that they waited too long. We're past the point of no return at some level in the transition to clean energy, partly because it's such a global phenomenon. I think the interesting thing to watch is going to be what happens with LNG export, because clearly that's where this industry has based its growth story on going forward. We're going to export endless amounts of LNG out of the Gulf of Mexico to the rest of the world. And obviously Trump is doing his best to help with that. You know, place after place, the tariff negotiation has ended up with people promising to buy hundreds of billions of dollars worth of LNG. But my guess is that while that may be a short term boost, a kind of sugar high, it's probably not going to last.A, because it's running counter to these economics, but B, because if you're the ruler of some Asian country someplace and you look at this, do you really want your energy future tied to the increasingly fickle and erratic American government? Do you really want to put yourself in a place where Donald Trump can decide that your Supreme Court did something he didn't like and so he's cutting you off? My guess is that you're going to see almost the opposite reaction of what they want over time.Doug Lewin (18:59.618): There's a lot of different businesses, a lot of different sectors, including energy, where folks are asking themselves, do you want to rely on the fickleness of the American government right now? But to come back to the point of LNG, and this is where I do think we will see gas become more and more of that alternative energy is because again, the more you export, the more scarce it becomes and the higher the price goes, right. And we see this EIA just came out with a couple of days ago, a new short-term outlook that has gas prices up in the four and a half, five dollar range. The last two years, it's been like two bucks. So it's weird. We're actually seeing, you talked about gas being down in California, and that's part of the reason it is more expensive this year. We're seeing solar and wind way up in Texas. Unfortunately, we're seeing coal up too, and gas down, because demand is rising so much faster here than California. We're seeing everything rise except for gas, and that's with it only being like, three and a half, four bucks. If it gets to four and a half, five, I think you see even more solar and wind. I want to pivot a little bit, but did you have anything you want to add to that? Is it okay if I pivot?Bill McKibben (20:05.91): No, just to say, I do think that it's really important for people to bear in mind what a global story this is. And it's not just the energy sources themselves, it's the appliances that make use of them. So the fact that half the cars sold in China last month came with plugs dangling from the end is an extraordinary part of this story. There's no story...Doug Lewin (20:34.247): And they're not going back, right? It's not like it's gonna dip below 50%. It's only going up from here.Bill McKibben (20:39.158) Once you've built the infrastructure, I mean, these are, the story is these are better machines, you know. An electric vehicle is better. I've driven one for years. I would never go back for anything, nor would I get rid of the heat pump in my house and replace it with a furnace and an air conditioner. You know, this is better stuff that also happily happens to be better for the world. But any story about global oil demand 10 years down the road depends on everybody in China deciding they want to drive, I don't know what, a Bronco or something with a gas tank. And that's just not going to happen. In fact, the opposite is going to happen.Doug Lewin (21:19.31) They would have to pay like 40, 50,000 bucks for, especially after the tariffs the other way. And then like the electric vehicles in China are down to 10, $15,000 for like a really, really nice car.Bill McKibben (21:30.574) 12 grand, you can buy a car that does stuff American cars can't do. The future now, sadly, gets written at the Shanghai auto show, not the Detroit auto show. And all of this, I will just add, as a patriotic American, pisses me off. I grew up in Lexington, Massachusetts. My summer job was giving tours of the battle green, where the American idea was first defended in blood.Doug Lewin (21:59.02) I've been there. It's a great site, by the way. I loved it there. It was awesome.Bill McKibben (22:02.446) And the fact that the country that invented the solar cell and the country that invented the lithium ion battery is just surrendering. It's not that China is going to eat our lunch. It's we're catering the lunch. We're sending over a bunch of waiters in red caps to serve lunch to the Chinese. And it is absolutely maddening and should be to any red-blooded American to watch that happen.Doug Lewin (22:33.078) Yeah, we're going to put a pin in that. Hopefully we'll have time to come back to that. If not, we'll be back on the podcast at some point in the future. We'll talk about petrostates versus electrostates and what it means that China is dominating the supply chain for not just EVs and solar panels, but transformers. There's a big, big issue there that we've got to deal with as a country. But I don't want to lose the earlier point, which you were just saying, this was the pivot I wanted to make and you made it excellently, which is the EVs are better, the heat pumps are better. This to me, we're at a critical inflection point in dealing with climate change. That if we lead with climate change, and it feels like, I mean, you pretty much said this in the book. You certainly were like going right up to it. And I think even beyond it, like pushing the boundaries here a little bit. I want to push the boundaries a little further, Bill. And look, I want to be really clear. We can't ignore the climate science. I spend a good part of my, any given week reading what's coming out and different climate scientists, Andrew Dessler down here in Texas. I could give a long list of the people that I look to that are really, really smart. Also in Texas, thank you.Bill McKibben (23:33.486) And hey ho. You've got a good Texas contingent.Doug Lewin (23:39.34) I really could, I'm going to stop myself from naming them because then I'd leave somebody out and somebody will get mad at me. But they're Legion and they're smart and the contribution they're making is important and it should not be ignored. And when we think about the mass of people, right, the general public that is not reading about climate science, they're trying to live their lives. More than half of Texans are struggling to pay their energy bill because it's too high. There was a great survey out of Texas Energy Poverty Research Institute. I'm going to have Margo, the director of that organization, on the podcast next month. It'll be a must listen. They did this community voices energy survey right at about 50% of Texans are reporting that they're choosing between their food, medicine, and power. And I think if we lead with climate change, it's very depressing. It is a hard thing. It is complicated, and it is depressing as hell. And so people are just like, I have so many problems in my life and now you want me to deal with this and I have no power to deal with that. Now flip that around and say, hey, what is happening to deal with climate change? You don't even have to think about it to deal with climate change. These are technologies that lower your energy costs, give you a better, smoother, faster ride in your car, keep your house more comfortable at lower cost in extreme heat, especially winter, whatever. Like that pivot, I feel like is where you're going here. It would just had me so excited reading this book because you obviously are a pivotal figure within those that are working on climate change. I think we have to get back to like, what is the purpose? Where does this end? What is the vision? What is the light at the end of that tunnel? If we successfully deal with climate change, it's not privation and higher prices and you know, you're putting on extra layers to stay warm in the winter. It's none of that. It's actually energy abundance, really an end of scarcity for a lot of different things.Bill McKibben (25:47.67) So I think you're absolutely on the right track. I want to say a few things about climate that I think are important here. I don't think it's going to go away in any way, in part because those feelings of privation are now directly linked to what's happening to the climate. I mean, the fact that Texans are having to use so much expensive energy has a lot to do with the fact that the temperature now pins at 100 degrees beginning in May and stays there till October, and obviously comes with all the kind of tragedies that you all have dealt with in the Hill Country. I also think that human beings are complicated and that we make a mistake sometimes in assuming that we work just on a kind of economic cost benefit analysis when we think about the world. Humans like to be engaged in the process of making the world a better place. Care deeply about a world that works better for their kids and such. And that's why it's exciting that the one thing that we can do about climate change also happens to be a beautiful thing that we can do for everybody's future. The epochal moment that we're at shouldn't be washed over. Right now, in the 2020s, after 700,000 years of humans merrily setting things on fire, we're at a point where we don't need to do that anymore. And that comes with extraordinary benefits. The climate is perhaps the most abstract of those. One of the least abstract is that we don't need to be causing hundreds of thousands of cases of childhood asthma across this country every year anymore by sending up the cloud of particulates that come when you burn fossil fuel. That's a big help, especially in places that are hot and poor. But we also have this chance of building a future that is in our own control, which is another thing of great emotional appeal to people. Most people don't have their own supply of coal or gas or oil, you know, at least since John D Rockefeller, a great deal of the intense and now grotesque inequality that marks our planet has derived from the fact that we depend on these few outcroppings of fossil fuel scattered around the world. The people who control them become richer and more powerful than is wise for our democracy or wise for our economy. Imagining a world where instead communities have some control over that. I was so struck by your reporting earlier this year during the state legislature session in Texas when people started appearing out of rural Texas saying, don't do this stuff on solar. This is how we pay for our schools now. That revenue source is what keeps our otherwise remote rural impoverished community going. That could be true for the entire...Doug Lewin (29:04.726) I just want to interject to say at one of my favorite phrases that I've just ever heard on anything is from John Davis, a former Republican legislator. He was a chairman in the house, Republican in the aughts and I think into the early teens. He's got a ranch out in Menard about three hours west of Austin. There's no oil and gas on his ranch. He's a, I think he's fourth generation, maybe fifth. And he was getting ready to like get to the point where he was not going to be able to keep his ranch. He just couldn't keep up with the expenses of it. Cattle wasn't bringing enough money in. He was heartbroken, but it was like, it was a financial decision he's gonna have to make. And then he said, as he describes it, I struck wind. He didn't strike oil, he struck wind. He's got seven wind turbines. There's a great article in the Telegraph, we'll put a link in the show notes where he says, you know, 40% of his income now is coming from those seven wind turbines. And the cattle graze right around the wind turbines and don't have any problems. This whole thing of like taking away farmland, like. The cattle are perfectly happy. They go and get shade from the tower at certain times of the day, and that's about all that affects them.Bill McKibben (30:09.026) Let's don't overlook that at all, because it turns out that that's one of the really fun parts of this story.Doug Lewin (30:15.252) End of your book, by the way. The whole section on land is just so well done. Yeah.Bill McKibben (30:19.636) Agrivoltaics, we live on an overheating planet where shade is actually a really useful commodity all of a sudden. You don't have to look very far on the internet to find lots of pictures of sheep and cows happily lolling in the shade of solar panels. I will say to anybody listening that the word to the wise, don't put your goats in there. They like to chew the cables and they enjoy trying to jump up on the panels themselves. Keep the goats away, but everything, I mean, the French have figured out that they're increasing yields of wine grapes 60% by sticking them in fields where you get more shade and of course more moisture retention as a result. And I think that this part of the story, people are starting to understand a little better. If I go to my grave having only explained one thing, it would be that we could take the land currently used to grow ethanol in this country and cover it with solar panels and provide more energy than the US will ever use. The insanity was driven home for me standing in a field in Illinois with a farmer who put part of his acreage into solar. He said, you know, we grew a lot of ethanol, a lot of corn for ethanol here. One acre of corn grown for ethanol every year produces enough to drive my Ford F-150 about 25,000 miles. So not nothing, but one acre of that same land covered with solar panels with other stuff in between, but covered with solar panels produces enough electricity to take my Ford F-150 Lightning, the EV version, not 25,000 miles, but about 700,000 miles. When you start getting those kind of figures in your head, you'd get the sense of what's possible here. And you get the sense of how easily this can and does cross ideological lines. That's what I've been loving about your reporting from Austin. And it's not the only place. One of my favorite stories this year is about, and it's not like a crucial central part of the solar story, but it's a really good one. In the last couple of years across Europe, this stuff called balcony solar has just taken off for apartment dwellers. It is apparently several million Germans have gone to whatever the German equivalent of Best Buy is and plunked down a few hundred euros and come home with a solar panel that they hang from the balcony and just plug straight into the wall. And they're producing 20% of the power they use maybe. That's illegal everywhere in this country, except in that progressive bastion Utah, where two months ago, a libertarian state senator said, why can the people of Hamburg and Frankfurt do this and not the good people of Salt Lake and Provo? You know, I don't like this. And so unanimously, the state legislature passed the enabling legislation. And I now have a steady diet of videos on YouTube of Utahns hanging their balconies, solar panels off and plugging them in and generating power. If you're a good liberal, you may love the idea that we're networking the groovy power of the sun. If you're my home is my castle kind of guy, you may like the idea that you're now actually independent of the big powers and able to, you know, run your own.Doug Lewin (34:00.306) Maybe you like both. Absolutely. We can take both.Bill McKibben (34:03.412) We're all Americans, so we have a little bit of all of this in us. And it's why we're doing this Sunday thing in September, this big national day of action on September 21st, the fall equinox, just to try and drive this message home. And we kicked it off with a little ceremony at Old North Church in Boston, where we hung a solar powered green lantern up in Paul Revere's steeple because this is such a possibility. And that kind of liberation story, revolution story, is so akin to what I've always thought of as the kind of American spirit. And so antithetical to what at the moment I think too many people are perceiving as where we just try to hold on and never change to what we have now. You know, if we're the country on coal, then we're going to power it on coal forever. Well, I mean, you know, as I say, I grew up in Lexington. If that had been our attitude, we'd still be speaking with British accents and sending money off to the king.Doug Lewin (35:12.694) And using whale oil and kerosene and yeah.Bill McKibben (35:16.236) Yeah, yeah. This is the moment. And it's great fun for me. My other identity, in a sense, I guess, is as a Christian. I've been a Methodist Sunday school teacher much of my life and that sort of thing. And so I love the idea that we're getting energy from heaven, not from hell, you know, that the good Lord saw fit to hang this big ball of burning gas 93 million miles up in the sky. And now we have the wit to make use of it. I was very taken by the news a couple of weeks ago that Vatican City is now going to become the first fully solar powered nation on earth. They just broke ground on a big solar farm outside Rome. And given the nature of solar power, within a few months, they will have finished this project and the Vatican City will be running all on solar power. So for me, the climate story is in the middle of all of this. And the only reason that we're doing the kind of activism that we're doing is we have to make this transition as quickly as possible. Unlike our other political issues, the thing that makes it different is it's one that comes with a hard physical deadline. Once we melt the whole Arctic, it's not like someone has a plan for how we're going to freeze it back up again. And that's about where we are now. We're watching in real time the degradation of the climate. So absent that, we could all just sit back. I could sit back and say, well, 40 years from now, we're going to run the planet on sun and wind because it's so obviously economically the thing to do. And economics eventually erodes politics and wins. The trouble is, is if it takes us anything like 40 years, then the planet that we run on sun and wind and batteries is going to be a broken planet. So that's the one place where I think we need to keep reminding ourselves that this good news story is happening at the same time as a very bad news story. And they're very deeply connected. So deeply connected that it's almost like a Hollywood script. June of 2023 was the month when temperatures around the world really began this acceleration, this spike. That was the month when climatologists were saying, this is the hottest temperature we've seen in 125,000 years. And every month since has been the hottest October, the second hottest May, whatever. We've stayed up at this very elevated place. June of 2023 was also literally the same month when human beings started putting up more than a gigawatts worth of solar panels every day around the world. A gigawatt being the, I mean, one can talk about nameplate capacity on it, but being the rough equivalent of a coal fired power plant or something. A very large one, yeah. So these two things are happening right now. And we have no idea how this race comes out. We know that we're not going to stop global warming. It's too late for that. Much damage already done, much more to come. But what we're playing for is the ability to stop it short of the place where it just cuts civilizations off at the knees. And even that's an open question and we don't know. But I think that your original point was right, that by itself, that has not been enough to move our political system in the ways that we would need it to move. This is an extraordinary opportunity that comes with cheap, clean energy. And so the shorthand that I've been using for people that help get it across is to say, we've spent a long time thinking of this stuff as like the whole foods of energy. It's nice, but it's pricey. We need to get it through everybody's minds that this is the Costco of energy. It's cheap. It's available in bulk. It's on the shelf, ready to go.Doug Lewin (39:37.4)So, it hasn't been enough politically. I want to read a little part. This is from towards the end of the book, not right at the end, but a little quote you had here. You said, we're finding enthusiasts around the world, not for net zero by 2050 or dramatic reductions in carbon emissions or any of the other phrases that have come to define the climate debate. It's not that those things aren't important. They are. It's that they don't really offer a positive vision of the world we might build. I agree with this a thousand percent. And I want to tie this together with what I thought was just a great podcast that I recommend everybody listen to. The Ezra Klein Show, the one he did with Jesse Jenkins and Jane Flagel, who I think are two of the brightest minds in energy out there. You were just talking a minute ago, Bill, about Utah and about what is effectively a little bit of a deregulatory action, right? Making it easier for people to plug and play a solar panel. If it's configured that way and it can work in a normal socket and provide power, again, they're doing this all over the world. It's not dangerous. Why wouldn't we give the people the freedom to do that? Basically, what I'm getting at is we are getting to a point that to deal effectively with climate change, to deal effectively with the rising temperatures and the heat and all that comes from that, we are going to have to build a lot. And the environmental movement has existed for decades to really stop infrastructure from being, but that's, that's an oversimplification. It hasn't existed a hundred percent for that. But I think it's fair to say a lot of the orientation of the environmental movement. And it's not, I'm not saying that as like a bad thing. There was a move in Texas 20 years ago to build 11 coal plants. I was a long time ago, like trying to stop those. And I'm glad I did. We shouldn't have built those. So it's not a bad thing to stop some infrastructure from being built. But now we're at this point where like, my God, to get out of the mess we're in, we got to build and we got to build a lot. And I just wrote an article on this talking about energy pragmatism and how maybe it's not crazy. Although there's a little voice inside my head telling me it is crazy to think we could get any sort of bipartisan energy, you only have to read any newspaper any day, it'd be like, how is that possibly going to happen? But we've been polarized before and energy does seem to be an area where bipartisan agreement can happen. But that of course means that progressives are going to have to give something to get something. So you could take any part of that when you want, but I think the main question is, is this a time where progressives, where people that are concerned about climate change should be actively working with conservatives on what motivates them to come up with some kind of a bipartisan energy framework that might be able to propel us forward.Bill McKibben (42:33.422) Sure. First thing is I've done a lot of writing in the last couple of years about just what you're talking about. And with the case I've been trying to make, among other things, is that people who, like me, old white people should stop suing to stop things they don't like. Solar farms, wind, you know, I am so tired of the I don't want to look at it argument, which actually is behind an awful lot of the opposition to renewable energy. And it's shameful at this point and should be abandoned. I don't think, frankly, anything useful is going to happen in Washington. I see no sign. Politics aside, it just seems to me that the place has been abandoned to a kind of nonlinear uninteresting thinking in every way. But I do think that state by state and city by city across this country, there are all kinds of ways to work this out. One of the things we're really concentrating on at Sunday is permitting reform at the local and state level. Because among other things, I mean, and this is sort of most obvious with rooftop solar, our system's just absurd. I mean, if you live in Australia or Belgium or something, you can call up the contractor on Monday and say, I want solar panels on my roof. And by Friday, they're up there plugged into the grid producing power. Here, it's a months long odyssey. $1 a watt in Australia. It's a third the price. 50 cents a watt increasingly in Australia. I mean, it's really unbelievable. And as it turns out, I wrote a long piece for the progressive magazine Mother Jones, pointing out that this is mostly down to absurd regulation. We have 15,000 municipalities and county commissions and stuff that all have their own sets of codes. They do these inspections on the roof as if you were building something dangerous. Clearly, this is not dangerous. If there were an epidemic of solar panel rooftop fires across Australia, trust me, Fox News would be covering them 24 seven. Okay. This is no more dangerous than putting in a refrigerator, but we treat it as if it's, you know, I don't even know what someone wants applying to build like a toxic waste dump on their roof.Doug Lewin (44:54.412) It's an electrical appliance and we have batteries in all like at our computers at our phones and that we treat a battery in the garage.Bill McKibben (45:02.026) We're not used to doing this and so not able to do it. And so I think we can change those things in lots of places. And I've really been enjoying working sort of across, there's a group called Conservatives for Clean Energy in the Southeast. They were really the ones who persuaded Governor DeSantis in Florida not to put the kibosh on solar there. And the Sunshine State is actually now beginning to put up solar at a semi-respectable rate.Doug Lewin (45:32.366) It's literally called the Sunshine State.Bill McKibben (45:35.266) Yes. One of the things that always amuses me is that Vermont, where I am, which is not the sunshine state, has for decades had one of the highest levels of solar penetration in the country, just because people are that way. But we can do this. And so I think that your analysis is correct. And I think that if and when sanity returns to Washington, it will probably return with a kind of different flavor of thought around that kind of regulation. That said, the baleful effect that the fossil fuel industry has on our political life is just worth bearing in mind all the time. And they're very good at taking things and twisting them in their favor. So the one part of the IRA that is going to survive, for instance, is the boondoggle stuff that Joe Manchin put in at the behest of the fossil fuel industry. We're gonna spend tens, maybe hundreds of billions of dollars on what are really kind of absurd, expensive projects like carbon capture from coal-fired power plants and things like that. Money that if you spent it on renewable energy would return 10 times the climate benefits, but also 10 times the economic benefits. So I understand why people are reluctant to help an industry on the decline try and maintain its advantage through political gamesmanship. That said, this is a transition. And there are communities that depend on fossil fuel and people that... And we need to figure out how to make that work. Exactly right.Doug Lewin (47:20.91) A lot of them in Texas.Bill McKibben (47:26.22) We need to figure out how to make that work, and I think we can. I think the thing that we can't figure out how to make work is a forever return for Exxon's shareholders. I was really struck last year when Darren Wood said, quite frankly, in response to the obvious question, why don't you guys build a lot of renewable energy or an energy company? He said, we don't do it because it doesn't offer above average returns for our investors. They've had a hundred years to realize above average returns. It's about time for the rest of us to realize the kind of savings and freedom that comes from not relying on energy that can be hoarded, held in reserve, doled out month by month for another check.Doug Lewin (48:18.092) I know I need to let you go in a minute. Two quick points, and then I'm going to ask you if there's anything else you want to say before we end. One, Exxon is investing in lithium mining in certainly in Arkansas, maybe in Northeast Texas. So even they're changing. Two, I think as far as DC goes, obviously nobody has a high opinion of Congress right now. I mean, the polling puts Congress slightly below the plague or something like that. But I think there are, particularly in the Senate, a lot of folks that understand that if we severely limit the build out of wind and solar, it will affect many of our other national goals, including winning the AI race with China, which is very important to the Trump administration and a lot of folks in Congress. Like, I still have this like, it may be a very thin thread of hope that there might be some ability to have a bipartisan bill like in 2005, like in 2007, 2015. So I'll let you respond to that and then, I know I need to let you go if there's anything else you want to say.Bill McKibben (49:22.967) I'll just say, I hope a few of them grow a spine and are willing to stand up to the White House on some of this. Yes. And we'll see. But that's why we're doing things like Sunday. It's really important to demonstrate across the country that there's an understanding and a desire for this future. And if we change the politics even in small ways, then that has the possibility for the kind of outcomes that you're describing.Doug Lewin (49:52.334) Bill, if people want to know more about Sunday, they can go to, what is it, sunday.earth? And it's going to happen on September 21st. Is that right?Bill McKibben (49:59.174) Sunday.Earth. Exactly right. You got it just right. Doug, let me just say such thanks for what you do. You're doing it in the most important place in the world and just in exactly the right key. So many, many thanks.Doug Lewin (50:13.902) I really appreciate you. We will put links to where folks can read your excellent substack. Can't recommend that highly enough. And then here comes the sun, depending on when we put this out, it'll either already be out or you could pre-order it.Bill McKibben (50:27.875) It's out next week, so yeah, I am glad you enjoyed it.Doug Lewin (50:31.352) So it'll probably already be out. Make sure you order it and we'll put links to other places people can find you. Bill, thanks so much for doing this. This was a pleasure. Thank you.Bill McKibben (50:39.545) Our real pleasure. Thank you all. Take care.Doug Lewin (50:43.288) Thanks for tuning in to the Energy Capital Podcast. If you got something out of this conversation, please share the podcast with a friend, family member or colleague and subscribe to the newsletter at douglewin.com. That's where you'll find all the stories where I break down the biggest things happening in Texas energy, national energy policy, markets, technology policy. It's all there. You can also follow along at LinkedIn. You can find me there and at Twitter, Doug Lewin Energy, as well as YouTube, Doug Lewin Energy. Please follow me in all the places. Big thanks to Nathan Peavey, our producer, for making these episodes sound so crystal clear and good, and to Ari Lewin for writing the music.Until next time, please stay curious and stay engaged. Let's keep building a better energy future. Thanks for listening. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe

This is a free preview of a paid episode. To hear more, visit www.douglewin.com🎧 Listen to the first 15+ minutes for free, and if you’re a paid subscriber and want to listen in Apple Podcasts or Spotify, just connect your private Substack feed. Here is the a link with step-by-step instructions. You can also hear the full episode in Substack; just make sure you’re logged in with the email linked to your subscription.Texas’ retail electricity market was built to be a model for the world. When the state restructured its power sector in 1999, the idea was straightforward: unleash innovation, empower customers, and let competition drive costs down.More than two decades later, the reality is mixed. Texans enjoy more choice than anywhere else in the US — and some of those choices are great — but too often, customers are steered toward gimmicky plans with hidden fees instead of real value.On this episode of the Energy Capital Podcast, I talk with Nick Chaset, CEO of Octopus Energy US, about why the market isn’t reaching its full potential, how Octopus is trying to change that, and what policymakers can do to deliver a system that actually works for people. The Stakes for TexasElectricity consumption has gone from 400 terawatt-hours four years ago to nearly 500 TWh this year, a 25% jump. Peak demand hit 85 gigawatts in 2023 and 2024, up from 75 GW just a few years ago.We’ve built new generation to meet that growth, mostly solar and storage, but the way we price and sell electricity hasn’t kept pace. Most Texans are still on outdated plans that don’t reflect when power is abundant or scarce, driving up costs for everyone.

In this week’s Energy Capital Podcast, I revisit my recent article, None of the Above, with added commentary. Please give it a listen and let me know what you think in the comments.All of the Above vs. None of the AboveFor years, U.S. energy policy has been framed as “all of the above.” No red or blue electrons, just building what works.The new budget bill flips that script and is leaving closer to none of the above. The administration’s preferred resources aren’t available at scale:* Nuclear? Promising, but still 5-7 years, at least, from scaling* Gas? Facing massive supply chain bottlenecks, the world’s biggest turbine manufacturer only produces ~20 GW per year, globally.* Coal? No amount of weird nostalgia will changes its costs and health impacts.* Renewables and storage? The only sources growing fast enough to meet demand if they’re not strangled by new red tape.Blocking wind, solar, and batteries takes away most of what’s getting built. So where will the new power for AI come from if not from renewables and storage?AI’s Power Hunger Meets a Grid BottleneckThe White House’s own AI Action Plan says it plainly: “We must harness the full power of American innovation.” But there’s no details on how to harness enough electricity to make it happen.Meanwhile, AI developers are already building massive projects like Stargate in Abilene, a facility that will need 1.2 GW of power at launch and grow to 5 GW. For perspective: that’s more than the peak load of Austin, the 11th largest city in the U.S.How are they powering it? With a mix of wind, storage, and “incremental gas.” It’s pictured below.The market is showing us the path forward. Will policymakers follow?The Clock Is TickingEIA projects Texas demand will grow 14% in 2026 (see below). Nationally, data centers and electrification are set to drive historic load growth. Without new renewables and storage, we face higher prices, weaker reliability, and missed economic opportunities… just as China adds 400 GW of clean energy in a single year.We don’t have 5–7 years to wait for next-gen nuclear. We don’t have a supply chain ready to churn out additional gigawatts of gas turbines overnight. We have renewables and storage. Or we will not have enough to win the AI race.There’s Still a Way ForwardHere’s the good news: Developers can still add a lot of power in the next few years — if Treasury issues clear guidance and lets projects use existing credits before they expire. Congress already wrote this into law. The administration just needs to get out of the way.And yes, we should plan for what happens after credits expire. Permitting reform. Smarter integration of flexible loads. More diversified generation. But first, we have to stop kneecapping the solutions that are already working. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe

This podcast is on YouTube with Graphs Congress’ new budget bill is an energy earthquake. It could wipe out tens of gigawatts of energy production, just as we’re experiencing load growth unlike anything since the 1960’s. It will drive power bills higher for families and factories, and give China the upper hand in the race for 21st century economic supremacy.To understand in more detail the impacts of the federal budget bill, this week on the Energy Capital Podcast, I talked with Dan O’Brien, senior modeling analyst at Energy Innovation. His team modeled what this bill really means for Texas and the numbers should stop us in our tracks.If you’ve been reading this newsletter, you know I’ve warned about this moment for months. Now, the data is here. It’s worse than we thought. We were on a path to energy abundance and we’re about to get energy scarcity including increased risk of blackouts and much higher electric bills.From Ramp to Cliff: What This Bill Actually DoesHere’s what Congress passed:* Ends clean energy tax credits abruptly. No glide path, no transition, just a cliff.* Imposes impossible project timelines that most developers can’t meet.I’ve written before about how this creates scarcity, not abundance (Energy Scarcity). We’re pulling the cheapest, fastest-growing resources off the table while demand is surging. That’s a recipe for higher prices and weaker reliability.And make no mistake: this isn’t happening in a vacuum. It’s happening right when Texas has proven that solar and storage are great for reliability and affordability.The Modeling: 77 GW GoneDan’s modeling tells the story:* 77 gigawatts of lost clean energy in Texas, including over 50 gigawatts of solar and over 20 gigawatts of wind)* Only 2 gigawatts of additional gas* Household power bills up $400–$500 a year* Industrial energy costs up 50%* Tens of billions in lost rural tax revenuePut that in perspective: ERCOT’s entire summer peak is about 85 gigawatts. This bill wipes out nearly that much future clean power before it’s even built.These numbers aren’t isolated. Princeton’s REPEAT Project and Columbia’s Climate Knowledge Initiative show the same trend: abruptly ending credits doesn’t save money. It costs money—because you’re replacing cheap renewables with expensive alternatives, or worse, with nothing at all.Demand Is Exploding, So Why Are We Pulling Back?At the same time, Texas demand is skyrocketing. From 2021 to 2025, Texas has experience 6% year-over-year growth, the fastest since the 1960s. AI data centers, crypto, and industrial electrification are all plugging in at once.And here’s the kicker: the resources meeting that demand surge aren’t gas or coal. They’re wind, solar, and batteries. They’re 92% of what’s been added since 2021. In the first half of 2025, wind and solar made up 40% of ERCOT’s generation mix. Batteries are breaking records almost monthly, keeping the grid balanced during extreme heat and sudden shifts.ERCOT calculated summer energy emergency risk dropped from 16% to under 1% in one year, because of solar and storage. We have the data. We have the results. So why are we sabotaging it?The Human Side: Jobs and Rural TexasThe energy sector is one of the largest drivers of job growth in Texas. These are real people—60,000 Texans working in wind, solar, and storage, including 6,000 veterans. It’s rural school districts balancing their budgets with wind and solar tax base and farmers and ranchers keeping their land in their families for another generation. It’s welders, electricians, and manufacturers in counties that haven’t seen this level of investment in decades.Global Stakes: China’s Electrostate MomentZoom out. While we’re cutting our legs out from under us, China is sprinting ahead. Last year, they added 400 GW of clean energy, several Texases worth of power. Last month, they put in 90 gigawatts of solar. The Financial Times calls them the first “electrostate.”The U.S.? We added 60 GW in 2024. And now we’re debating LNG power plants that don’t exist. As I wrote in Energy Submission: this isn’t energy dominance. It’s energy surrender.If we abandon clean energy leadership now, we’re not just risking higher bills—we’re giving away the 21st century.There’s Still Time: Ramp, Don’t CliffI’m not arguing for permanent subsidies. We should phase them out, but smartly, with predictability. A ramp-down avoids price shocks, keeps manufacturing momentum, and protects rural tax bases while we scale what’s next.We’ve already proven the formula: reliability up, prices down, emissions falling. It’s not theoretical. It’s working. And throwing it away overnight isn’t policy, it’s ideology.The Bottom LineThe Texas grid is stronger than it’s ever been, because of solar and storage. That’s not my opinion; that’s ERCOT’s own data. Reliability is improving, costs are falling, and we’re finally catching up to the energy future the rest of the world is racing toward.This bill reverses that progress. It’s a choice between abundance and scarcity, between leadership and surrender. And the clock is ticking.Timestamps* 00:00 – Introduction* 02:00 – What is the federal budget bill and why is it important?* 04:30 – Impact on Texas power* 07:00 – Why is there only a tiny increase in new gas capacity * 10:00 – Modeling Assumptions and Safe Harbor Provisions* 12:30 – Demand forecasts and modeling variables* 14:00 – Residential energy cost increases: $480/year* 16:00 – Why that could be worse if Treasury’s guidance is restrictive* 19:00 – Why are power prices high if renewables are lowering costs?* 21:00 – 54% increase in power costs for large commercial & industrial customers* 25:00 – Job losses from the federal bill* 29:00 – Rural community impacts and manufacturing losses* 30:00 – Policymakers could revisit this policy as the impacts take hold* 32:00 – Phasing out credits would protect consumers and end them permanentlyResourcesEnergy Innovation - Linkedin* Daniel (Dan) O’Brien - LinkedIn * Updated: Economic Impacts of the U.S. “One Big Beautiful Bill Act” Energy Provisions — Energy Innovation* Impacts of the One Big Beautiful Bill on Texas Energy Costs, Jobs & Emissions (PDF) — Energy Innovation* Texas Reliability Entity 2024 Reliability Performance & Regional Risk Assessment — Texas RERelated: Writing * TRE: Solar and Storage Help Reliability; Texas Grid Roundup #68 - Doug Lewin* Clean Energy Development Slows Without Tax Credits — Texas Tribune* Boom Fades for U.S. Clean Energy as Trump Guts Subsidies — Reuters* What the ‘Big Beautiful Bill’ Would Mean for Renewable Energy — Governing MagazineTranscriptDoug Lewin (00:05.922): Welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. My guest this week is Dan O'Brien, senior modeling analyst at Energy Innovation. Dan has spent a lot of time working on a model to show the impacts of the federal budget bill that passed the Senate on July 3rd, signed by the president on July 4th. This episode is a shorter one. Quick note to the listener, there were some charts and graphs. You can see all of that on the YouTube channel, Doug Lewin Energy.But if you are listening to the podcast version, we made sure to describe all the charts and graphs so you'd be able to follow along. The stuff that we got into in this particular podcast, the change in capacity that will be coming from the federal budget bill, which was a massive loss for Texas, 77 gigawatts of capacity. In the next 10 years, we talked about which sources that comes from and what might fill the gap and what doesn't fill the gap. We don't see a whole lot of gas. So we talked about all of that. We talked about the change in cost, both for households and businesses, a massive rise for both, but much bigger for businesses, about a 20% increase for residential consumers. That's $500 per year per family, but a 50% increase compared to had current policy stayed in place for businesses. We also talked about job losses, the loss of investment impacts on rural communities.Compare Texas to the impacts of other states. This is a short but very dense, very full episode. Hope you learned a lot from it. As always, please give a five-star review wherever you listen to your podcast. Please follow along, become a subscriber at YouTube, the channel's Doug Lewin Energy. And to subscribe to Texas Energy and Power Newsletter and the Energy Capital Podcast, go to douglewin.com. And with nothing further, let's jump in to this podcast on the impacts of the federal budget bill on Texas. Thanks for listening.Dan O'Brien, welcome to the Energy Capital Podcast.Dan O'Brien (02:07.694): Thank you for having me.Doug Lewin (02:09.389): So let's start with you've spent a lot of time obviously modeling the federal budget bill. Let's just start from the highest level. Why? Why spend time modeling this bill? What is the bill and why is it so important that you want to spend time modeling?Dan O'Brien (02:25.166): Well, energy is everything, Republicans got that right in campaigning last year. And one thing that this big, beautiful bill does is really changes how energy will be produced and transformed and consumed in the US in the next decade. And this happens a few different ways. So the biggest one being changing the tax credit structure around energy in the United States. So the big bill repeals a number of different tax credits that are offered to companies to incentivize development of new energy facilities like power plants in the US. It also increases the amount of oil and gas leasing in the US through running more auctions and lowering the royalty rates for these projects. It delays conservation funding that was passed in 2022. So it's kind of all consuming and touches a number of different areas. And my organization is one that tries to focus on producing quantitative analyses of bills like this. So we've definitely put a lot of time into it and happy to chat through it.Doug Lewin (03:34.612): Awesome. And you guys at Energy Innovation have done a great job and a great service in modeling this. I do just want to say from the outset, there are a lot of folks out there modeling this. And one of the articles I wrote, I think it was Energy Inflation, but we'll put a link in the show notes. I cited, I think, four different modelers that had in the same ballpark of similar results. There's, of course, key differences and all of that, but so that people don't have the impression that this is kind of a lone voice out there. There's a lot of folks doing this. They're all kind of directionally showing the same thing, but for energy innovations model, let's talk about what you're actually seeing or the results in the models from the passage of the federal budget bill. Let's start with what is the change in capacity. And we're going to focus mostly here on Texas, the Energy Capital Podcast, but if you want to cite some of the national statistics, I think they're relevant, but mostly with a focus on Texas. Let's start with what do we see in the differences in what gets built with this bill in effect.Dan O'Brien (04:35.138): Sure. So the biggest change is this bill repeals and shortens the lifetime of the clean electricity tax credits for developers and utilities around the country. And these are tax credits that incentivize new power plants coming online. And they're especially targeted towards renewables, though they're technology neutral. So any power plant that's not generating emissions can qualify for this. And because of the timelines for development and how simple these projects can be, wind and solar tend to be the technologies that are losing out. And so what we see is those are the biggest losers in terms of new capacity in Texas. Texas is actually the state that we find has the biggest losses in terms of capacity from this bill, about 77 gigawatts of lost capacity in the next decade. And about two thirds of that is solar and one third is wind, roughly.Doug Lewin (05:35.182): Just to put that in context, that's obviously a huge number. Texas' all-time peak demand in the summertime is about 85,000 megawatts or 85 gigawatts. So that's almost as much as Texas' entire peak demand. The total installed capacity in Texas is somewhere around 170. So losing 77 is a great big deal. But I would like for you to address while you said there's 54 gigawatts of lost solar, 23 gigawatts of lost wind, three gigawatts of lost batteries. And then you had in your models only two and a half gigawatts of increased gas. That's certainly, I think, counterintuitive to what a lot of folks, including probably the folks that authored the bill and championed it, thought would happen. They talk a lot about how we need less renewables, we need a lot more gas. Can you talk about why you think the model produced that? Why is that the result?Dan O'Brien (06:28.462): Sure, and let me share a graphic here that kind of shows off that point that you're talking about.Doug Lewin (06:33.494): And Dan, as you're pulling that up, let me just say for, because I don't think I said this yet. We will describe these. If you're listening to the podcast audio only, we'll describe them so you won't lose anything. If you're in a place where you can follow along on YouTube, the channel is Doug Lewin Energy and we'll have the video there so you can see the graphs. Go ahead, Dan.Dan O'Brien (06:51.758): Sure, thank you for that. So the graph that I'm showing is the annual change in Texas's electricity generation capacity. And what it shows is that solar is the biggest loser, wind is second to that. And it shows a stacked column chart highlighting that the losses in these different technologies increase over the next decade. We see a few gigawatts lost in 2026 to 2029. But in the early 2030s is when we see the biggest losses in new capacity for these technologies. Simultaneously, it shows that there are really small additions of gas plants on the positive end of the chart. As Doug pointed out, about 2 and 1 half gigawatts of new gas capacity is what we project to come from the bill. Now, why is that? Folks who are listening here may be well-tuned to the shortage of new gas turbines that utilities and developers are unable to source new gas turbines for plants that they might want to build in the next four or five years. So we don't really have the ability to meet the loss in renewables with a gain in new gas plants. And as a result, what we're really seeing is existing gas plants, especially, are just running longer hours of the day to meet existing demand and growing demand due to things like data centers and manufacturing facilities.Doug Lewin (08:20.874): We would see... Your modeling is showing an increase in capacity factor of gas plants, which are probably... I think the number is 45, 50% right now. They might go to something like 60, 70%, something like that. They're higher.Dan O'Brien (08:36.994): Yeah, that's exactly right. So presently we see around 40 to 50% capacity factor for gas plants, that is for combined cycle plants. And what we find in our modeling is that these tax credits for renewables in the 2030s especially really drive down that capacity factor. As more and more renewables are hitting the grid, we're seeing those more efficient combined cycle plants are running fewer hours of the year down into like the 30s percents range. But as a result of the bill, the trend reverses and those plants are running more hours into the 50s and 60% range. So it's really a dichotomy of whether or not these tax credits are in place that are really increasing the profitability of new wind and solar plants to meet rising demand.Doug Lewin (09:27.862): Now, there's obviously something interesting that's happening that is probably really hard. I would imagine is really hard to model. You could let me know if that's true or not. You're modeling the final bill, which the Senate modified to allow a runway for wind and solar projects and other projects as far as the foreign entities are concerned. But basically you have through the end of the year to commence construction, as long as you're completed in four years, you can still get the tax credit. Are you modeling that or are you adjusting to what appears to be the executive order from the president to treasury, which is basically trying to obstruct that and make commenced construction a much harder definition? Are you able to account for that in the model? Are you just modeling it sort of on face value as it passed the Senate and was signed into law?Dan O'Brien (10:18.914): You know, all these groups, you noted at least four groups modeling this. All of us are doing our best at interpreting what we think will come out of this. We are assuming that some producers are able to pull forward their construction dates and begin construction this year so that they can engage with the safe harbor rules and claim the tax credits for the next few years. Really intricate ways of doing that. Essentially what we assume is the Energy Information Administration has a list of planned power plants. And we assume that all those plants that have received regulatory approval but have not yet started construction can pull forward that construction date. I think it threads the needle relatively well, especially given the executive order kind of aims to make it harder for plants to receive that regulatory approval and start construction. So maybe we're a little bit conservative in which producers and developers are able to do that. But if anybody tells you they know the future right now, they're not telling the truth, you know.Doug Lewin (11:23.502): No, anybody ever tells you they know their future, they're not telling you the truth, but especially now, there's a lot of uncertainty. And I think unfortunately, the administration's point is to have a lot of uncertainty, which is unfortunate. But it's safe to say, Dan, that what you just showed in that chart, which is a lot of drop off in the 2030s and only a little bit in the late 2020s, could be much worse. We could see more supply constraints, higher prices, all that kind of stuff. If the guidance out of treasury is particularly onerous, this could actually be worse.Dan O'Brien (11:58.018): Yes, it could be worse, the degree to which is really hard to estimate from a quantitative approach.Doug Lewin (12:03.854): Got it. Okay. Thanks for that. Before we get into talking about cost, I do want to just ask you kind of a modeling question. What are you guys putting in there for demand, especially in the ERCOT market? Because there's such a wide range of demand forecasts. I had Olivier Bofisse from Aurora Energy Research on the podcast, and their demand forecasts in the 2030s are in the low hundreds at 110 gigawatts. ERCOT's are 150 by 2031. There are some that are forecasting much, much higher even by the early 2030s in a 200 range. So obviously within that spread, that's going to create very different results. So where do you guys kind of come out on the demand side of the equation?Dan O'Brien (12:48.098): Yeah, I don't have a number to put in front of you right now, but my guess is somewhere in the middle there. For most of our demand forecasts, we'll pull government data, so EIA data, for example, so wherever they're landing. And then we're starting to build into the model a little bit more exogenous demand projections so we can better account for data centers and growing demand from that because the government projections can be a little bit delayed and trying to stay on top of growing demand from that side is something we're focused on.Doug Lewin (13:18.584): Okay, cool. Yeah, it'd be great if you can, we can include in the show notes. I'd love to have what that is. Because I do think part of what is going on here is, and one of the reasons why this is so difficult, is these things play on each other, right? If there's not as much supply, particularly affordable supply, then you may end up getting less demand, right? But if that demand pool ends up being really strong, you could get a lot more supply, but it's going to end up being very high cost supply. So it's obviously really hard, but I think that number will matter a lot and how that's modeled if there's a different range. I think having different demand numbers is a really useful thing for folks in the market and planners, regulators, policymakers, for everybody to be able to see.Dan O'Brien (14:05.974): Yeah, completely agree.Doug Lewin (14:08.022): All right, cool. So let's talk about cost. So this is one of the main takeaways you guys have. Again, you modeled all 50 states. Texas was one of them that came out worst. What did you see as far as increased energy costs? Maybe we start with households, but you can take it in whatever order you want.Dan O'Brien (14:25.934): Sure. So I feel like just starting with overall power prices is helpful. When you pull renewables offline or don't add them to the grid, what you see is gas running a lot more often like we just discussed. And when you see that across the whole country, we find that the incremental gas demand from the bill outweighs the incremental gas production from the bill. And just from like a supply demand perspective, that shows you gas prices going up. So you pair that with increased reliance on natural gas and you see power prices go up. And that's something on the order in Texas of around 20 to 50% depending on the consumer. So residential consumers probably on the lower end of that and then industrial commercial consumers on the higher end. So what does that mean for households? In Texas, what we find is around $480 a year of increased energy spending. And where does that fit? So depending on the state, we see somewhere between $50 and $650 of increased energy spending. And I'll put a graphic up on the screen here that can kind of show where those costs are distributed. So what we find is it's really states in the South and the Midwest that have the highest increases in power. And these are states where, you know, they're really well geographically oriented for renewables. You know, the sun shines a lot in the south and the wind blows a lot in the Midwest. So when you pair that with tax incentives, it makes a really economically favorable environment for renewables. When you pull those back and a lot of these are states that don't have strict renewable portfolio standards, for example, that are maintaining that market certainty and giving business certainty to developers. And so those are the states where power prices tend to go up the most.Doug Lewin (16:25.806): So about 500 bucks a year by 2035, a little over $200, $220 by 2030. I mean, again, I just want to emphasize the degree to which those power prices might shoot up quicker will depend on a lot of how this plays out at treasury and what that guidance is. If it's very restrictive, I think we're going to see power prices that you'll pull forward those price increases. Is that a fair conjecture to make?Dan O'Brien (16:56.322): Yeah, that's absolutely right. So by assuming that producers can pull forward the construction date on some power plants, we're assuming that some of those renewables get online in the near term and keep prices down in the near term. But if the treasury guidance reverses the ability of those developers to do so, then power prices will go up more in the near term.Doug Lewin (17:16.811): If you're listening and not able to see the map, what we're looking at on the map is sort of a line right up the center of the country with some of the biggest price increases, including Missouri and Kentucky, but also Kansas, Arkansas, Oklahoma, Iowa, Minnesota. Like Dan said, a lot of the windiest places. Then as far as sunny places, you're seeing high increases in North Carolina, Florida, Texas. The states that fare worst are Missouri, Kentucky, South Carolina, Oklahoma, Texas, kind of right there in that next tier. You said that's about a 20% increase, the $500 equates to about 20%.Dan O'Brien (17:50.358): In residential power prices. Exactly right.Doug Lewin (17:53.048): For residential power prices. Okay, great. Let's talk about, well, not great, it's terrible, but great information. Let's talk about what this means because there's huge implications here for the broader economy. Obviously, it's always important to center this around people and always important to ground ourselves in the fact that there is a large portion of the public that is unable to afford their energy bills as they are now. So the stat that I like to cite there is that one out of six people nationally are in arrears on their electric or gas bills or both. The U.S. Census Bureau consistently shows 30%, sometimes higher, sometimes a little lower, but usually not much lower, about 30% that self-report choosing between paying for energy, their light bill, or medicine and food. So that's a very devastating increase to residential. I hear a lot and Dan, you're happy for you to talk about this if you like, but I feel the need to address this because I get this a lot. People are like, look, power prices are already high. I don't know what you're talking about. I'm hurting. My bill's really high. You know, I get this a lot. And what I like to remind people, first of all, I hear you. I get it. It's painful and it's not right. We should be doing more to help people. I'll acknowledge that first and foremost. And your power prices would be a lot higher right now if we didn't have renewables in the mix like we do. They do put a downward pressure on generation. Most of the increase in the last few years has come from transmission and distribution and specifically really the distribution side of the grid. So we've seen large increases in T and D. Now we're going to see large increases in generation too. So it's kind of this double whammy. You're welcome to address any of that you want. I do also want to talk about the commercial sector and industrial consumers because this is a lot of the drivers of the economy and if power prices go up there, particularly for those that are very price sensitive, which would include steel mills, oil and gas producers that are trying to connect to the grid, refineries and petrochemical facilities, all kinds of different industries that are very price sensitive. So feel free, Dan, to address anything I just said as far as affordability and all that. And then let's do talk about commercial and industrial.Dan O'Brien (20:13.518): Sure. So I appreciate your point that it is important to both say energy costs are too high and are impoverishing people and renewables are helping. I'd point to a report from Josh Rhodes that found about $32 billion of cumulative savings thanks to renewables in ERCOT. And that was between 2010 and 2022, I believe. So renewables help people. It's really hard to see that impact because all you see is your own power bill. You don't see here's your power bill and here's what it would have been if we didn't have these power plants on the grid. That's right. So I think that's really helpful perspective and important one for folks in energy to focus on. To your point, residential consumers, households, people like you and me, we don't just pay for a gas turbine to run. We pay for all of the services that go into making sure our electricity is reliable and it doesn't shut off at random parts of the day. We pay for the transmission that gets it from the power plant to our towns and we pay for the distribution that gets it into our homes. That's one reason that we find that 20-ish percent increase in residential power price being lower than the 50-ish percent increase in power price for commercial or industrial consumers.Doug Lewin (21:38.964): I just got a pause. Wait, 50% increase for large consumers specifically in Texas.Dan O'Brien (21:46.478): That's right. 54% is what we found.Doug Lewin (21:51.146): Yeah, keep talking, tell me more, because that is an eye-popping figure.Dan O'Brien (21:56.586): It's an eye popping figure. And what does it mean for business is kind of the key question here, right? There are a lot of industries that are heavily reliant on costs of energy. So data centers, for example, we keep hearing about them, hearing about the boom of AI, but a majority of the operational costs for a data center are power. Most of the spending that they do on a day-to-day basis once they've opened is paying for electricity. And so if you see the price of power increase by 50% in your state, you're not going to be a state that's attracting new data centers. Other types of consumers like steel mills, for example, you listed, or other manufacturing sites that are heavily dependent on electricity are going to find themselves going to other states. These companies are going to other states that have lower power prices or going outside of the US and offshoring to places where there is this continued investment in the technologies of the future on the grid that are making electricity cheaper rather than subsidizing the past.Doug Lewin (23:09.857): 54%. So the average megawatt hour in ERCOT the last couple years from memory is something like 35, 40 bucks, not including 2022 where gas prices were so much higher, but say 23, 24 even this year were somewhere around 30, 40. So you're talking about going to like $60 a megawatt hour on a wholesale basis, something like that.Dan O'Brien (23:31.822): I think an important clarification here is we're not comparing to today's numbers. We are comparing a world before the bill and a world after the bill.Doug Lewin (23:41.368): Good distinction. Okay.Dan O'Brien (23:43.822): Yeah. So a world before the bill, renewables make up a large share of the grid, and they're running in more hours of the day, and they're producing electricity without any fuel costs. Then you shift to a world where we're heavily dependent on gas, and gas prices simultaneously are skyrocketing. And so the difference between those two scenarios is a 50% increase in power prices for industrial consumers.Doug Lewin (24:11.16): Got it. How does that compare to other states? You talked about how different data centers or any number of industrial customers might move to other states. Are other states seeing 50% increase or is that really kind of unique to Texas?Dan O'Brien (24:26.574): Texas is towards the top of the list. There are a few states that are higher. Kentucky, for example, like you listed earlier, Kansas, could be heavily reliant on wind, but without the tax credits, kind of shifts back to coal or gas. Oklahoma sees really high increases. Again, similar, really favorable environment for wind, but without the tax credits is more reliant on fossils. That said, aside from those few states, Texas is definitely seeing amongst the highest cost increases and definitely higher than a lot of states, especially in the Northeast where you have renewable portfolio standards and other state level policies giving a little more economic certainty to renewable developers.Doug Lewin (25:09.314): Very interesting. Okay. Let's talk about jobs as well. We've talked about the cost of power and what that might mean for investment and competitiveness. There's a whole lot of jobs in clean energy in Texas right now, and those were increasing significantly to the point where even there was a very interesting tweet earlier this year from Governor Abbott where he said, we had beat out California actually in the addition of wind and solar jobs earlier this year. And he was rightfully bragging on that. So we've really seen this make a big impact for Texas workers. What happens to jobs under the budget bill?Dan O'Brien (25:46.228): Like you said, renewables and clean energy generally powers a lot of the economy in terms of new job additions. I'm now showing on the screen here for those who aren't looking, a graph of the change in jobs in Texas as a result of the bill. And I have it broken out into seven different sectors. So agriculture, fossil fuels, electric utilities, manufacturing, construction, government, and other. And what we see is in 2025, there's very small impact from this bill because it takes time for utilities to update their planning and make different power plants. What we see is that by 2035, 10 years from now, Texas loses around a hundred thousand jobs in sectors other than coal, oil, and gas. And those three sectors, coal, oil, and gas, add around 6,000 jobs on the same time frame. The overall loss is around 94,000 jobs just in Texas alone. And like you just said, it's the biggest state for clean energy in the country right now. And this is kind of a big reflection of that reality is that losing clean energy does a lot more to harm the economy than gaining in coal, oil, and gas can.Doug Lewin (27:10.648): So that's about 30,000 manufacturing jobs, about 20,000 construction jobs. You got this other category. Is that, is a lot of that like wind technicians and solar installers and things like that, or do those fit into construction?Dan O'Brien (27:24.632): Those are probably mostly in construction, but other captures the induced impacts of these losses around the economy. So these are convenience stores on the corner that are shutting down because people aren't buying goods because the economy slows down. These are teachers and nurses and other folks employed around the economy that lose their jobs because clean energy is such a powerhouse in Texas that when that slows down, the rest of the economy shrinks.Doug Lewin (27:55.278): Particularly in Texas rural counties, right? I mean, I refer a lot to, and we posted it on the YouTube channel. There was a hearing around Senate Bill 819, which was the very onerous restrictive permitting bill that passed the Senate but did not pass the House. When they brought it up in the Senate, there was some great testimony. I highlighted in the YouTube video the testimony of folks from Armstrong County, Schleicher County, and Nacogdoches County. The first of those two, Armstrong and Schleicher, like 2,000 people and they literally have tens of millions of dollars of investment going into their schools and roads and all the rest. So we would obviously see much less of that. But it's interesting to me though, Dan, even if you were to discount all that, and I don't think that should be discounted, but even if somebody's listening and says, well, I don't know about all that, you've got 30,000 manufacturing jobs lost for 6,000 oil and gas jobs gained. Even if you just look at that piece of it, it's a terrible trade off for the state of Texas. This may work out other places okay, but it looks pretty obvious from the modeling. And again, yours isn't the only one. We're seeing pretty consistent results that this is a terrible outcome for Texas. And it's hard to imagine any elected official in the state of Texas supporting this kind of thing.Dan O'Brien (29:11.628): Yeah, that's right. It's pretty stark losses when you look at it around the economy. And even if you focus on one sector like manufacturing or construction, each of those on its own are two or three times, at least the losses that you see in the gains in the fossil industry. I think you point to a correct reality that rural communities are really the ones that are harmed the most from this. These are communities, especially where new power coming on is often from smaller companies, family-owned businesses that can't afford and don't have the capital to be resilient to big shifts in policy like this.Doug Lewin (29:50.444)Before I ask you if there's anything I should have asked that didn't or anything you want to say in closing, I will just say I think as the results of this bill start to become more more apparent, as people's electricity bills go up, again, depending on what kind of guidance Treasury gives, that could happen very quickly or it may take a couple of years. But either way, as the jobs start to be lost, as the manufacturing starts to move out of the state of Texas, even outside the borders of the United States, I think it's going to become very important for policymakers of both parties. We've talked about a lot of the states that are going to see the biggest impact from this. I think of folks like Senator Moran and Senator Grassley and Senator Ernst and Senator McConnell from states like Kansas and Iowa and Kentucky, and even Cornyn and Cruz from Texas, trying to figure out how to create some kind of bipartisan policy. And you don't have to agree or disagree with this, Dan, this is my view of the world. If you're going to phase out the tax credits, and I actually think it's okay to phase them out, if it's actually a phase out, if there was actually a ramp, a slope downward, not a cliff. And I think that who's really going to end up at the bottom of that cliff are consumers and American manufacturers. And what we need to do is durably phase them out in a way that Democrats agree to so we don't get this whipsaw back and forth. I think the modeling that you guys have provided is really helpful for people to start thinking that through. As we start to see what happens and how that lines up with the models, I think it's just going to become so important to revisit this and come up with some durable policy. You can react to any of that you want or leave it alone if you like, but also let the listeners know anything else that you wish I would have asked you, anything else that you want to say in closing, Dan.Dan O'Brien (31:38.838): I mean, all I can do is agree. I think good policy is designed with quantitative backing, like the modeling that we're trying to do here. Good policy gives certainty to businesses around the economy. Good policy focuses on helping people. And this is not good policy. If it were done right, it would be just like you described. It's understandable to want tax credits to phase out over time as the industry matures and the US becomes a powerhouse in the clean energy industry in a different world. It's important to phase out government subsidization of that. It's important that these are industries that learn to stand on their own in the same way that it's important that the fossil industry eventually does so. And giving that independence while also making sure it doesn't happen by pushing them off a cliff is important to keep it from hurting consumers and burdening households like yours and mine with high energy costs and making people lose their jobs just to get the kind of policy you want in place rather than the policy that makes the most sense for individuals.Doug Lewin (32:47.714): Yeah, unless anybody thinks it's just impossible or hopelessly optimistic. I, first of all, acknowledge that it's maybe a bit of a long shot that this would actually be fixed. But I will say two things on that. One, there's still a lot that Republicans in Congress want to get done, like permitting reform, right? Senator Barrasso had worked with Senator Manchin in the last Congress. They didn't get that across the finish line. And number two, no matter what anybody says, I just don't believe that any policymaker wants to see electric bills go higher and American competitiveness get harmed. So I think as long as we can talk about those high level goals, and again, just like you said, Dan, a high level goal can also be ending subsidization. If that's your goal, you're better off doing it in a bipartisan way so it doesn't get reversed next time Democrats are in control. So maybe it's naive, maybe it's optimistic, but it's a little thread of hope or something that I'm holding on to. Anything else you want to say in closing, Dan? This was great. I really appreciate all the work you're doing at Energy Innovation. This modeling has been super useful to me. I've put it in the newsletter, so thanks for everything you do. Anything else you want to say in closing?Dan O'Brien (33:53.966): Just appreciate your having me on and happy to chat with you in the future or answer any questions from your listeners. So thank you.Doug Lewin (34:01.016): Thanks so much, Dan, appreciate it.Thanks for tuning in to the Energy Capital Podcast. If you got something out of this conversation, please share the podcast with a friend, family member or colleague and subscribe to the newsletter at douglewin.com. That's where you'll find all the stories where I break down the biggest things happening in Texas energy, national energy policy, markets, technology policy. It's all there. You can also follow along at LinkedIn. You can find me there and at Twitter, Doug Lewin Energy, as well as YouTube, Doug Lewin Energy. Please follow me in all the places. Big thanks to Nathan Peavey, our producer, for making these episodes sound so crystal clear and good, and to Ari Lewin for writing the music. Until next time, please stay curious and stay engaged. Let's keep building a better energy future. Thanks for listening. This is a public episode. 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In May 2016, a wildfire ripped through Fort McMurray, the heart of Canada’s tar sands and bitumen mining region, with a speed and intensity unlike anything firefighters had seen before. It created its own weather. And it triggered the largest evacuation in Canadian history, which had to happen within mere hours.But this fire wasn’t just a freak event. It was a warning of more to come. Since then, Texas experienced its biggest wildfire ever — the Smokehouse Creek Fire — in 2024. On the latest episode of the Energy Capital Podcast, I talked with John Vaillant, author of Fire Weather: On the Front Lines of a Burning World, to unpack what happened in Fort McMurray and why it matters more than ever today.A City Built for Oil, Burning on OilFort McMurray exists to extract bitumen — a heavy, tar-like form of oil that’s mined, not drilled. The scale is staggering. It’s one of the largest fossil fuel reserves on Earth, and the city’s infrastructure, economy, and identity are built around it.John explains how the very thing that built Fort McMurray also made it vulnerable. Warming temperatures. Drier forests. Flammable building materials. More people living in high-risk zones. A city that was a tinderbox.Why This Story Hits Close to HomeTexas is no stranger to extreme heat and fast-moving fire.The Fort McMurray fire was one of the first modern wildfires to force a major oil-producing region to confront the new physics of our climate.But it wasn’t the last.In the episode, we talk about:* The almost unimaginable intensity of modern wildfires* the Lucretius Problem: the worst or biggest hurricane, flood, fire, etc. is not the worst or biggest possible* parallels between Fort McMurray and Texas suburbs near the WUI (wildland-urban interface)* Why we need to rethink infrastructure, building codes, and land use to have a chance at resilience in the face of extreme fire weatherThis is one of the most powerful stories we’ve featured — and one of the most important. Thanks for checking it outThis work would not be possible without your support. This episode of the Energy Capital Podcast is free, but paid subscribers get access to select episodes, including this one on the future of advanced nuclear reactors with Matt Loszak, as well as Grid Roundups, the full archives, special presentations, Reading and Podcast Picks, and more. If you’re not yet a paid subscriber, please become one today. The Texas Energy and Power Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a paid subscriber.Timestamps* 00:00 – Introduction* 02:00 – The Fort McMurray Fire* 04:00 – Fort McMurray’s economy is based solely on a fossil fuel: bitumen* 07:00 – The context of the Fort McMurray fire* 10:00 – The physics of modern fires: radiant heat of 900 degrees * 13:00 – The toll on firefighters* 14:30 – The megawatt equivalent of a wildfire: “this now is what fire is capable of”* 16:30 – Fires now create their own weather: pryocumulonimbus clouds* 19:00 – The Lucretius Problem and discontinuity* 22:30 – The connection between monster firestorms and floods and other extreme weather events * 26:00 – Similarities between Texas and Alberta* 27:30 – The Texas legislative session and flood response, adaptation* 29:00 – Examples of effective adaptation: “defensible space”* 32:00 – Texas wildlife risk and Wildland Urban Interface (WUI)* 37:00 – Greenhouse gas levels are higher by far than at any time in human history* 40:00 – The American Petroleum Institute’s policy reversal* 44:30 – Opportunities for business and industry from reducing emissions* 46:00 – Who’s leading the race for the future of energy? * 49:00 – Could Texas lead the way?* 51:00 – Final Thoughts & A Path ForwardResources* Fire Weather: A True Story from a Hotter World by John Vaillant* The Fires Sweeping Across Texas Offer a Terrifying Warning, New York Times Op-ed by John Vaillant* CBC documentary: Fort Mac Fire: Rogue Earth* The Fire Age by Stephen Pyne * Ladies and Gentlemen, the Northeast Is Burning, New York Times Op-ed by John Vaillant* The Fires Sweeping Across Texas Offer a Terrifying Warning, NYT Op-ed by John Vaillant * Mark Carney should understand better than anyone why Canada is burning. Here’s how he can change course, The Star Op-ed by John Vaillant* Steiner Ranch neighborhood gets second emergency evacuation route | FOX 7 Austin* Texas Wildfire Risk Assessment Portal* California Burning by Katherine BluntTranscriptDoug Lewin (00:04.984): Welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. My guest this week was John Vaillant. John wrote a book that really struck me, and as soon as I read it, I knew I was going to invite him to be a guest on the Energy Capital Podcast. It's called Fire Weather: On the Frontlines of a Burning World, and I cannot recommend this book highly enough. It was an absolutely fantastic read. It was the story of a fire that went through Fort McMurray, which is a town that exists for bitumen mining sort of a type of oil, but it's not really drilled. It's mined. We get into that in the conversation, but this fire was absolutely horrific. One of the worst that humankind has ever seen. We are dealing with fire weather in Texas in 2024. The Smokehouse Creek fire was the worst fire that ever happened there. And John brings a whole lot of insights. He was a Pulitzer Prize finalist, National Book Award finalist for this book.It took seven years to write it, to detail everything about it. Just incredible book. Again, highly recommended. But what really was the takeaway for me from this book was the Lucretius problem, which we talk about in the interview. So I won't talk about it now, but listen to the podcast. And I think you'll also find that that is a really useful construct to think about what's happening in our world in 2025 as we get the worst flood we've ever seen, the worst fire we've ever seen, the worst hurricane we've ever seen, so on and so forth.The Lucretius problem is a really valuable frame for this. I really enjoyed this discussion with John. Hope you do too. As always, please do spread the news of this podcast to friends, family, colleagues. Let people know about the Energy Capital Podcast, Texas Energy and Power newsletter. Word of mouth is very important and we really do appreciate those five-star reviews wherever you listen to your podcasts. And with that, here's the podcast recording with John Vaillant.John Vaillant, welcome to the Energy Capital Podcast.John Vaillant (01:57.4): Doug, so good to be with you. I'm glad we finally got it organized.Doug Lewin (02:01.838): Yes, sir. I've been trying to make it happen for a while. Because as soon as I read this book, I knew I needed to talk to you for the podcast. I'm talking about Fire Weather: On the Frontlines of a Burning World, a book you released last year, and John, just blown away by the book really truly, just a fantastic piece. I think, you know, wildfires are such a defining feature of this epoch, this era we're in. I think yours and Katherine Blunt's California Burning are probably, I need to have Katherine on for sure, just really the standouts. But why don't we just start with, can you just talk about the book, what it's about, how long it took you to write it? Let's talk about Fire Weather first, please.John Vaillant (02:42.926):So I was working on a novel back in 2016. My head was not in fire. I was not even in Canada. And while I was away, Fort McMurray, Alberta, which is the petroleum hub of Canada, almost the Houston of Canada the center of the industry, caught on fire. A wildfire swept into town on May 3rd, 2016. That's still early spring in the subarctic, which is where Fort McMurray is. So there was ice on the lakes. There were car-sized blocks of ice on the river that flows through the city called the Athabasca River. But the temperature record for that day was broken by about eight degrees Fahrenheit. It went up into the low nineties, relative humidity was around 11 percent like Southern California, and an unstoppable fire swept into the city of Fort McMurray, driving the largest, most rapid evacuation due to fire in modern times. People got out. No one was quite sure how many actually escaped, but about 80,000 people left.The fire, meanwhile, stayed burning in the city limits for nearly a week straight, and it shut down the multi-billion-dollar Canadian petroleum, I should say, bitumen, industry for weeks and hobbled it for months.Doug Lewin (03:57.59): And it really is this kind of amazing crystallization, because you mentioned bitumen there, right? And we should probably talk about what that is. This is what is often referred to as tar sands, right? This is really oil that has to be it's not really oil, but has to be heavily, heavily refined. So just to give a sense of the setting and the context of this fire, can you talk a little bit about bitumen and Fort McMurray?John Vaillant (04:23.374): Sure. I mean, if the oil you know, the sweet crude that you're getting out of the Gulf of Mexico or out of Texas is rum, what you're getting out of the tar sands is molasses-soaked sand. And in order to turn that molasses-soaked sand into a bottle of rum, you have to melt the bitumen out of the sand, which requires billions of cubic feet of natural gas every day just to melt this stuff into something that will fit and flow through a pipeline. Then you need to dilute it with condensate, which is super volatile, super toxic, and then pump it basically a thousand miles south, 700 miles south to the US border to specially designed American refineries that can process ultra-heavy crude. So this crude is so heavy, it sinks in water. And we all know oil doesn't sink, it floats around. This stuff sinks to the bottom.And so it makes oil spills, bitumen spills, almost impossible to clean up. And it's just a very, very energy intensive fuel. It almost doesn't make sense. And the business model is a very, very different one than you would use in Texas or that the Saudis would use. And it's a very particular animal that ends up being the most dirty, most expensive, most environmentally destructive petroleum product on earth.Doug Lewin (05:48.864): And the whole town basically exists to mine that, right? I mean, like there might've been a fort there before that, but like there's a hundred thousand people, I think roughly living there at the time of the fire less now, right? Because not everybody came back, but a hundred thousand people at the time. And it basically is a town that exists for this bitumen mining, correct?John Vaillant (06:10.446): Solely, solely to service bitumen mining. And I'm glad you used the verb mining because that is how they extract it. They use gigantic shovels and load them into 400-ton dump trucks that are the size of three-story houses. Then they have another method called SAGD where they pump superheated steam, again, heated by natural gas, into the bitumen deposit and melt the tar out and then suck it out, you know, basically with a giant straw, but it's still not like the way you would pump oil in Texas or the Gulf of Mexico. It's still this incredibly stubborn, dirty, full of heavy metals and other contaminants product. So it requires layers and layers of extensive and expensive and energy-intensive refining to turn it into something remotely sellable, really.Doug Lewin (06:59.598): And it's just, I think, a really important reminder that even those that are, and sometimes especially those that are working within the fossil fuel industry are not immune, obviously. They're like the rest of us to the sort of ravages of this extreme weather that's hitting us. So that's the setting. So it's like May 2016. Let's talk about the fire a little bit. I think this is, you know, obviously this is something that affected Alberta. But as you note in the book, California has had what's something, I think this stat was, something like 10 out of the worst 20 wildfires ever in the state have happened in the last few years. Texas, of course, just last year in 2024 had the largest wildfire in its history, the Smokehouse Creek fire. So while this is the story of one particular fire, obviously, the implications are much broader. But can you talk for a little bit about the fire itself and the magnitude of it?John Vaillant (07:56.504): So we have conditions that would be familiar to Texans years of drought, record high temperatures, excessively flammable, explosively flammable conditions. But again, we're in the boreal forest. So we're on a latitude the same as Alaska, but we're in northern Alberta. It's really wet up there. It's really the wettest biome on Earth, but it is drying out right now. And so we had two years of drought. We had El Niño. We had record spring temperatures, you know, breaking into the nineties when it's normally in the forties and frosting at night. And now we've got southern summer temperatures and you've got this rock bottom humidity. And so there were five different fires burning around Fort McMurray on May 1st. And, you know, water bombers were on it. Alberta has a very robust wildfire fighting program. Some of the best wildfire fighters in the world reside there.But the conditions were so explosive that when the embers generated by the inevitable winds that come out of even a small wildfire started, you know, the embers started to fly, they didn't just land and fizzle and sputter. Each one turned into a new full-blown fire. So now you have this almost like imagine a drone swarm of incendiaries flying around. The wind shifted as predicted. By the way, just for the record, all the predictive data going months out was basically impeccable. It was clearly going to be an unusually volatile fire season, 2016, and the weather for early May was going to be exceptional. And the wind prediction predicted to blow into town at noon on May 3rd came to pass like clockwork. And when those embers started landing on houses and yards that were already bone dry, they didn't again just fizzle and sputter. They burst into flames and so by around 1:30 there was a wall of flame about 300 feet tall and six miles wide that basically kind of broke over the southwestern edge of Fort McMurray and just started consuming neighborhoods.And I learned a lot about radiant heat this book took me seven years to write. I'm not a fire person, not even really a climate person. So I had a very steep learning curve. This was a very complex and dynamic situation. But from the very beginning, when it first made headlines and started being the chyron on the bottom of news shows around the world as Fort McMurray disappeared, it was clear that we were into something different and unusual. And the radiant heat coming out of this fire, the radiant heat is the heat that tells you not to touch the candle, it's invisible. It moves at the speed of light. The radiant heat coming out of this fire into Fort McMurray was about 900 degrees. So that's hotter than the planet Venus. And what that does is it desiccates everything in its path. Every single tree, every blade of grass, every garden is suddenly tinder dry. And not only that, as those excessive heats start hitting vinyl siding, tar shingles, plastic playground furniture, garbage cans, those are all made of hydrocarbons, which are in fact volatile. And when 900-degree radiant heat hits them, they start to off-gas and vaporize. And so by the time the fires landed, what you have is each neighborhood is essentially turned into kind of a gas can of volatile hydrocarbon vapor. So these houses did not catch on fire in the sense that we are used to. They exploded into flame.And when firefighters started telling me, "These houses burnt from the roof to the foundation in six minutes," you know, my response was, "You know, dude, you know, adrenaline, you're talking to a journalist, you know, there's no way you're looking at your watch when this is happening." Well, I was wrong. And I interviewed a lot of different firefighters working in different parts of the city. I heard three minutes, I heard six minutes, I heard nine minutes. This is how fast these houses were actually burning down. So these are two-story, three quarter million dollar rich oil workers' houses. It's the highest income in Canada, by the way, in Fort McMurray. $200,000 a year per household is the average. And these houses that they had built were going into the basement in the time it takes to smoke a cigarette. So this was a kind of supernatural energy and hyper-combustive situation that was sweeping the city from end to end. And so as I learned that, it was clear we're entering a new regime. And then when Stephen Pyne wrote about this same fire in Slate later in May 2016, and that's I'm pretty sure that's when he coined the term the Pyrocene Age, the age of fire. I call it 21st century fire, but it's the same thing. You talk to any wildfire fighter about what their experience was in 2000 and what their experience is now, and it's a different reality. Fire does different things. We saw that in Texas in the Smokehouse Creek fire. That fire became the biggest fire in Texas history in about four days. It killed a fire chief. We lost a fire chief. That is really unusual. He was a volunteer, but he'd been fighting that fire, I think, for five or six days. And I think he had a heart attack. It doesn't matter though, the mode of death, the fire, the stress of that fire, the intensity of that fire, the relentlessness of these fires does enormous physical and psychic damage to firefighters.Doug Lewin (13:44.31): Yeah. And this is the Lucretius problem, which I really just so appreciate you introducing that term into my vocabulary. We'll talk about that in just a second. You said 300 feet high, six miles wide. Did I hear that right? That's how big the fire was. So I want to, if you don't mind, John, I want to read you just a little, well, not read you, it's your writing, but read for the audience a little section of the book. So this is the Energy Capital podcast where I'm usually focused on energy and power grids and things like that. I think that this is highly relevant. Obviously the Smokehouse Creek fire started with some utility poles. There's all kinds of connections between wildfires and power sector. But the way you put this in power terms, I think our audience will particularly appreciate. So I'm going to read just a, well, it's not super short, but it also gives the audience a flavor of the writing, which again, I just think is phenomenal."Under normal circumstances, head fire intensity, fire's raw energy output, is measured in kilowatts per meter along the leading edge of the fire. One kilowatt is equivalent to the energy produced by ten, 100-watt bulbs or a thousand-watt space heater. Barring excessive wind, a fire of a thousand kilowatts, a million watts per meter, can be managed effectively by a ground crew. But once it jumps above two kilowatts per meter, or two megawatts per meter, even heavy machinery and water bombers may have trouble containing it.By the time it intensifies to 10 megawatts per meter, 10,000 kilowatts per meter, 10,000 space heaters worth of energy per meter of fire, you have an out-of-control wildfire on your hands. Keeping in mind that a head fire intensity of 10,000 kilowatts per meter represents an uncontrollable fire, consider this, at its height, the Chisholm fire generated 225,000 kilowatts of energy per meter. That's 225 megawatts. That's a decent-sized power plant across a front that was described as miles wide. If you're having trouble imagining a quarter of a million space heaters compressed into the length of a yardstick and then multiplied by several miles, you're not alone. Six scientists from four countries who studied this fire had the same problem. We are beyond the normal scope of fire here. Familiar formulas no longer apply. This is the kind of energy that is not burned but vaporizes, energy more often associated with lasers, atom bombs, and suns."I'm skipping ahead just a little bit. "For fires of this magnitude, we need a different scale of measurement. And in the end, the six authors of a peer-reviewed paper entitled 'The Chisholm Firestorm' resorted to megatons, the units of energy used to measure the explosive power of hydrogen bombs. The energy released during the fire's peak seven-hour run was calculated to be that of 17 one-megaton hydrogen bombs, or about four Hiroshima bombs per minute. This now is what fire is capable of on Earth."That was kind of a, I had to put the book down after I read that, and like catch my breath. Stunning, absolutely stunning. You can react to that however you want and add in any additional detail. I'm wondering though, has there been one bigger since then? Is that the biggest recorded fire in the history of humanity?John Vaillant (17:01.39): So that was the Chisholm fire of 2001 that coincidentally also burned in Alberta, about 200 miles south of Fort McMurray. And it produced a pyrocumulonimbus fire column, which punctured the stratosphere and was mistaken by US military satellite data analysts for a nuclear test in the boreal forest of Canada. And they actually called Canadian authorities and said, "Did you just perform a nuclear test?" And they said, "What are you talking about?" "Well, we have this 45,000-foot-tall plume coming up out of the forest in Alberta. You know, what's up?" That's what it was. That was the Chisholm fire of 2001. So that to me is kind of the beginning. There were other big fires then, of course, but this one was sort of, with fanfare and a lot of charisma, welcome to 21st century fire. And so we have had bigger fires since then. And Fort McMurray was certainly a player. California has generated quite a few pyrocumulonimbus fire clouds. We can talk about that in more detail, but those are effectively firestorm systems that perpetuate themselves. And they were effectively unknown to fire science prior to 1998. The only place you would see gigantic lightning-generating plumes like that that would puncture the stratosphere is over huge volcanoes. Well, now wildfires can generate that same kind of energy. And so that's what we're seeing in California. I'm not positive the Smokehouse Creek fire generated a pyro CB, but Canada in 2023, that record fire season that turned New York City orange and basically changed the sunsets all the way to Europe through the summer of 2023, that was the worst fire season in Canadian history. Canada generated by itself 142 pyrocumulonimbus fire systems. And these were barely on the radar, so to speak, 20 years ago. So we're in a new world now.Doug Lewin (19:13.72): So to that point, we're in a new world now. I really think the Lucretius problem is a really great way to sort of characterize, I think, how we need to think about this. And this is one of the reasons I was so keen to talk to you about this, because I really do feel like, and we have obviously an experience of this now with the Smokehouse Creek Fire, but it's like each of these events, and frankly, even the flooding that happened just a week or two ago, right? You get these events that kind of push the limits of human understanding and even comprehension. So talk about the Lucretius problem. And then I want to actually dive into this for a little bit, because I really think that this is, at least for me, that was one of the big takeaways and kind of a central theme of the book is that we have got to reorient ourselves. And if we don't, the consequences are dire. So maybe start by describing the Lucretius problem that we get into talking about a little bit. What is it?John Vaillant (20:10.392): So Lucretius was a Roman poet and philosopher, lived about 2,000 years ago. And among his many observations were that people tend to base their assumptions about the future, not only on past experience, which is logical, but also on local experience. The distillation of that is "the fool thinks the biggest mountain in the world is the mountain that he himself has seen." In other words, I live out here in Vancouver. I'm looking at the coast range. There are about 5,000-foot-tall mountains. And it would be like me saying, "Well, these are the biggest mountains in the world," but we know the Rockies are just, you know, a thousand miles to the east of me. And then the Himalayas, you know, are even bigger. And so it's that kind of mindset. And I think firefighters and probably flood managers run into this too. It's like, "Well, we know this river. We know this forest. We had that really bad one back in '85 or that really big one back in '98. And so that's about as bad as it gets. And we've calibrated to be able to handle that." And what all the climate science is telling us and all the very hard-won physical experience is telling us is we are now entering a regime where floods, rain, drought, fire, storms in general can behave in ways that simply exceed or just blow through any past records that we're familiar with and will do so at a speed and with an intensity that we are physically unable to respond to in any meaningful way. And so the Lucretius problem pairs well with a futurist named Alex Steffen's term "discontinuity," which is scenarios wherein past experience and past knowledge cease to be effective.And what we see though, especially with large institutional response, especially firefighting services and whatnot would be, well, they're designed to respond to 1998-size fire and flood, but we're now in the 21st century and fire is doing things that are simply outside that box. And we're still responding, kind of playing catch-up to this new reality. And also then when we see this new reality, there's a tendency to treat that as a freakish aberration rather than, the bar is actually moved and we need to respond accordingly and actually imagine something even bigger and even worse and even faster in order to have any hope of getting ahead of these disasters which are catching us off shore over and over again to devastating effect.Doug Lewin (22:58.242): Yeah, exactly. Imagine and then prepare for. And that's the really hard thing is because, you know, it's very hard to get people, because it's, it frankly costs money. It's expensive, right? To get a warning system, for instance, a river rising 26 feet in 45 minutes costs some money. And, you know, people will say, "Well, river can't rise that fast." Well, this is where we've got to imagine that 26 feet in 45 minutes, the next time it could be 26 feet in 30 minutes, right? I mean, the moisture that is falling out of the air because the temperature is warming, the firestorms that are happening, the droughts that are happening, even the heat waves, right? Heat waves for sure. Like that's another thing we've got to plan for. How much air conditioning demand do you need for your power grid? When you say, "Well, can't ever get hotter than 112." Really? It probably can, right? And then there's one that's a little bit more, the science is a little less certain on this, but it's what scientists will say is like medium confidence around ice storms, right? Texas had Winter Storm Uri in 2021 and 10 million people were without power for days. And I hear this all the time in power circles, like, "Oh, that was," as you just said, like a freakish aberration. Basically people will say those exact words. So we'll plan for a Winter Storm Elliott or 2011-style winter storm. We don't really need to think as much about Uri because that's probably never going to happen again. That's dead wrong. And to the Lucretius problem, there's no reason to think that the next winter storm won't even be worse. We have to not only imagine it, but prepare for it.John Vaillant (24:34.666): Exactly. And the science is all there. If you look at CO2 levels, which hit 430 parts per million for the first time in three million years this year, if you look at methane levels, which are rising even faster, I think, than CO2, we can extrapolate out where temperature is going to go and where storms will then follow. And so we really have to look at who benefits from inaction. And it's pretty clear in Texas who the beneficiaries are and, you know, that rugged individualism, "pull yourself up by your bootstraps," put that to one side. And on the other side, look at excess deaths for the state over the past few years and track that through this current administration and just see where you are. You know, how there's a lot of dead, rugged individuals out there. And, you know, we understand about community and Texans understand about community and we keep each other alive. We take care of each other. And that's how a lot of people were saved from that terrible flood is because the community showed up.Doug Lewin (25:41.26): Yeah. Yeah. And to make sure that in the next flood, and this is where I think, John, this is really important, right? And I think one of the reasons why it's so just intriguing and fascinating, and I mean, what's the word? Almost like it's such an amazing coincidence of sorts that it happened in Fort McMurray is that the very fossil fuel interests that are trying to stop the reduction of emissions are being impacted as well. Maybe this is just the hopeful optimist inside me, but I'd like to think we get to a point where enough people even within that industry go, "Okay, look, we're going to continue to produce oil and gas, but we have to do so in a way that reduces emissions. We're being impacted too." Dare to dream.John Vaillant (26:25.93): Yeah, I think it is a dream. And I think as your Texan listeners may know, Alberta is really your twin, is the Canadian twin to Texas. And toxic libertarianism is alive and well in the province of Alberta and in the state of Texas. And you can really see it in the response to the Fort McMurray fire. The most expensive weather disaster in Canadian history. And their response was to rebuild the city exactly as it had been out of the same materials and expand bitumen production and refused to talk about climate or climate change. And you know, that status quo is lethal. And Fort McMurray was really lucky in that last fire, but that luck is going to run out. There have been numerous evacuations in Fort McMurray since then due to fire, because it's been almost 10 years, as well as devastating floods. So many of the same issues that Texas faces and is resistant to taking meaningful action are Alberta's reality too, and for many of the same reasons.Doug Lewin (27:37.422): Yeah, I think one of the areas where I think there is some, and we'll see, Texas is about to, by the time this podcast comes out, probably will have started a special session. The Texas legislature only meets every two years unless called by the governor. There's going to be 18 things on the call. The biggest headline item is going to be mid-decade redistricting, but one of the 18 items on the call is going to be disaster preparedness. And it's going to be very interesting to watch what the response is. Is it just a very localized solution where all they're going to do is fund a siren warning system on the one particular river, the Guadalupe River, and then kind of dust their hands and say, "We're done"? Or is there a much more comprehensive approach taken?I'm curious, since you've written the book, or even in the process of writing the book, have you seen examples of places around the world where adaptation is really done well? Because I wrote an article a week or so ago and cited your book and Lucretius problem. I called it "failure to adapt." And I think that is one of the stories of just being alive as a human being anywhere in the world in 2025. We can talk about mitigation. We're clearly not doing what we need to do to reduce emissions. There's also this kind of parallel path of even if we brought emissions down to zero tomorrow, we've already baked a lot of the changes that are happening in, and the adaptation is just not keeping up. Do you have examples of places you've come across where you're like, "Here's a place that has really done the early warning system, has mastered evacuations," anything like that you can point to?John Vaillant (29:21.526): Yeah, there are a few different examples, and all this is with the caveat that we just can't underestimate the inertia of the status quo and the incentives, which is mostly petroleum-based, to maintain the status quo at really at all costs, including the cost of human lives. But there are communities in Canada and I think most notably in California where people are really managing, you know, what's called their "defensible space." And these are these concentric rings around a given value, which would be say a house or a school or a community, where people are really trying to manage the fuel load, thin out the forest, ideally create multiple escape routes. Because that's a real issue, especially in new developments. There's only one road out of these places. And if that road is blocked, could be by two T-boned escaping vehicles or could be by fire or fallen trees, you're trapped in there. You are literally in a fire trap. And so that killed a lot of people in Paradise, for one.So it's very sporadic. You see some of it in building materials. So people are deploying metal roofs more often. There are lots of low-cost, easy-to-install external sprinkler systems that are basically modified garden sprinklers that will create a water curtain over your house. And that's really good for flying embers and small fire. Another example would be in what's called "fire smarting" up in Canada where, and I know they have that in some communities in the US, where firefighting service representatives will come out to your community, to your backyard, to your cul-de-sac, to your town meeting and talk to you about how to make your own home less flammable. So that would mean moving wood piles, taking down the wooden fence and putting up a metal one. There are a lot of different conduits for fire. And so what these firefighters can help you do and what I tried to do in Fire Weather is kind of invite the reader to look at the places where they live through the lens of fire. So how does fire take advantage of your spaces and in fire conditions, the mulch in your flower bed will turn into a fuse that can lead right to your house and set your porch on fire. A wooden fence can do the same thing. That beautiful juniper bush that you have growing outside the window that you meant to prune but never quite got around to it, so now it blocks the whole window, that thing will set your house on fire by itself. Those are really explosively flammable torches. So this kind of thinking means for actually relatively little money, it will turn into a fuse that can lead right to your house and set your porch on fire. A wooden fence can do the same thing. That beautiful juniper bush that you have growing outside the window that you meant to prune but never quite got around to it, so now it blocks the whole window, that thing will set your house on fire by itself. Those are really explosively flammable torches. So this kind of thinking means for actually relatively little money, you can modify your space and probably reduce the flammability of your house and yard by probably double digit percentages. And that's not going to stop a firestorm, but there's a lot we can do when it's just embers and ash that are flying. But it means admitting that this is a possibility and that's hard to do to think, well, my house could actually burn down. And that's a psychological and emotional leap that a lot of us are resistant to making.Doug Lewin (32:37.442): Yeah, for sure. I mean, it's not like a fun topic. Nobody wants to think about this, but it's absolutely essential that we do. In Texas, you know, we've talked a little bit about Smokehouse Creek in the Panhandle, but the central part of the state, you know, basically from Dallas down to San Antonio, where a lot of the state's population lives, particularly west of the I-35 corridor, at various times can be a tinderbox. I mean, there's just a ton of cedar out there. I think various studies have put Austin and San Antonio and kind of the hill country, the same area that just flooded. So there's less risk right now because it just flooded. But in future years, when drought inevitably returns, those areas are some of the most fire prone in the country. And then you have, and you talk about this a lot in the book, the wildland urban interface. I want to talk about that a little bit where a lot of these suburbs and the exurbs are sort of growing into areas that used to be wildlands and kind of burn from time to time and are meant to do that, but now we suppress them. And so now you've kind of got these tinderbox areas with a whole bunch of homes in them. So I do think we've got to start thinking about this much more comprehensively, both from a community aspect. You mentioned the only one road out. There was actually a fire in a neighborhood in Northwest Austin called Steiner Ranch several years ago. Might've been 10 years ago now, where that was exactly the thing. There was one road out. There were arguments for years after that about punching another road through there to give people another way out. So we have to think comprehensively at like a community scale, those kinds of issues, and then also individually. Do you, I don't know, again, if you've come across in any point in the research for this book, I mean, this is almost an impossible question to ask, but I'm gonna ask it anyway. Like, how do you get over like these, because really what we're talking about is there's the physical response, but there's like the bigger barrier, I think, is the psychological response, right? A, people don't want to talk about it, and B, even if they do want to talk about it, they're going to say, the biggest fire we ever had was this, so that doesn't look like that much of a problem.John Vaillant (34:43.479): Boy, I think we are very well defended psychologically. And then if you have a kind of a libertarian culture, for example, which is super independent minded and frankly, very reactive, you know, we'll deal with the problem when it comes. And then you, if you add very deep religious faith, you know, that, you know, God's going to cover me here, that can make it a lot harder to look squarely at the science and look squarely at things that are hard to see. Temperature is invisible, but it really impacts our reality. Off gassing, vinyl siding, and tar shingle and mattresses, it's invisible, but it will turn your house into a bomb. And if you want to see a really graphic example of that, Underwriters Laboratories has a video on YouTube comparing an old fashioned sort of grandma living room with cotton and wool and horsehair stuff sofa with the modern living room, which is all polyurethane and laminates, and they set them both on fire the same way. The grandma's living room takes 25 minutes to become uninhabitable. The modern living room explodes like a refinery fire at three minutes and 20 seconds. Three minutes and 20 seconds, and the room blows up. And it blows up because the heat from that fire that's burning in the sofa, starts the cushions off gassing, which starts the synthetic carpet off gassing, which starts the nylon curtains off gassing. So even before they ignite, they're just filling the room with flammable vapor that reaches a certain density and blows up. It is shocking to watch. And that's where most of us live now. You got three minutes.Doug Lewin (36:40.052): It's heavy stuff. I want to talk about a couple other things here. Number one, you mentioned that, you know, we haven't reached 420 parts per million in the last three million years. There's been a lot. I think it originated with a Joe Rogan comment a couple of weeks ago where he had a Washington Post chart up. We can try to find this and drop it into the show notes, but it went back like, you know, a half a billion years and says, well, you know, actually 420 isn't that uncommon for the history of the earth. But I think it's important to remind people humans, even hominids, pre-humans, have only existed for a few million years. We're in that like Goldilocks zone of climate that has now been changed. And 500 million years ago, it doesn't matter that much to us. Like it's two and three million years that we've existed.John Vaillant (37:29.442): Yeah, and I don't agree with Joe Rogan on all that many things, but I think we can certainly agree that through the lifespan of planet Earth, the past couple billion years, there have been some very high CO2 levels. What makes this era unique is the speed with which it has happened. So there's no other era in the history of planet Earth where CO2 and methane rose at the precipitous rate that it is doing in our era, and that is directly attributable to the combustion of fossil fuels. And so that is just a different scenario that we have created. Most geologic change, with the exception of a meteorite impact, happens very gradually over tens or hundreds of thousands of years. We are doing this in decades. All of us, most of us listening to this podcast, can remember normal winters and normal summers. So in our lifetimes, basically in the past 50 years, we've seen extraordinary changes to our environment so that spring, summer, winter and fall are behaving in ways that would not have been recognizable to us or even conceivable to us when we were 10 years old. And that has never happened before. And we did that. And that is, it's hard to take responsibility for that, especially if you're from a petroleum driven province like Alberta or a petroleum driven state like Texas. And somehow we have to be able to quantify and show gratitude for the gifts that petroleum has given us, which are too many to number. But even now, those gains are being taken away from us by another byproduct, another unmeasured externality of this petroleum well. And that is CO2. And that's the hard math we have to do.Doug Lewin (39:29.282): Yeah, for sure. And this is interesting. I obviously live in Texas. I work in Texas. I work within energy in Texas. So I do talk to a lot of folks very regularly that work within and for fossil fuels. I do think there is a pretty high awareness at the individual level of what is going on with extreme weather and rising emissions and the change of our climate at the institutional level, it's much, much slower. You talk in the book, and you called this, I think I captured this correctly, is a direct quote, the most consequential policy reversal in the history of human civilization, the American Petroleum Institute's decision to leave the climate task force many, many years ago. Can you talk about that? You talk about that a lot in the book and why you think that's the most consequential policy reversal?John Vaillant (40:26.796): Yeah, in so doing, we can give a shout out to the petroleum industry. Petroleum is why we get to live the lives we're living right now, why we have the mobility that we have, the wealth that we have. Countless products that we have now are thanks to that industry. And they are very good at what they do. They also have very good scientists. And when CO2 level rise became measurable in the 1950s, thanks to Charles Keeling, who came out of Caltech with some new equipment that enabled him to do that, enabled us to do that. The petroleum industry earnestly, with good intention, got concerned, got interested, because they knew that fossil fuel emissions contain a lot of CO2, coal does, gas does, oil burning. So they studied it. And they studied it with the same zeal and skill with which they studied other aspects of the petrochemical industry. And they discovered in the late 70s, actually earlier, that fossil fuel anthropogenic CO2 had the potential to alter the climate in very destructive, possibly irreversible ways. So they knew this in the 1970s and 80s, and the evidence hadn't shown up yet. The temperature hadn't risen enough to prove the theory, but they gamed it out. And if you look at their graphs of volume of CO2 generated by a naturally growing fossil fuel industry through the 90s through the 2000s into the 21st century and where temperatures would be and where CO2 levels would be, they're spot-on for 2025 and they figured that out almost 50 years ago. So they predicted almost 50 years ago where we would be today. And that's why people say Exxon knew, Shell knew. They didn't know in the sense that the temperature hadn't got there yet, but they had good scientists and they used the scientific method to predict this. So fast forward to 1982, 84, there's an oil glut. There is a lot of depression. I think there's a recession going on at that time. The oil industry is really struggling and the API makes this decision to basically disavow the science. It would be too costly to the industry to respond in a meaningful way to the CO2 generated by the fossil fuel industry. Because if we think about it, at root, the fossil fuel industry is a fire industry. And if you're in the fire industry, you're in the CO2 industry. And as they demonstrated with their excellent science, if you're in the CO2 industry, you're in the climate change industry. They understood that and leaders at the top, you know, who have names, made the decision to say we're not gonna go down that path and we're going to deny that this is an issue and we're going to distract and obfuscate. And that's where this notion of the merchants of doubt came in. They used many of the same methods that the cigarette industry used. And so we still live in that world now and we're paying increasingly heavy consequences in human lives and human jobs and human quality of life for this intensifying heat and fire and weather disaster. So this is all traceable. And right now, if you're interested, the American Petroleum Institute, the API, is trying to pass legislation that would reduce protections for oil workers in hot climates, in dangerously hot conditions. So it's a ruthless entity. And while individuals who work in that industry may be lovely people and contributing to their community in all kinds of ways, the organism that will stop at nothing to survive and that will stop at nothing to appease shareholders and squeeze every last dollar out of the industry before we tip over into renewables has no conscience. And that's what we've seen for the past 50 years. And we're suffering.Doug Lewin (44:39.33): There is, I think, a sort of a thread of hope here in the sense that there could be bigger business opportunities with lower emissions, particularly when you think about global markets and how fast they are moving. Asia and Europe, you know, the United States is, you know, huge and a behemoth, but we are, you know, at the end of the day, part of a bigger world. And I think that that is where some of the change, maybe not at the API level, but within some of their member companies is coming from. I think there's two things. One, while their organizations, as you say, act differently, the individuals are people and have families and kids and grandkids and nephews and nieces and look at that and say, what kind of a world are we leaving them? We have a responsibility. That's not enough, right? But when it matches up with, maybe there's a market opportunity here to market a low emission fuel, to get into using oil and gas experience in the geothermal industry or capturing carbon and storing it or any number of these different sort of potentials. That's where I think there might be something. And I think John and I, I'm curious what you think about this and this might be a good place to end. I mean, there's so much more to be said about this. But there is this long history, which is really tragic, of an industry as a whole really, as you say, obfuscating, really sowing doubt and sort of intentionally misleading. Here we are in 2025. We are seeing the impacts in fires and droughts and floods and heat waves. I am more interested in what people do from this point going forward than I am in the past. The past matters. We can't whitewash it. We're talking about it. It's important for people to understand that history. But what matters to me right now is what people do going forward. That's what I'm watching.John Vaillant (46:40.75): Yeah, I'm with you 100 percent on that, Doug. And unfortunately, who's owning the future is China. And I'm surprised that this doesn't sort of gall that competitive American spirit. I know Americans are fighters, are competitors, are inventors, super creative people. And yet China now is running away with the renewables industry, is running away with the EV market. And Ford is content to, you know, offer an F-150 Lightning, but is leaning hard on gas powered F-150 pickup trucks, which is a 20th century vehicle that has no relevance or real utility in the future that most of us would like to inhabit, which is one that has some kind of stable climate. And the F-150 is not contributing to that. And that's a super popular truck. Ford sells a million of them and American oil companies are happy to gas them up, but that is not where the future is. Right now, China is installing more than a... So a gigawatt of energy will power roughly 750,000 to a million homes. And China is installing maybe one and a half or two gigawatts of renewable energy every day in that country. And the EV market, BYD and four or five other electric vehicle companies that none of us can pronounce has run away globally with the EV industry. They are stealing the 21st century from us in terms of energy. And who controls the energy really controls everything dependent on that energy. It has been oil. Oil has owned it for 150 years. They are not gonna own it for the next 150 years. And no one is saying, ban oil, but we need to respond meaningfully. We need to look at the writing on the wall, not the wall that's just in Texas, but look globally. And that's where the current regime is really hobbling us. It's no time to take a provincial stance. It's no time to be kind of willfully protectionist and not respond to the needs of the rest of the world, which are one, a need for a stable climate and reducing CO2, and also for the incredible abundance and opportunity offered by renewables now. Solar is the cheapest energy ever invented, and battery technology is in its nascent. It's exploding right now. And so the possibility of having a stable renewable grid is well within grasp, and this is where Texas is actually a leader in the country. I think you're installing, Texas is installing more renewable energy than even California. So this is again where that independent mindedness and hardworking horse sense of Texas can really take advantage of the future and be a leader.Doug Lewin (49:48.49): And competitiveness, John, right? Because this is the future. Like, you know, the Financial Times called China "the world's first electro state," right? The idea that they're going to control the supply chain on electricity should be scary to Americans, particularly those that are worried about China dominating the 21st century. The world is going to want these low emission products and services. We should be using American ingenuity and innovation to compete. And particularly Texas, Texan innovation and ingenuity. And like you said, oil has provided so many advances. I think a lot of times in discussions around climate change that is left out. And I think that's very off-putting to folks within the oil and gas industry. They don't think of themselves as bad people. And like you said, they're active within their communities, their identities of good people. And they're like, hey, we're trying to provide something the world needs. Granted, the world has needed and continues to need oil and gas. Where there are alternatives that are lower emission, we should use them. Where there aren't, we should reduce emissions as much as possible, right? And that is the formula for competitiveness, because the world is going to demand these products. China sees this, and it's stunning to me that American leadership doesn't really seem to get this, at least yet. John, I'm going to give you a chance. I'll ask you in just a second, if there's anything I should have asked you that I didn't that you want to add. But I will just say to the audience again, I said at the beginning, I'll say it here at the end, this book is just remarkable. And no matter what your belief system is or what your background is, like read this book. I actually don't think it is primarily a climate change book. I don't know how you think of it, but it is a book about a fire in a place. And no matter what your beliefs are, I think you will read it. It is a page turner. You know, usually people think of page turners as fiction. This is one of those great non-fiction works that just keeps you from putting the book down. So kudos on a great book. And is there anything else you want to add in closing?John Vaillant (51:50.146): Well, thank you, Doug. I really appreciate that. And I, you know, I think one reason the book does resonate is I spent a lot of time talking to firefighters and people on the ground. You know, it's not climate scientists' opinions of what happened. It's the experience of people who actually went through this and lived it. And that gives it a kind of credibility. And the other thing I would say is CO2 and methane will not wait for us to get our act together. They will keep rising and they will keep intensifying weather behavior. And so it really behooves us to take note of the science, take note of CO2 and methane, and recognize that it doesn't care if we flood or burn or flourish. It really doesn't matter to those gases. And we have it in our power to moderate the increase of them. And if we allow them to increase rapidly, as rapidly as they have been, we are going to have a world that is increasingly difficult to live in and that our children will be increasingly unable to flourish in or even envision a future in. And so that's where we can have our opinions and our feelings about our modes of energy, but the science doesn't lie and the science doesn't wait.Doug Lewin (53:10.378): And a different path is possible. Like we can reduce emissions. We can get better at adaptation. We totally. We're going to have to. John, thank you so much. I really appreciate it.John Vaillant (53:21.048): Really a pleasure to speak with you and I'm so glad that it was worth the wait, I hope. I really enjoyed it.Doug Lewin (53:27.054): Absolutely it was. Absolutely. Thanks, John.John Vaillant (53:29.464): Yeah, take care Doug.Doug Lewin (53:31.65): Thanks for tuning in to the Energy Capital Podcast. If you got something out of this conversation, please share the podcast with a friend, family member or colleague and subscribe to the newsletter at douglewin.com. That's where you'll find all the stories where I break down the biggest things happening in Texas energy, national energy policy, markets, technology policy. It's all there. You can also follow along on LinkedIn. You can find me there and on Twitter @douglewinenergy, as well as YouTube @DougLewinEnergy. Please follow me in all the places. Big thanks to Nathan Peavey, our producer, for making these episodes sound so crystal clear and good, and to Ari Lewin for writing the music. Until next time, please stay curious and stay engaged. Let's keep building a better energy future. Thanks for listening. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe

Either the Texas grid is highly reliable, or the sky is falling.Spoiler alert: bet against the latter.A June report from the Texas Reliability Entity (which has federal statutory responsibility to report on Texas’ grid risks) shows that the ERCOT grid is increasingly reliable. That’s mostly because of solar and battery storage additions to the state’s energy portfolio.It also directly contradicts a report from President Trump’s Department of Energy, released about a week later, which said Texas faces a severe and shocking likelihood of outages every year — including this year.Meanwhile, in the real world, ERCOT expects to approach record peak demand next week. Again, thanks to the state’s booming solar and storage resources, ERCOT forecasts that we’ll have 35 more gigawatts than we need when demand peaks.What gives?Solar and Storage Is Powering the GridIn its report, the Texas Reliability Entity writes:The Region’s reliability performance remains strong while navigating [many] challenges. … The Region’s resources managed extended high summer peak periods in 2024 (as in recent years), helped by new solar generation and energy storage. Annual energy production increased (alongside renewable generation output and peak renewable penetration levels) to meet projected peak loads. As a result, the Region did not experience any Energy Emergency Alerts related to insufficient responsive reserves in 2024 [emphasis added].Yes, no matter what anti-energy politicians or activists say or believe, Texas’ abundant solar and battery storage resources are helping meet our booming demand. But don’t just take the word of the entity whose one job is to ensure Texas grid reliability …ERCOT CEO Pablo Vegas told the ERCOT Board just last month, “The risk of emergency events during [peak demand] periods is shrinking, dropping from over 10 percent a year ago to under 1 percent.”Vegas — again, the CEO of ERCOT — also said, “The peak in the summer, of course, is in the afternoon at the peak heat, when air conditioning load is at its highest. Solar energy is very well suited to help support that.”And the Chairman of the Public Utility Commission of Texas, Thomas Gleeson, said much the same late last year: “Solar and storage are key for reliability in this state,” Gleeson said. “We need them to be successful.”He added that solar and storage “saved us this summer.” He was speaking of 2024; it’s almost certain to be true this summer as well.Yet President Trump’s Department of Energy reached a very different conclusion – thanks to deeply flawed assumptions and methodology.What the DOE got wrongFirst and foremost, the DOE assumes that only “Tier 1” energy generation projects will be built over the next six years. These are projects that are so far along that they’re almost certain to be completed. Texas has about 29 gigawatts-worth of them (see graphic below).The thing is, Texas has added 50% more than that to the ERCOT grid in just the last four years.There are 112 gigawatts-worth of projects — nearly four times as much as is in Tier 1 — in Tiers 2 and 3, just waiting to graduate. The DOE assumes that none of that will get built.Unfortunately, the DOE report comes on the heels of the catastrophic new federal budget law (the apparently unironic “Big, Beautiful Bill”) that was designed, especially with subsequent executive actions, to hobble renewable energy projects in Texas and around the country.Maybe that’s the reason for the DOE’s pessimism about the Texas grid: it’s like a doctor mocking the health of a patient after cutting off the patient’s medicine.The DOE report seems to describe a state of energy scarcity that the administration and Congress have created. Given the regulatory uncertainty they’ve injected into the process, a shortage of Tier 2 and Tier 3 projects might become a self-fulfilling prophecy.The graphic below is from the North American Electric Reliability Corporation’s (NERC’s) Long-Term Reliability Assessment, published in December last year. It shows more than 100 gigawatts of generation in Tiers 2 and 3. It also shows steadily rising reserve margins — the amount of supply in excess of demand represented in the blue bars — as additional Tier 2 and 3 capacity is brought online.But because the President has directed the Treasury Department to make it as hard as possible to qualify for tax credits, many of these projects won’t get built to service rapidly rising load growth.They’re literally creating energy scarcity in place of energy abundance.What We Talk About When We Talk About CoalWhy would the administration make such a big bet on such dubious numbers?The clear implication is that officials are scrounging for excuses to force inefficient coal and gas plants to keep running, no matter how bad they are for consumers and grids. As Princeton energy modeler Wilson Ricks told Canary Media: “This report seems designed from the ground up to justify keeping coal plants open with emergency orders.”Of course, old coal plants are far from reliable. As TRE noted in their report, and as shown in the chart below, forced outages of conventional generation are up significantly in recent years. Forced — that is, unplanned — outages at gas and coal plants are up 50% compared to ten years ago.Indeed, old gas and coal plants are among the least reliable generation resources in existence.What’s the Plan?DOE’s shoddy analysis also doesn’t bother with a prescription. Clinging to aging, unreliable power plants is a Band-Aid at best.Worse, there’s a worldwide shortage of gas turbines right now. If you order a turbine today, you’ll get it a year or two after President Trump’s term ends. Gas plants aren’t coming to save us.Nuclear power also can’t deliver the amount of electricity we need, at least not until well into the 2030s. To be clear, I’m excited about new nuclear plants. There’s real hope there for clean, constant power … but not in the next few years. The technology simply can’t scale that fast.So, seriously, where does anyone — including the Trump administration — propose getting the new electricity that America is going to need to power rising demand from AI data centers, industrial electrification, and increasing extreme heat?Texas is a place to look for answers. ERCOT expects to integrate a mix of renewables, storage, gas peaker plants, and demand response programs in coming years to meet the state’s aggressive demand growth projections. Texas is also on the front lines of energy waste reduction: the PUC and ERCOT’s Energy Waste Advisory Committee will soon take that crucial issue up, per requirements that the legislature approved this year.Vegas, ERCOT’s CEO, has been a consistent defender of the state’s competitive energy market and its ability to meet the state’s energy needs. In a House Committee on State Affairs meeting this year, state Rep. Rafael Anchia asked Vegas whether “market forces exist today, absent heavy government involvement, for us to meet load forecast?” (That’s a load forecast showing a 75% increase in peak demand in five years, by the way.)Vegas’s reply: “The market, as structured today, is very well suited to support the growth trajectories that we're seeing increase in the state of Texas.”And it’s working. The U.S. Energy Information Administration says the wholesale cost of power in ERCOT is 15% below the national average — all while reliability in Texas has improved:The Trump administration should be looking for ways to support these market forces. Instead, with the budget bill, executive orders, and now a misleading DOE report, it’s undermining them.We Need More SupplyTexas Governor Greg Abbott rightly bragged in his State of the State speech this year that the ERCOT grid’s generating resources grew by 35% over the past four years.Of that growth, 92% came from wind, solar, and storage.Unfortunately, the President and Congress just passed a law that makes it much harder to add new supply. That reduces grid reliability.It’s kind of perfect that the DOE released its doom-and-gloom report just days after the bill was signed. It’s a self-fulfilling prophecy, foretelling a future of energy scarcity, higher prices, and lower reliability that the administration itself is creating by throttling the renewables that our state and nation increasingly need for economic growth..Their report is not a representation of current reality or trends; it’s a window into the world they’re creating.When we get there — when you’re spending more than you can afford on less reliable power — remember who to thank.The Texas Energy and Power Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe