An epic energy shift is underway

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AMY HARDER: When the Paris Climate Agreement was signed, we were on track for 3.9 degrees of warming. That’s Celsius. But today, we’re on track for 2.7 degrees of warming, so we’ve actually made progress, and that’s great.

I think that can get lost in the headlines of ‘Oh, coal production in China is skyrocketing,’ and ‘Climate deniers in the presidency.’ Right now, it’s all about the pace at which we address climate change, and that’s what will likely be slowed under a new Trump administration.

That being said, that’s where my reluctant optimism comes in. We have made progress.

BOB SAFIAN: That’s Amy Harder, Executive Editor of the energy publication, Cipher News. I wanted to talk to Amy in the wake of the UN’s recent COP29 climate conference, which took place shortly after Donald Trump’s re-election. There have been widespread questions about what the new administration means for the future of energy and climate policy. Amy explains how the oil and gas industry is responding right now, as well as what’s happening in wind, solar, and nuclear energy. Plus, the role of Elon Musk in EV adoption, the pros and cons of AI when it comes to climate change, and why China is far ahead of the U.S. in the race for clean energy. The future of the energy sector is something that impacts every single business and every one of us. So let’s get to it. I’m Bob Safian, and this is Rapid Response.

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SAFIAN: I’m Bob Safian, and I’m here with Amy Harder, executive editor of Cipher News. Amy, thanks for joining us.

HARDER: It’s great to be here.

Copy LinkInside the 2024 United Nations Climate Change Conference

SAFIAN: So you’ve spent your career covering energy policy and climate at Axios, The Wall Street Journal, and elsewhere. In the past few years, you’ve led Cipher focused on clean energy. You covered the recent COP29 meeting, the United Nations climate talks in Baku, Azerbaijan. So what was the scene like this year?

HARDER: I wasn’t actually on the ground in Baku, but we had somebody there for Cipher. I was in Dubai last year, which was a very big COP with 80,000-plus people. This year, it had about 55,000.

And so it was much more subdued. There wasn’t the big debate about fossil fuels. This COP really focused a lot on climate finance. How are we going to pay to both move to clean energy and also address the impacts of a warming world that are already happening?

That latter category is incredibly important to lower-income countries that are the least to blame for causing the climate change problem but are bearing the brunt of the costs.

Ultimately, there was an agreement to, on paper, triple the amount of climate finance going to lower-income countries. Technically, it’s not really a tripling because they don’t consider inflation. But nonetheless, the fact that there was a deal at all, considering the sort of choppy and dire global geopolitics, is actually a victory in and of itself. The election of President-elect Donald Trump, which occurred just a few days before the climate conference started, was obviously a dark cloud over this conference because of the positions the president-elect has taken. Considering all of that, I think you have to consider it a win, even if it really left a lot of things on the table.

SAFIAN: I mean, you say 55,000 people instead of 80,000. 55,000 is still a big group.

HARDER: For context, the Paris Climate Agreement, which was struck at a COP in Paris in 2015, had something like 30,000, and that was considered a lot.

So these numbers just continue to go up. But when you’re there, and I’ve attended several COPs, you don’t see everybody in one area. You don’t really see the difference between 55,000 or 80,000 because you just see a lot of people, period.

Copy LinkThe role of fossil fuel countries in climate talks

SAFIAN: The COP host this year, Azerbaijan, is arguably a petro state. Many other attendees are oil-dependent countries like Saudi Arabia. It feels like there could be a natural tension there.

HARDER: Oh yeah, you definitely feel the tension. Last year, Dubai, the United Arab Emirates, a huge oil producer, bigger than Baku and Azerbaijan. But the importance of fossil fuels in Azerbaijan’s economy is literally evident when you look at the skyline. There are these two very well-known skyscrapers that are the shape of natural gas flames, which is intentional. It’s a recognition of the importance of natural gas to that country.

SAFIAN: And a point of pride for that country as well?

HARDER: Exactly. The head of the COP, an Azerbaijani government official, said on one of the opening days of this conference that fossil fuels are a gift from God. So that clearly didn’t sit well with some of the other attendees.

SAFIAN: Very different from the language about transitioning away from fossil fuels that was agreed to the last time around, right?

HARDER: Right. And that language held by a thread. It wasn’t reaffirmed, but importantly, it wasn’t removed. It was subtly included in the final agreement. Considering how difficult the global circumstances are, I consider that a victory for climate talks.

Now, some people may not agree with that, and I certainly respect that. But context matters. You can’t look at two wars that are happening in the Middle East and Ukraine and Russia, and the election of Donald Trump, who has said climate change is a hoax and is likely to roll back any efforts to address it in the U.S. You can’t look at all of that and be sad that the agreement wasn’t more ambitious. You just have to accept that we’re going to get less because of those circumstances.

SAFIAN: Yeah. And the number of people who are there — I hope I’m not over-anchoring on this, but I’m just curious — are the fossil fuel-aligned states sending more people to overwhelm the number of people that are there? So there are more physical bodies aligned with their positions.

HARDER: It is definitely the case that fossil fuel companies and countries are sending more people since the Paris Climate Agreement, because the Paris Climate Agreement of 2015 was when the world said, ‘Hey, we are going to reduce greenhouse gas emissions,’ which by the transitive property means we have to reduce emissions from fossil fuels.

So you’ve seen a gradual increase in the number of fossil fuel representatives at these conferences since then. The skeptics will say this is like tobacco makers running the show of a cancer conference.

Less skeptical people would say that the energy companies, the fossil fuel companies, got us into this mess, and they have to be at the table to get us out of this mess, whether you like them or not. I, as a journalist, try to report on both of those perspectives without being in one camp or another.

One thing that I found a little surprising was the CEO of ExxonMobil attended his first COP last year in Dubai. And he went again to Baku this year. You’ll always have the environmentalists who make the very understandable point that fossil fuel companies, including Exxon, have worked to sow doubt on climate science for decades.

And now they’re showing up at these conferences, which can invite some criticism. At the same time, when he was in Baku, he urged President-elect Trump to stay in the Paris Climate Agreement. To me, that’s not necessarily surprising to someone who follows this a lot, but I do think it’s worth noting to people who are more casual followers of this topic to say, ‘Hey, the world’s biggest publicly traded oil company CEO is calling on a Republican president to stay in a climate agreement that will, by design over time, reduce the products of that company.’

I think that’s significant and something to be noted, no matter where you fall on the spectrum of fossil fuel companies being the bogeyman or inconvenient ally.

Copy LinkHow Donald Trump will impact energy production in the U.S

SAFIAN: You mentioned several times that Donald Trump has not been friendly to the climate crisis. He’s nominated oil executive Chris Wright to be the U.S. energy secretary, who has publicly said he doesn’t believe there’s a climate crisis.

Are fossil fuel companies celebrating all this? Whether they’re doing it publicly or privately, are we going to see a drilling and emissions free-for-all?

HARDER: I think at the top level, the topline is yes, they are certainly happy that a Republican won over a Democrat, no matter which Democrat or Republican. On a net, it’s a gain for fossil fuel companies. That being said, it’s very unlikely that we will see a unique increase in oil and gas production.

That’s not because Trump is going to fail on his policies. It’s just because oil and gas production doesn’t actually rise and fall based on any one president. These types of policies take years and decades to play out.

In addition, oil and gas production has actually continued to go up under President Biden, who has extolled the benefits of oil and gas production.

So I anticipate oil and gas to continue an upward trend. What’s more, driving oil and gas production is just the cyclical nature of prices.

Another quick note is how some oil companies are tiptoeing into new climate technologies. Occidental Petroleum, a Texas-based oil company, is working on ambient carbon dioxide. The CEO has expressed to President-elect Trump the importance of the tax credits for these types of policies. She told her investors that she believes Trump understands the importance of these tax credits.

So I anticipate there to be perhaps a not-so-subtle preference for tax credits to stay in place, especially those that benefit oil and gas companies. That could be a line in the sand in the next administration. So, things like direct air capture and carbon capture, which is where you capture carbon as soon as it leaves the smokestacks of a coal plant.

None of us really knows what Trump will do, but those are some of my humble predictions.

Copy LinkHow Trump will impact wind and solar efforts

SAFIAN: So I want to ask you about renewable energy. Trump’s been vocal about his distaste for wind farms onshore and offshore. In terms of solar, his tariff plans and rollback of subsidies would make equipment more expensive. Are those industries — wind and solar — are those executives in industries panicking? How are they preparing?

HARDER: Wind and solar are at a point where they’re booming, and I don’t anticipate that to completely slow down and definitely not reverse under Trump.

Certainly, there will be some challenges on the edges, but they’re becoming cost-competitive and even exceeding costs compared to natural gas and coal throughout the United States. I think the renewable energy, wind and solar in particular, those executives are less concerned. In fact, in my conversations, that’s what I’ve heard.

One area where I could see potential progress under Trump in a way that perhaps you couldn’t have under a Democratic president is a bipartisan agreement on increasing permitting processes and expediting those processes, which could help a lot for wind and solar.

That’s something Republicans want for other reasons related to oil and gas, so you could see sort of a grand bargain under Trump.

Copy LinkChina’s dominance in the clean energy race

SAFIAN: I noticed that among the world leaders who chose not to attend COP29 this year was China’s leader. How significant is that? I mean, China is a huge player in this space.

HARDER: Obviously, President-elect Trump has been very critical of China and has vowed to impose more tariffs on China, along with other countries. This will be an area I’ll be watching closely. We talk about the clean energy race with China. Well, China has won the clean energy race, so I don’t know if we need to start the race over and try again or set new benchmarks.

SAFIAN: When you say China has won the clean energy race, I mean, I don’t think that’s something that most Americans instinctively embrace or recognize or appreciate.

HARDER: Right. Cypher has published a report showing China is responsible for 41 percent of renewable energy investments last year. We have a chart on our website that shows China light-years ahead of the second closest country, which is the U.S., but we’re less than half of China’s investments.

So any way you slice the data, China is winning.

They’ve just made clean energy so cheaply. How does the Trump administration handle that? Is that something that could rally the average American to support clean energy domestically? I tend to think not because it hasn’t in the past.

SAFIAN: China’s lead in clean energy isn’t because it owns technology the U.S. doesn’t. It’s just because the scale of investment has been so much larger.

HARDER: Well, it’s rapidly produced very cheap solar panels, so its dominance is across the board, but acutely so in solar panels.

But the question is, are we willing to spend more on energy if it’s made domestically? We, as a public, have not really shown that we’re willing to spend more on most things.

Both Democrats and Republicans have traditionally been critical of China. The divide is actually among business leaders who tend to want to work with China. Elon Musk, we haven’t actually mentioned him yet, manufactures his Teslas in China. Tesla has plants there. That dynamic will be fascinating to see play out. Business leaders want to work with China because it’s such a huge economy, but politicians are more critical. So that will be interesting.

Copy LinkThe complexities of global EV market dynamics

SAFIAN: And China’s EV industry is much farther along than the U.S.’s.

HARDER: Much further along. BYD, a Chinese EV maker, can make an EV that’s outrageously cheap. You can’t buy those in the U.S.; the Biden administration has effectively made it impossible. But I wrote a column a few years ago with the headline ‘We Need Cheap Electric Cars to Tackle Climate Change,’ because we’re not going to reduce emissions if only rich people are driving Teslas.

Elon Musk, as the CEO of Tesla, once said he wanted to make a more affordable electric car, but he’s walked that back, and many other EV makers have as well. That’s concerning to me.

SAFIAN: Musk is going to have a tricky environment to navigate because he wants to keep his vehicles and Tesla operating and selling in China, but he’d love to keep BYD’s vehicles out of the U.S. How do you navigate that? ‘Yeah, use my stuff, but I’m not going to use yours.’

HARDER: Yes. One thing I’ll say is that Musk has been very clear he doesn’t support electric vehicle tax credits; he thinks they should go away. The reason is very clear: Tesla will benefit if EV tax credits go away because Tesla is a dominant player in the market.

Another key point is that if subsidies for electric charging stations go away and Tesla follows through on its promise to open up its Tesla supercharging network to other electric cars, imagine if every gas station was owned by ExxonMobil. That’s what could likely happen in the next 30 to 40 years.

That would be kind of crazy.

SAFIAN: If Musk owns all the charging stations, maybe he doesn’t have to sell all the cars. He’ll still generate a ton of money, right?

HARDER: Totally. Elon Musk has done wonders for the EV boom and, in some respects, for climate change. But he’s made it clear his priority is his own capitalistic gains, not necessarily addressing climate change.

Elon is a perennially complex figure. Yes, his EV strategy may be self-serving, but if we zoom out, the widespread adoption of EVs would surely be a net positive for humanity, whether you’re driving a Tesla or a BYD.

SAFIAN: After the break, Amy and I explore whether nuclear energy is on the verge of a comeback, the cost-benefit tradeoffs of AI when it comes to climate, and more. Stay with us.

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SAFIAN: Before the break, Cipher News’ Amy Harder shared key takeaways from this year’s COP in Baku and why China is leading the U.S. in the race for clean energy. Now, Amy digs into the resurgent role of nuclear energy and why she identifies as a “reluctant optimist” when it comes to climate solutions. Let’s get back to it.

Copy LinkExploring the return of nuclear energy

I have to ask about nuclear power. There’s been a renaissance of interest, with the notorious Three Mile Island reactors — one of them is set to be started back up. Nuclear power has no carbon emissions, so it’s environmentally friendly in that sense, although there’s plenty of fear around the risks, too. How much of a role will nuclear play in our evolving energy system? How much is that changing?

HARDER: I think that is one of the technologies that could see an embrace from the Trump administration, despite the fact there’s actually no ties to the oil and gas industry.

That being said, there’s only so much the federal government can do, and there are a lot of challenges facing nuclear power, cost being a very acute one. Secondly, there’s ongoing and relatively persistent public concern about the safety of nuclear power.

Yes, Three Mile Island was scary when it happened in 1979. I’ve actually visited and toured Three Mile Island, not once, but twice in the last five years. Actually, the safety of nuclear power is far safer for us than fossil fuels.

So I anticipate there to be positive headwinds for trends like tech companies restarting some of these nuclear power plants.

I think that will continue, but I don’t anticipate the kind of sweeping initiatives we heard about back in the day, like during the George W. Bush era, where there was talk of building 100 nuclear power plants. That didn’t happen, and it’s unlikely to happen now.

Copy LinkThe promise & challenges of nuclear fusion

SAFIAN: What is your state of optimism or pessimism about nuclear fusion? There’s a lot of speculation and hope that it could solve everything.

HARDER: The joke is fusion is always 30 years in the future, no matter when you say that. It’s something that feels like it’s getting closer, but it’s actually not. That’s the conventional view. I am a sort of reluctant optimist. We are seeing scientifically backed improvements in fusion power.

Just to be clear, fusion, unlike fission nuclear power, doesn’t create the nuclear radioactive waste that fission does, the traditional type of nuclear power.

So that’s one reason why it’s so appealing. But like fission, it provides a steady base of clean power. It would — when it exists — provide a solid source of energy. So it can provide more reliable energy compared to and complement the variable wind and solar that we expect to continue growing.

So that’s why we cover it, because we think the potential is great. But it’s also important to talk to the skeptics and discuss the real challenges, with cost being a significant one. Cost is a challenge with everything in energy.

SAFIAN: Yeah. I was curious, is there any clarity about what the cost of fusion power and fusion plants would be, or we don’t know, because we don’t know how to do it yet?

HARDER: I think there are a lot of question marks there. Microsoft has actually signed an agreement to get energy from a fusion company within the next decade. I think that’s really ambitious. I think that will be one of our first opportunities to see how this actually works.

You hear optimistic statements from entrepreneurs in this space that they can make it affordable. So hopefully the horizon gets closer.

Copy LinkEnergy demand and AI’s role in climate change

SAFIAN: Part of the renewed focus on nuclear power has been spurred by big tech companies looking to fuel their generative AI efforts. Amazon, Microsoft, and Google have all announced deals. We’ve seen reports that a single AI prompt uses a significant amount of energy, but I think you’ve reported on studies saying rising electricity demand can’t just be blamed on AI. Can you put into context how much energy the AI revolution requires? What is the impact in a broader sense?

HARDER: Yeah, certainly. We actually dug this out of a recent International Energy Agency report. They mentioned artificial intelligence, or AI, something like a dozen times, whereas last year the report mentioned nothing at all about AI.

So it’s a simple sign of how big this topic has become. That being said, I think the energy demand of AI is taking a lot of oxygen out of the room, perhaps an outsized amount.

The IEA has found that while energy demands for AI could and likely already are having localized impacts on energy demand, on a macro level, it’s really a relative drop in the bucket.

For example, our increased demand for electricity to power air conditioning is more than the electricity forecasted for data centers. This is to say local communities need to handle this, but on a macro level, we shouldn’t think about avoiding asking ChatGPT for travel itineraries to Europe because we’re worried about climate change.

SAFIAN: Turn off your air conditioner instead, right?

HARDER: Exactly. Well, no, I mean, comparing it to air conditioning, which is a life-saving machine in some parts of the world and will be as climate change heats up the world. Places like India need air conditioning to survive.

So, this idea that we’ll be assigning some morality to energy use is, first, morally questionable because it’s a bit like free speech. We support free speech even if people say things we don’t like. There are obviously limits, but they’re very rare. With energy, even if we don’t like the use, we have to support the use of it.

Instead of policing energy use, we need to ensure energy is cleaner.

AI, and this is way above my pay grade, but the benefits AI will bring and is already bringing to many parts of the world are going to far exceed the incremental electricity demand we will have to power AI. We will get to more affordable fusion technology faster because of AI. We’ll speed up the innovation pipeline and process because of AI, which is remarkable.

On a macro scale, we need to use this as a catalyst to ensure our increasingly electrified world — air conditioning, electric cars, heat pumps, all of those — can be powered by clean energy.

Copy LinkUsing fear vs hope to spur investment in climate solutions

SAFIAN: I watched part of Al Gore’s talk at COP29 in Baku. From your point of view, where are we in terms of using urgency and even fear to spur action on climate versus the hope and optimism that we can do it?

HARDER: This is a topic I think about a lot and it tends to go in cycles. When Al Gore published ‘An Inconvenient Truth,’ we were in a fear cycle, and I think during 2020, with the lockdowns, it was a mix of fear and hope. Air pollution literally evaporated, right?

Because none of us were going anywhere, and it helped us imagine what a cleaner world could look like. Of course, none of us want a cleaner world at the expense of our livelihoods and mobility. So, I think we’re entering a period where fear doesn’t carry a lot of weight.

We saw this clearly with the COVID-19 pandemic. People wouldn’t wear masks to flatten the curve.

To flatten the curve of emissions, we’ll have to adjust our livelihoods for our entire lives, and we’ll never do that to such an extent. We will never sacrifice in order to address climate change. So, we need exciting new solutions, whether that’s a fancy electric car that doesn’t need human driving or a really tasty burger with fewer methane emissions than a traditional beef burger.

That being said, parts of the community and the world emphasize the dire urgency we’re facing with a warming world.

That’s important not to gloss over as well.

Copy LinkThe progress that we’ve made in regards to climate solutions

SAFIAN: If you had to encapsulate the world’s progress on clean energy right now, what would you say?

HARDER: When the Paris Climate Agreement was signed, we were on track for 3.9 degrees of warming, but today we’re on track for 2.7 degrees of warming. We’ve made progress, and that’s great.

I think that can get lost in the headlines of ‘Oh, coal production in China is skyrocketing and climate deniers in the presidency.’ We’ve made progress, and we are making progress. It’s all about the pace at which we address climate change, and that’s what might slow under a new Trump administration.

That being said, it’s possible it might not be as slow as some people worry it will be. That’s where my reluctant optimism comes in. We have made progress.

SAFIAN: Well, Amy, this has been great. Thank you so much for doing this.

HARDER: Thank you so much for having me on. It’s been fun.

SAFIAN: Listening to Amy, I really appreciated her even-handed explanations. So much about energy policy and climate issues can become heated. And it can be difficult to understand what’s really going on. It was reassuring to learn that the revolving door of U.S. administrations doesn’t necessarily reverse the trend toward cleaner energy. It was instructive to hear how fossil fuel proponents and climate change activists interact at events like the UN’s COP. And it was bracing to hear how far ahead of the U.S. China is in its renewable energy efforts. Although it also means that change is possible. All in all, I found myself agreeing with Amy’s reluctant optimism. While there’s plenty frustrating about how the energy industry operates, progress has been made. And to be honest about my own tendencies, I prefer to be optimistic. I want to believe that new technologies — things like AI, nuclear fusion, direct air carbon capture — that they’ll have real impact, that we can figure our way out of the climate change that we’ve created for ourselves. At least, I hope so. I’m Bob Safian, thanks for listening.