America's New Energy Playbook - Center on Global Energy Policy at Columbia University SIPA

Guest

Paul M. Dabbar

Non-Resident Fellow

Transcript

Paul Dabbar: The energy sector is very fragile, what I call the big four of energy policy topics, energy production or availability, energy prices, environmental impact, and national security. And there’s great degree of history that if you focus on one versus the other, that something will happen in politics, something will happen in a challenge in the world that will cause a disruption.

Jason Bordoff: A major shift is underway in American energy policy. Over the past month, the Trump administration has launched an ambitious agenda aimed at transforming the nation’s energy landscape, declared a national energy emergency and pulled back from American climate commitments at the heart of Trump’s. Unleashing American energy strategy lies a complex balancing act, maximizing domestic energy production and infrastructure development, while also navigating concerns about the cost of energy grid reliability and economic competitiveness. And there are open questions about the implications for the Biden administration’s energy and climate initiatives, including the Inflation Reduction Act and more broadly for the clean energy transition. How will this reshaping of American energy policy affect domestic markets? What role will technological innovation play in bridging competing priorities? And how might this transformation impact the delicate balance between energy security and climate considerations?

This is Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I’m Jason Boff. Today on the show, Paul Debar Paul’s the chairman and CEO of Bore Quantum Technologies and a senior non-resident fellow here at the Center on Global Energy Policy. He spent the last few months leading the efforts of the incoming Trump administration to put together the US Department of Energy. Paul served as the fourth undersecretary of energy for science during the first Trump term. In this role, he functioned, as doe’s principal advisor on fundamental energy research, technology and science. He also oversaw the majority of the department’s national labs, and he led the largest environmental remediation program in US history. Prior to his role as undersecretary, he was a managing director at JP Morgan where he led energy and business investments across a range of energy technologies including solar, wind, and natural gas.

We discussed the Trump Administration’s energy agenda and their focus on energy affordability and energy security. We also talked about domestic oil and gas production and the implications for the economy and national security, how the US can meet growing electricity demands, what permitting reform could mean for all types of energy infrastructure. Just to note that Paul joined me before Trump announced large tariffs on Canada and on Mexico. I hope you enjoy our conversation. Paul Debar, good to see you again. Welcome to Columbia Energy Exchange and welcome back to the Center on Global Energy Policy. You were gone for a little bit to do some stuff. We’ll talk about

Paul Dabbar: Oh, as an alumni as well as a past and future participant of this wonderful center. It’s great to be here again.

Jason Bordoff: Thanks. And so I kind of was saying how you took a bit of a break from doing stuff here with us and probably other things to spend at least several months, I think leading the effort for the incoming Trump administration to put the Department of Energy together. We’re talking at a time when everyone is incredibly interested in understanding what this new administration’s energy policy is going to be. We saw a flood of executive orders come out literally on day one trying to make sense of what they all mean. So obviously we’ll go into some of those in specific detail. But first maybe just for people listening, what can you tell us about the effort of putting a department together? What does that look like? How does it work? How did you spend your time?

Paul Dabbar: Yeah, so I think whether it’s Department of Energy or any of the other ones, I think if you take a little bit of a step back that I think well run, presidential transitions have been thought out for a long period of time. And I think if you look back, there’s actually been some academic writing on this topic, which is how do you organize a change of the full management team of the largest enterprise in the world? And really you can’t do it from the beginning of November and be ready if you were doing it from a standing start. And so there was a lot of preparation this time. I think if it’s done well, there’s a lot of preparation and in large part from people who are experienced and with the federal system, if you’re doing DOD, you want people who were interested in that. If you’re trying to deal with the National Security Council, you want people who work there as part of that effort or the Department of Energy. And so I think that’s the right way to think about it because these organizations are very complicated. You look at the Department of Energy, there’s a loan office, it’s nuclear weapons and nonproliferation and running labs and

Jason Bordoff: Which is most of it, right? I mean, I think there’s a lot of attention to LNG exports and drill, baby drill, but the Department of Energy is mostly a scientific research organization and our nuclear weapons stockpile.

Paul Dabbar: Yeah, if you look at by budget, which is certainly at least a measure of effort, the Department of Energy is about 85% of the budget is nuclear weapons and the lab complex, it’s a very huge part of that. And obviously the energy policy things were less budget and therefore it’s a little bit hard to use the budget as a perfect metric as like LNG policy is incredibly important, but the budget is near zero effectively for that compared to some of the other things. But yeah, I mean DOE to a large degree is a very large RD organization running the former Manhattan project that started right here at Columbia.

Jason Bordoff: Yeah, that’s right. Just in the engineering building, I think in the basement they still have some of that stuff down there. You can go visit

Paul Dabbar: And that’s right. And the first uranium separation was at 130 fifth Street and Broadway. So literally just about 10 blocks north of where we’re sitting until they figured out that it was going to take the size of a small city to Iran and they moved it to Oak Ridge,

Jason Bordoff: I guess. Yeah, there’s a reason it was called the Manhattan Project. So look, we had day one and let’s focus on energy and climate. A lot of other stuff has happened in the last week or two, but everybody saw sort of headlines come out about caricaturing perhaps like drill, baby drill, energy dominance, unleash American energy, energy emergency, offshore wind is bad. Again, maybe caricaturing, but I’m wondering if you could just start helping by, in your view, there’s a perspective and a perception of what this administration’s energy policy is and is going to be in your view, what’s right and wrong about that perception that you see taking shape from the headlines that are coming out?

Paul Dabbar: So this is equally as applicable to every other department, but it’s applicable to energy in terms of policy, which is the president gave three speeches a day for seven days a week for months. He obviously talked a lot about all sorts of different topics, but if you scrape his speeches on whatever the topic is and you itemize it, and you can probably guess that his policy people did more than scrape it, they were writing it that were in the speeches, the policy for energy is in all his speeches, there’s nothing. There’s a hundred percent transparency. You just have to kind of go through the speeches and bullet point out the topics. So everything that he’s been doing in energy and elsewhere has been incredibly transparent because that’s how the team worked. The team worked at coming up with looking at the list that he gave speeches on and the executive orders once again, whether the Department of Energy or other topics are what came from the policy, not the other way around. So I wouldn’t look at the EO as a policy is that there was policy that’s in all his speeches and it became executive orders. And by the way, if you want to have a prediction of what’s next, it’s actually just go back and again look at the speeches.

Jason Bordoff: So tell us what’s next based on how do you characterize what the energy policy is based on, as you said, all of those speeches, if that’s where it comes from and what should we expect?

Paul Dabbar: So I would say that there are two top topics that came up over and over again and Jason you already mentioned, I think both of them. And one is unleashing American energy was a very high theme of his speeches in area of the policy. And the other one was inflation. Those are the top two there. I can go through others, but those are the top two that came out the most. So when you stop and think about exactly what does that mean, that’s actually the details, those are the details of the executive orders. How do you think about what does unleashing American energy mean? So let me give you a few derivatives of that. One is citing, and once again he talked about citing an awful lot in his citing meaning permitting, permitting building and how hard it is to build in this country. And by the way, he didn’t talk just about energy on that topic.

He talked about other things, but certainly energy was a big part of that on the unleashing American energy, whether it’s EPA, interior, LNG orders. But by the way, he talked both about electric transmission in his speeches as well as pipelines. So it was pretty much across the board, it is been hard to build things in this country and we want to build things and we want to be, he didn’t use all the above as much as he did previously, but effectively it was we need, he would go through different examples of different sorts of energy and he would say, we need to be able to build more.

Jason Bordoff: And you think that is all of the above? That’s oil, gas, that’s pipelines, it’s also clean energy, renewables, transmission, it’s all of that.

Paul Dabbar: Well, he’s had some, I think as compared to last time, once again just reading what he’s saying both with the executive order on wind as well as with solar, he does have another derivative of this topic, which is he’s been particularly, he has not liked incentives. You mean tax credits? The IRA subsidies, subsidies, mandates. He’s been against those sort of things in general. And so whether it is the EV tax credit and the EV as he called the EV mandate, which is a bit of details to go through, but also wind and solar, he’s also talked about that. So taking a little bit of a step back, you start thinking about, okay, so what are the various incentives, what the things that are being held up, what are things that were supported disproportionately compared to other energy types over the last few years and how to basically create a level playing field. So that unleashing American energy aspect is generally focused on allowing people to go build what they want to go build on a non-specific directed basis. Maybe that’s a better way of putting it and being neutral to that and not having citing focused on only this type of energy or tax credits just on that sort of energy. That’s the general

Jason Bordoff: Theme, let people build, but let everything compete on a level playing field. And in the spirit of friendly provocation, I presume level playing field would probably not include, let’s account for the externalities of carbon emissions from some of those sources of energy and then let them play on a level playing field.

Paul Dabbar: Well I do want to talk about one of the points, and we’re kind of jumping around here a little bit, but he did say I’m before clean air and clean water. He said that in the Biden interview, sorry, debate. And I like to come back to environment in terms of actual progress rates that occurred between when you were in government when President Trump, Trump 1.0 and Biden and there’s some interesting data maybe we can get into. Yeah, we can go back to that. Sure. So the second big area is energy inflation. And so he talked about inflation a lot and energy inflation was just one area of overall inflation, but it was a common theme on the overall inflation topic was energy inflation, significant concern with energy costs is what you’re saying?

Jason Bordoff: Energy. Okay. Yeah.

Paul Dabbar: So he talked a lot and him and the vice president a couple of days ago in his interviews kept on highlighting that energy and the energy costs through the economy are a very wide reaching. It goes into the logistics stuff that shows up at your home, the food that you buy. I mean there’s some pretty high numbers,

Jason Bordoff: But average gasoline prices around 3 15, 3 20 now natural gas prices are three 50 to $4. Is

Paul Dabbar: It very expensive? Yeah. So it’s about 50% up from, remember you had to put it back into the context of where he was at. And I think it’s really important to kind of put it into the context of what happened with energy when he was there last time. And the mindset, I’m just describing to you the mindset because during Trump 1.0, there was energy deflation, right? It was literally prices were dropping.

Jason Bordoff: Oh, we had a pandemic and we

Paul Dabbar: So if you go 2017 to 2019 December, energy prices were dropping during that timeframe. And so he remembers that energy prices were deflationary and that’s one of the reasons why interest rates were able to be kept very low was because we had low inflation. And what big driver of low inflation when he was president last time was that crude prices were ticking down. This is a longer topic about why that occurred, right? And power prices were dropping in part because natural gas was still very dominant in the power sector. We have a lot more problems in the power sector here. There’s a long conversation about what’s going on in power, which I think is,

Jason Bordoff: I want to come to that

Paul Dabbar: Which I think is much more challenging. And he’s called it out by the way in his speeches.

Jason Bordoff: And the emergency order I thought was interesting because it wasn’t just about oil and gas and dominance, it was about electricity grid reliability and meeting the power demands of AI for competition stuff I’ve written about as you know. So it was interesting that that was one of the areas of focus there. Is there a tension between, so I guess what you’re saying is a lens through which we should understand how this administration will approach energy is bring energy prices down and that has a bunch of implications for where you think policy might go. We saw, I was in Davos, we saw him give a speech and one of the things he said is OPEC bring oil prices down, that kind of pressure. So I suspect we’ll see more of that, but is that intention with the first goal of unleashing American energy dominance, if oil prices go down, you don’t produce more.

Paul Dabbar: So in theory you could think that, and of course in many contexts that’s absolutely the case. But once again, I’d like to step back to Trump 1.0, Trump 1.0 is we produced more oil, I’ll just pick on oil for a quick second. We produced more oil in the United States and prices dropped and there were some interesting dynamics of what was going on in the oil markets. Same thing with natural gas. We produced more natural gas during his first term and prices were dropping. And why was that? The primary driver of why both increased volumes of energy production went up dramatically during his last administration and prices dropping was innovation period. That’s the core point. And I’m going to take a little bit of a step back. I know Jason, you and I have talked about this, which is where was an area that Republicans carved out for where government should focus versus Democrats around the 2016, 2017 18 timeframe.

And the Republicans back then, and I could say ally, because that was a part of this, was carving out instead of regulation, we should focus on innovation. And that became very bipartisan. It’s kind of hard to argue against we should support additional innovation. And during that timeframe, support universities support for labs, support for the r and d structure across the us. And by the way, not just in energy, if you look at NASA and returning to the moon and Artemis and all those things got dramatic increases. So this innovation kind of theme actually produced results during Trump 1.0 of lifting costs into Permian. If you look at the EIA data, the production costs for energy, for lifting oil, for lifting gas, and as a result, power prices were all dropping so deflation. And that was driven by innovation to a very, very large degree. You saw Chris Wright at his hearing, what was his primary theme innovation. He talked about that over and over and over again as the primary focus for unleashing American energy and driving down costs.

Jason Bordoff: And so is that just to take that to innovation and you ran the national lab system for four years and that is a really important crown jewel for innovation for this country. And then at the same time, we saw in the last week a pause on federal funding and institutions like this one concerned about what was going to happen to funding, what do you expect will happen to funding for energy innovation r and d across the board, including clean energy and all the stuff happening at the national labs, which is incredible.

Paul Dabbar: So as we all know, what’s happened for the last few years is that there was a tremendous increase in spending, but it was focused on high TRL level industrial policy. So the money was focused on helping support power transmission lines at pg e in California, which I think is a definition of a high TRL level sort of asset, 15 billion or dollars in a loan to pg e for primarily transmission. What happened is that at universities like Columbia and MIT and Caltech and the national lab system actually although their funding went up ever so slightly after inflation, it was actually a real cut. So if you go to places like the Jet Propulsion lab and elsewhere, they were laying off people this last four years and it’s been particularly unpleasant for them. And if you go to university presidents, you highlight how’s your funding been for the last few years they’ve been saying we’re under pressure.

I think anyone at Columbia knows that if you take a look at funding from the federal system, they’ve actually been under pressure. So the money’s been going to building a lithium ion battery plant and it’s been away from r and d, right? That’s just kind of facts. And so once again, during Trump 1.0, there was very low industrial policy, not to say zero, but quite low comparatively to the last four years and very large increases in innovation. So if you take a look about what’s about to happen with fusion, right? If you look at the 30 new battery chemistries rather than just lithium ion, that was invented about 20 years ago. I went to the Nobel Prize ceremony for that because we won that. That was fun. But we started an extra 30 battery chemistries that we think are potentially much better than lithium ion. So jumping that tension in policy I think is important to compare where President Trump is. And to contrast it, you have high TRL level industrial policy spending the last four years and I think a possible return of shifting some of that money from industrial policy back to RD.

Jason Bordoff: So what I hear you this, if I remember correctly, echoes some of what you wrote in an op-ed in the hill last year where you kind of argued that the inflation reduction act maybe wasn’t as great as some people on the other side of the aisle think it is for deploying renewables faster. I don’t want to characterize your argument because you view that as a huge amount of demand side stimulus, maybe before supply could catch up, it was inflationary manufacturers increase prices to capture the value of the tax credits. And I mean I’ll leave it to listeners to form their own judgments about whether they agree with that or not. But I hear you saying that there’s a lot of interest in what this administration is going to do with the inflation reduction, our tax credits particularly for say solar and wind. And some people are like, oh, it’ll all be fine grading jobs in red states. So people will protect that. But you’re expressing a view that would make one maybe more concerned because it’s a view that says this money could be deployed better on things like r and d and national labs and not tax credits for consumers or maybe even manufacturing. But again, I don’t want to characterize what you think.

Paul Dabbar: Yeah, I mean that was a good recounting of one of my editorials. I laid out facts, right? My editorials, I tend to focus on facts and then maybe at the very end have a takeaway associated with the facts. But during the time that you were in leadership in federal government, the growth rate for example in renewables year over year, increases of deployment rates was going up quite a bit. And the cost of power purchase agreements, which is how much it really cost to a customer was dropping every year. So the deployment rates were going up every year and the cost of customers were dropping every year during Trump 1.0. It continued, the pace of growth actually increased every year. So it kept on increasing. And the PPA rates I’m using in my editorial, I quoted the s and p global data. So this is third party research data.

So we saw this continued trend of reduced costs, lower prices to customers and actually increased energy production rates. And by the way it, it was in solar and wind, but it was also in oil and gas and many other types. So it was literally all the above that happened all during your timeframe when I was under secretary, it flattened and actually reversed the last few years. That’s interesting. So the growth rate in renewables actually not only went to zero year over year in terms of changes, it actually dropped slightly to a large degree. It was because there was a big collapse in onshore wind, which is a longer conversation. Solar grew but net it was actually flat to slightly down. That’s strange because we had gone through 20 straight years where every year was going up in terms of the deployment rates and then the PPA prices, once again, the cost real cost to customers went up by a hundred percent.

And once again, we hadn’t ever seen that for 20 straight years. It was literally every year the prices were, it was deflationary. And so I wrote an editorial about why I started with here’s the fact pattern and then I go, why did that happen? And as you said, the reason why that occurred was on the asset side, the balance sheet, the costs for the equipment and the construction went up significantly for the last four years. And then very importantly, on the liability side of the balance sheet, the cost of capital went through the roof. And that’s because interest rates, the risk-free rate, the cost of equity and the project cost of debt as a result went up massively. And so if you combined the asset side negative and the liability side, the cost of capital, those is exactly what happened in terms of the data and that drove these reduced deployment rates and very much increased the cost. And so you can have a debate about why that happened, but those are facts.

Jason Bordoff: I guess just to predict kind of or not predict, but anticipate what we should look for in policy. Look just to that question of what you expect to happen to the inflation reduction act and the tax credits, what’s the view of this administration on

Paul Dabbar: That? So you have to take a little bit of a step back away from of energy because it’s part of a much bigger topic, which is the percent of the economy, which is now being debt financed by the US is at the highest in World War ii. So we’re about seven to 8% of the overall economy is annual debt issuance. Seven to 8% is a huge number and that’s driven inflation, that’s driven our cost of capital and contributed if not majorly contributed to the energy problems I just described. But it’s not isolated to energy

Jason Bordoff: Or to Democrats or Republican.

Paul Dabbar: Yeah, I mean exactly. Why are we at seven to 8% basically where our World War II levels of the percent of the economy, there’s a strong view in President Trump’s administration that needs to come down. I think there’s not too many people who disagree that it’s seven to 8% of the economy. It’s not too high so to speak. So as they take a step back and they go like, okay, so what do we do about that? They’re going to be taking a look at where the spending was and certainly the Inflation reduction Act, which was a big miss by the Congressional Budget Office at the time, they thought it was going to be 385 billion was their estimate of the score. And then subsequently they reassessed it and said, whoops, it’s actually about one point anywhere from 1.0 to 1.2 trillion. So I’m not a real expert in the history of the congressional budget office and on how off they’ve been, but moving from 385 billion to 1.2 trillion might be in the top five of their misses.

Jason Bordoff: And so without getting into maybe every 45 random letter that follows broad categories, solar and wind, carbon capture, low carbon fuels like hydrogen, what are the things you think that continue to receive support and what are the things that kind of lose in the coming years

Paul Dabbar: That’s going to be hard to identify? And the reason why I’m equivocating is that the president was very, very clear. I mean I got about 12 items here on the list and we’ve only hit on a couple of them where he was incredibly specific but he did not get on the campaign trail and mentioned the word 45 once. And so there was not a lot of detail around that. So

Jason Bordoff: That’s to be determined, determined or maybe even congress is going to be left to determine it.

Paul Dabbar: I think there’s a decent chance that Congress is going to be the driver of that level of specific. Jason, the only thing that he mentioned, although once again he never mentioned the word 45 wants was the EV credit doesn’t like that. Yeah, he doesn’t like that. And by the way, he said it over and over again. He goes, I like electric vehicles. I think great. I just don’t want to force people to buy them and I don’t think we should be subsidizing. And so that’s part of the general theme

Jason Bordoff: Also seems not to like wind. Is that a fair characterization?

Paul Dabbar: That is a fair characterization. So as a partial consumer of his comments, he’s been pretty public about wind for a very long time. So once again, shouldn’t surprise anyone about his opinions about wind because he’s been talking about this for at least a decade if not longer.

Jason Bordoff: And one of the important pieces of government for everything we’re talking about in addition to the Inflation reduction Act is the loan program office. Tell me what happens to that.

Paul Dabbar: The loan program office has been authorized and appropriated and up and running for quite a long time. I forget I think maybe close to 20 years. What happened was as part of the IRA, it blew it out by 10 times in terms of its authorized amount. So from about 40 billion to 400 billion. To put that into the context of how big 400 billion loan book is, if you look at the total loan book for all corporate customers for Morgan Stanley or Goldman Sachs globally, it’s $400 billion. So they were given the equivalent of all of Goldman Sachs for all industries, right? Industrials, healthcare telecom globally, and they were handed the same loan book size for just the utility sector. There was actually a lot of worries on Wall Street when that was done that DOE would take over the whole market and crush the whole market by kind of dominating it and kind of twist everything.

There was an interesting weekend set of phone calls when that passed on Wall Street where they were worried about that. So it is a huge amount of money now if I saw it all correctly, although they were being very, very aggressive about trying to get it out the door. They only issued, give or take 80 billion, they took it to a little bit over a hundred billion of outstanding. So they were very aggressive to try to do loans and they expanded it to far beyond what was the original intent? The original intent was new technologies usually one of the first three types of the deployment of that particular technology and focused on new innovation and clean. They expanded that to any technology that might facilitate that, which you can drive a truck through that. So transmission lines, not a new technology, they gave a huge loan just for power lines.

So the authorization’s still there, the new team can use it and maybe they’ll focus on nuclear, maybe they’ll focus on fusion versus whatever the last four years they’ve been focused on. The last thing I would highlight is that there was a big ethics allegation by the Inspector General about how they were processing loans. It was a very, very biting one. And so I do think that an assessment of what happened with that super huge loan book and whether there was any violations of proper ethics as was written down in a report from the IG, is probably something that’s going to be looked at.

Jason Bordoff: You mentioned permitting reform before and obviously there was a proposal Manchin barrasso and ended up not succeeding in part Republicans didn’t end up supporting it. What do you think permitting reform ends up looking like that this administration supports?

Paul Dabbar: I do think that there’s a few themes if you look back at Trump 1.0 and what were some of the things that were tried or done administratively that might be part of a legislative package. So one of ’em was time, as you know, there’s some kind of famous projects out there of a 10 mile road that took 10 years. If you look at Keystone Excel, it was basically done and they withdrew the permit after they had already spent $10 billion. And so the volatility associated with time for anything, this is not a specific energy type kind of question or even just energy, right? I talked about a road, it’s these perennial approval processes, which by the way is inflationary, right? Because if you’re carrying the cost of capital and carrying a project for 10 straight years, owning the land, controlling the leases, it actually increases. And then you’ve got inflation over the course of time is you have to wait 10 years to get something built.

Narrowing approval, timeline narrowing the litigation window. So I do think some sort of tort reform that narrows the scope. I think a timing probably a stop clock because at the end of the Trump administration last time there was a one year stop clock for review. It didn’t say things have to be approved in one year. They just said give a yes or no within 12 months, not wait a decade. I do think that kind of narrowing the scope, I’ll give you another one that also occurred at the end of Trump, 1.0 waters of the US waters of the us it was very nebulous of who had what control over what topics. And so at the end of the last Trump administration, they did a rule in which they said the scope for the state’s approval underwaters of the US is just based upon the emissions of whatever is being approved.

Let’s say it’s a pipeline or something like that. The only thing that the state of New York or whatever could review is whether if that pipeline was going to leak or not, but states had seized on a nebulous view that they could extrapolate waters of the US to many states away topics and things. They decided to have the authority where they kind of grabbed it to areas that were quite broad. And so I think narrowing the scope and go like, okay, if you’re a state under waters of the us, this is exactly what you can do and you cannot try to start doing things that were never done before. Underwaters of the US as a state, right? That’s a purview of the federal government if it’s beyond this box for you as the state of Ohio or whoever. So I think the narrowing of things to reduce time and reduce cost I think is going to be a big theme. Permitting

Jason Bordoff: Reform of course will be related to meeting the need for increased power generation, which suddenly everyone is, we haven’t done that for 20 years and now there’s a lot of uncertainty about it and even with deep seek now maybe it’s not as big as we think and the chips don’t need to be as complicated, but as I wrote a piece with our energy center colleague, David Hill, who kind of saying Trump talks a lot about energy prices and if he should worry about energy prices, he probably maybe needs to focus even less on oil prices and more on power prices. It sounds like you think that’s a view that is shared by people coming into the administration and just talk about the power sector, talk about the electricity grid and what is the administration in your view, view as the challenge, the problem, and what policy solutions will we see adopted to try to make sure we’re generating the electricity we need and keeping energy prices affordable?

Paul Dabbar: So I’ll say it even more directly then. Is it shared by people in the returning administration? I’ll go to the higher level order. The president said it in the speeches, so I keep coming back to that. So the president said a number of things about this topic in speeches, one of which he said was we need to double the amount of generation in this country in the next 10 years in order to maintain AI leadership as a quote, a quote from several of his speeches. So the power, demand and growth and the strategic importance of it, that’s one of the bullets, right? He said it, that’s a core part of it. He also said at another time when he is pretty harsh on Germany, I think he was in Trump 1.0 exposure to Russian natural gas and national security issues. He was pretty tough on them, but one of which he was tough on him was also about energy prices and the competitiveness of Europeans.

He was highlighting that a while ago and he highlighted it again during the campaign. And so he would make statements of it’s important for the US to have the lowest power prices in the world for our economic capabilities. So he talked about power prices, he talked about power, demand growth. He talked about AI quite a bit actually. And so this energy inflation, sorry I keep coming back to the unleashing American energy and energy inflation is the top two of the policy points that kept coming up. He specifically talked about this power topic by the way, he also mentioned power transmission. In his speeches he said, in order to be able to have low power prices, in order for us to maintain AI leadership, we need to build power transmission. Yeah. So he said All this so is

Jason Bordoff: And the outgoing Biden administration said a lot of that and said, we need to meet that power demand with clean firm power. Is it a fair characterization to say take the word clean out. That’s how we’re thinking about it. It could be coal, maybe wind is on the outs or not as much support in the IRA for solar and wind that doing this with zero carbon energy, that’s not the priority. The priority is more power generation period. Is that fair or not?

Paul Dabbar: I could say that firm power to drive down prices to allow economic growth is the core policy. So let’s talk a little bit about some of the points that you just made. So it was certainly highlighted that in many if not most of the power pools in the US over the last few years, we’ve de electrified the total capacity in PJM. The total capacity in New York, the total capacity of all the power plants in New England is lower than it was a few years ago. We’ve actually shrunk the capacity. So there’s a reason why wholesale power prices are going through the roof right now. One of them is on the supply side, so net net on megawatts, we actually shut down more power plants than we built. And if you look at the availability factor or effectively megawatt hours or the ability for it to actually produce the stuff that we shut down in New York, like Indian Point or that we shut down in New England like Vermont, Yankee and Pilgrim operated at 93% of the time at max at availability or capacity factor.

And the nineties what we replaced it with, it was 35% and the stuff that we shut down was dispatchable and the stuff that was replacing it with was also not dispatchable was not firm. And so there’s a reason why the wholesale power prices in New England went up by about a hundred percent in the last four years. If you look at the wholesale power prices, not the delivered, you got wires charges and it mitigates it, but on the wholesale generation amount it’s up about a hundred percent. And so the reason is that we got less supply as I just described, and we got more demand as you were kind of talking about. And the supply that we were replacing it with has worse characteristics when it comes to dispatchability and production. It is only generates a third of the time rather than 90% of the time.

So you add that all up together. That’s why the PJM auction and I wrote about this also in an editorial year over year, the PJM capacity prices is up 933% this coming year. 933% is a lot of inflation. And so if you take a little bit of a step back to your point more generation, more firm generation, how do you do that firm generation because we have not, we’ve been shutting down and we actually are not building firm generation. And I know a bit about data centers. If you look at a data center, the capacity factor or the percent it’s at max is about 90%. So when an average data center goes up, it runs basically max. And so it really needs firm. It really, really needs firm.

Jason Bordoff: And just to be clear, we are building a lot of renewables, deploying a lot of batteries,

Paul Dabbar: It’s not enough. It doesn’t even come close. And once again, I love lithium ion batteries because I was there for our Nobel Prize ceremony for us to do that, I think by definition I was happy about that. But do lithium ion battery at four hours for the prices that they are or cannot cover base load deployment four hours out of 24 and then they have to go figure out how to recharge it. It’s not very much. That doesn’t come close. So there are new battery chemistries. What is one new battery chemistry being deployed that we helped develop when I was there last time, that can operate for a hundred hours, that’s 25 times lithium ion and it’s 80% cheaper, so cheaper longer. So there’s technology aspects to this. So I think things are in a very positive state. If you take a little bit of a step back, the technology improvement possibilities I think are for this next generation of energy.

I’m incredibly positive about most of what we’re deploying here today in energy did not exist a generation ago 20 years ago. So if you go back and look at 2005, PV solar was not commercial in 2005. Wind capacity factors were way lower. There was really not much of a unconventional oil and gas drilling set of technologies 20 years ago. It hadn’t really started hitting until actually it started happening vaguely in 2005, the lithium ion battery. There was no EVs in 2005. And so if you stop and you look at what are we doing today, it wasn’t invented in this last generation and we should all be super positive about this broad base of technology innovation and how it improved so many different things. Now if you look at where are we going forward, I am so for as positive as I could be looking back at what was accomplished, the pipeline of stuff that’s coming forward and the depth of that pipeline and the breadth of the technologies of that pipeline makes what I just described in the last generation seem minor.

I’ll give you an example. I am incredibly positive and I sit on a fusion commission with the Senate. I’m incredibly positive that there’s going to be more than one private sector party with material fusion accomplishments in this four year cycle. And I’m saying that in a very educated knowing way like exactly who and when and the likelihood and performance metrics. I mentioned 30 different types of new battery chemistries, right? Much better than the lithium ion, especially for utility grid operations. I’m so incredibly positive that they’re geothermal. The incoming secretary is actually quite knowledgeable about this and if he was on the board of on the board and on the board of Olow nuclear and olow, right? So actually his knowledge base of energy technologies is vast. It’s quite broad. So those sort of things I think I’m very positive about

Jason Bordoff: Some people seem to think there’s a nuclear renaissance happening is that Trump administration will be very supportive of that and try to accelerate that.

Paul Dabbar: Another one of his speech points, I’m sorry I keep coming back to it, but that’s a guiding light. And so he did talk about that. He actually remembered Vogel at one of his speeches and so we obviously all paid attention. He actually specifically called out. He said some of these larger reactors have problems with construction and maybe these SMR reactors are maybe more likely in terms of lower risks of construction. He said that at his speech and he did it from memory to be clear. So it’s on the checklist. He said it, he remembers it. And I think from a technology point of view, you and me and everyone else who are in the energy policy sector see that there’s a pretty good mix of opportunities and certainly expect one or more of them are going to be successful.

Jason Bordoff: Obviously LNG exports was another issue and prom said it would lift the pause and then I guess the market will figure out how many more of these projects to build we’re already building a lot. It was interesting actually at this virtual speech he gave at Davos, Patrick Pier, the CEO of total energies asked a question raising a similar point I raised, which was it is possible, not certain but possible that there will be a tension between keeping energy prices low at home and sending a bunch of American energy to the rest of the world. And if that tension plays out, is it fair to say like putting Americans first and keeping energy prices low is going to win out if there’s a tension with sending a lot of energy to the rest of the world, if that puts upward pressure on prices, maybe this administration’s not going to support as much exports as people think and Europe will have to figure out what to do about that or is that not fair?

Paul Dabbar: I remember very well when I was at DOE and there was a big pushback about getting about LNG approvals from the US chemical industry.

I remember that. And they said it was also probably when you were in government where the chemical industry in particular was pushing back against LNG approvals and that was the exact argument that natural gas prices would have to go up because there was an increase in demand. That’s kind of econ 1 0 1. Sometimes there’s problems with econ 1 0 1, but just to stick with data for a quick second, natural gas prices are lower than they were back then and on a real basis they’re way, way lower. So it didn’t actually play out the last time. So I’m not saying that past performance is going to predict the future, but there’s a reason why natural gas prices are way lower now even though we’re exporting tremendous amounts more than back when you were in government or when I was in government. And it’s because, sorry if I keep coming back to my theme innovation.

So the innovation on drilling drove down costs and in part from scale operations of drilling. So you could predict that increased demand, more demand of exports would raise prices and it may not. But if you look in past, it was actually the opposite. And it was because of innovation and because of scale we’re at effectively near all time. We actually hit time low natural gas prices about six months ago. I haven’t looked in the last couple of weeks, but it’s incredibly low. And so didn’t all this production, sorry, demand shipping to Europe, helping them get off Russian natural gas, helping Japan, helping Korea did not do that. So I think we should be careful about predicting too much and sometimes these models are wrong and certainly their models, the chemical industry models back then were not accurate.

Jason Bordoff: There’s a lot of cheap gas in this country for sure. Lemme circle back to what you brought up before. I mean we’ve talked about a lot of things that I think as divisive as these energy and climate issues can be and as polarized as Washington is, a lot of people hopefully should be able to agree on innovation, lower energy prices, compete with China for leadership and AI grid reliability, nuclear geothermal. But I want to talk about climate change. And so you said earlier, clean air, clean water, everybody likes clean air and clean water. It’s not exactly the same thing as causing carbon emissions to go down necessarily. And we also heard the Green New Deal is a scam and pulled out of the Paris agreement and you explained earlier why some of the IRA things might be at risk. I had your former administration colleague, Frank Fannon on the podcast and the way he characterized it as sort of for the last administration climate was the north star. And for this one, energy security is the north star. And so does that mean just like climate’s not a concern, it’s on the back burner, affordability, security grid stability, but greenhouse gas emissions just are not going to factor in. And one would think we’re going to see setbacks in the pace of carbon emission declines over time. Is that a fair concern to have?

Paul Dabbar: So I’m going to be positive, but based on data as I like to write my editorials, I’m going to point out something which is cross administration positive with laying out data. And I also find it, I haven’t had time to dive into why the data is this case, but this is a very positive data point, the rate of reduction of emissions during the Obama administration year after year. So if you plot the emission per unit of GDP, that was during the Obama time and Trump 1.0 and Biden, it’s linear and it’s downward sloping. So the US led the world in the reduction of emissions from the whole Obama administration, the whole Trump administration and the whole Biden administration and the rate of emission reductions year after year was linear, was straight. And so that’s a really interesting set of data. So you could say that it didn’t net the differences of policy, technology, capital deployment, whatever the net impact of all that was was the same, right? Because the reduction rate was the same. So during the Trump administration it was improving at the same rate as the Obama administration and during the Biden administration it didn’t pick up even though there was give or take, 1.7 trillion authorized between all the different bills. So that’s like the most interesting piece of data that some researcher out there. Hopefully someone’s listening to this and go like, why did that happen?

Jason Bordoff: So a big factor I think in positive way, a big factor I think in the last decade plus was cheap natural gas, displacing coal and causing emissions to go down and over time, increasingly cheap renewables playing a role in that too. And I think to your point before I forget what we were talking about where you said the past is not a harbinger of the future. I think it is probably fair to say if a, we need emissions to be falling at a much faster rate than they are. But even if you wanted them to continue at the current rate, we kind of got that low hanging fruit from whatever that did. If you want them to keep going down that driver cheap natural gas is not going to keep doing it. We need stronger policy, we need support, we need investments, we need to bring the cost of renewables down. We need whatever you want to do. Subsidies mandate something. It doesn’t happen without policy. I think you can maybe disagree, but I think there was a phenomenon that happened in the past. I’m not persuaded it’s going to continue in the future just given market forces alone. I think that’s why policy needs to put a price on carbon, make sure the playing field is level and kind of get the outcomes that people want.

Paul Dabbar: So that’s maybe what I mean by maybe is that who knows exactly why it happened in the past because no one’s done any research to actually lay out why things stayed consistent through administrations, right? I’ve never seen a piece of research that describes that. Now I’m certain the gas had a big part to do with it, but to say that anyone knows what’s going to happen the next four years of emissions if a policy isn’t changed is I can’t predict that. I have no idea. I don’t know if the reduction rate will stay the same, you would’ve predicted that the Biden rate would’ve improved and it did not, right? So we’re missing something. We’re missing something in terms of policy impact and what we expect things would’ve happened and what actually happened. And I think that for us to go spend tremendous amounts of money or change big parts of regulation without actually understanding even what happened in the past, which I’ve not seen anyone, I haven’t seen a good piece to describe why I just described it was the case.

If we don’t start at least a little bit with the past and go like why was it consistent even though we spent more here and spent less here and so on. And so I think some researchers should spend the time before we go about doing it. I’ll give you an example. Efficiency rates of turbines dramatically improved about 50%. So the heat rate associated with gas turbines wasn’t just gas, but the efficiency rate of that gas being used was improved by 50%, right? So the heat rate is the amount of energy required to convert it into a kilowatt hour of electricity. So part of the reason why it wasn’t just that it was a switch to gas, but that actual gas was monumentally improved because of the lights of GE and Siemens and MHI on making much, much better turbines. So I know that’s a fact and that had a big part to do with it because that same molecule of natural gas emitted tremendously less to turn it into a kilowatt hour of electricity. I can actually go through technical,

Jason Bordoff: Technical just but to listen to what you’re saying, the view would be one view could be bringing down emissions is very important. We’re all good. We don’t need policy for that. The market’s doing that and that’s going to continue and we have a high degree of confidence in that and everything’s fine. That’s different than we got to make sure that happens and it is a policy priority. And if we’re wrong about that, we need stronger policies to make that happen. My sense is that is not going to be a priority for the incoming administration. I’m just wondering if that’s an unfair characterization. I hope you’re right. And the missions fall even faster going forward than they did in the past.

Paul Dabbar: So as Frank said about the North Star, I like to use a slightly different one to kind of package this all up together. This is about balance and the energy sector is very fragile. It’s really easy to have crises because energy is mostly just in time. Electricity is very, very just in time, but even oil and natural gas and so on is very, very tight storage versus the everyday kind of pushes and pulls. There’s maybe 60 days max natural gas is far less than 60 days. So the energy sector is very, very fragile and things come along. Covid wars happen pretty regularly, kind of disrupting energy and we’ve seen that obviously in this last few years.

And then supply like politics, Iran, Venezuela, whatever. And so the energy sector is very fragile. And so what I call the big four of energy policy topics, energy production or availability, energy prices, environmental impact. And by the way, it’s not just carbon. I’m a nuclear guy. So I kind of think about other topics than just air emissions. Air emissions are important, but I ran the largest environmental cleanup effort in the world. I have some history on this topic and national security. So those are the four big policy points. There’s great degree of history that if you focus on one versus the other that something will happen in politics. Something will happen in a challenge in the world that will cause a disruption. So the one thing that’s clearly an example of that is Europe right now. So they decided to throw a lot of their energy policy, I’ll pick on Germany just as a specific point.

They wanted low cost energy from someone who they thought was going to be from a national security point of view, could be handled through the Heigel trade, produces no wars kind of theory from a couple hundred years ago and focus on environmental topics for solar and wind in a country without a lot of land and not a lot of sun and shut down nuclear because of what happened in Japan. That was our policy. It set up a very fragile situation that something came along IE the war and then they fired up ignite because they hadn’t really thought through all this. And now their energy prices are putting much of Europe into, I mean, we all read this every day. A large part of European’s economic malaise is dealing with energy prices and energy availability. And so they talk almost, I don’t know, 75% of the time now is not about

Jason Bordoff: The conversation in Europe definitely starts with your competitiveness and security

Paul Dabbar: These days in retrospect. And by the way, president Trump said this to Germany at the un, you’re going to regret being exposed to Russian gas. And they laughed at him. And there’s a famous video of that and everyone now knows, including the Germans, that they were wrong. And so that’s an example of fragility, of throwing, forgetting topic one or topic two, just to focus on topic three and topic four or whatever. And so the balance is important. So I think the returning Trump administration cares about clean air and clean water. It’s not against it. He said it, he’s for it, but it’s not going to be number one, number one, and number one. And some people think that carbon is the only thing that you need to care about, period, right? Clearly that’s not going to the case of what President Trump was last time. President Trump is this time, but once again during his last administration to us led the world and it was pretty darn consistent. Once again, we’ve talked

Jason Bordoff: About that. I’ve kept you over time. I want to be respectful of your time, but is there anything from his public statements that on your list that we should flag for people we didn’t talk about or we kind of covered all the big things?

Paul Dabbar: I think from the point of view of balance and energy and economic development support for allies, which in some strange respect was not super strong in the last few years. Engagement with the world and the US strength of where it is in an energy is very, very different than where it was, let’s say eight years ago when you were finishing up in government, and I was just starting this last round, the US position in energy as the number one producer of oil, the number one producer of natural gas, the number one exporter of gas, number three, exporter of crude oil. But clearly the leader in the world of innovation, not manufacturing is a separate topic, but inventing new things, fusion, new batteries, whatever, and US leadership globally in capital markets, which has blown out in the last few years to some stunning level American leadership right here in New York on raising funds, swamps the rest of the world, America’s gapped that out in amazing fashion.

The rest of the world looks at not just tech leadership, but American capital leadership, which has gapped out significantly in the last few years, whether it’s venture growth, infrastructure funds, public equity markets, US swamps that that combo of that power across the board of energy creates a new playing field for the United States on the global stage. And that provides for not only potential deflation and controlling costs globally, but also stability. And because American leadership and energy versus some of these more unstable countries, some of which has some pretty poor governments like Venezuela or Iran, provides for greater stability in the market. So I do think that international component we didn’t heavily talk about on this conversation creates a great opportunity for the world to, as part of American leadership.

Jason Bordoff: Yeah, we didn’t get time to go deep into energy diplomacy and what it means. I will point people to a paper you wrote for the Hoover Institution, which got into a lot of that stuff and was really interesting to read and learned a lot from it and from this conversation. So obviously everyone’s incredibly interested in what the next four years are going to hold. Thanks for helping to explain it to us. Thanks for being part of this organization and having you as part of it really enriches the work that we do from your experience and expertise in public service in the private sector. Great to talk with you and thanks for helping us all understand what’s happening

Paul Dabbar: And thanks for your leadership of bringing together such great people here at Columbia, whether if it’s in your annual conference, but in all the research scholars that you bring on board every year.

Jason Bordoff: Thanks Paul Dabbar, thanks for being with us. Thank you again, Paul Dabbar. And thank you for listening to this week’s episode of Columbia Energy Exchange. The show is brought to you by the Center on Global Energy Policy at Columbia School of International and Public Affairs. The show is hosted by me, Jason Bordoff and by Bill Loveless. The show is produced by Erin Hardick from Latitude Studios. Additional support from Caroline Pittman, Martina Chow, and Kyu Lee. Sean Marquand engineered the show. For more information about the podcast or the Center on Global Energy policy, please visit us online at energypolicy.columbia.edu or follow us on social media @ColumbiaUEnergy. And please, if you feel inclined, give us a rating on Apple Podcasts, it really helps us out. Thanks again for listening. We’ll see you next week.

Over the past month, the Trump administration has declared a national energy emergency, launched an ambitious agenda aimed at transforming the nation’s energy landscape, and pulled back from America’s climate commitments.

At the heart of Trump’s “Unleashing American Energy” strategy lies a complex balancing act: maximizing domestic energy production and infrastructure development while also navigating concerns about the cost of energy, grid reliability, and economic competitiveness. And there are open questions about the implications for the Biden administration’s energy and climate initiatives, including the Inflation Reduction Act, and more broadly for America’s energy transition.

How will this reshaping of American energy policy affect domestic markets? What role will technological innovation play in bridging competing priorities? And how might this transformation impact the delicate balance between energy security and climate considerations?

This week host Jason Bordoff talks with Paul Dabbar about the Trump administration’s energy agenda, and its focus on national security and energy affordability.

Paul is the chairman and CEO of Bohr Quantum Technologies and a non-resident fellow at Columbia’s Center on Global Energy Policy. He has spent the last few months leading the efforts of the incoming Trump administration to put together the U.S. Department of Energy. Paul served as the fourth undersecretary of energy for science during the first Trump administration.

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