Transcript
INTRO
Jigar Shah: I'm Jigar Shah, a clean energy entrepreneur.
Jamie Nolan: And I'm Jamie Nolan, a clean energy communications executive. And this is Energy Empire. Jigar, I miss sitting next to you. What's happening?
Jigar Shah: That podcast studio that we had in New York during Climate Week was amazing.
Jamie Nolan: Yes, thank you so much to the team at Theorist for hosting us last week in New York in their brand new, beautiful studio space in Midtown. We loved it, and the team there was so nice, and it was wonderful being in person with people. It also made the whole thing feel so much more pleasant and so much easier that now I'm like, oh, I'm slumming it back in my beautiful home office.
Jigar Shah: I also heard you got a lot of social media attention, Jamie.
Jamie Nolan: I don't know about that. All I know is 4K requires a lot more makeup and hair, and so I did have to make a more significant effort on my appearance. And our producer tells me that he's using my thumbnail in the clips, and that he may or may not have seen a boost in the performance of the clips.
Jigar Shah: Oh my gosh. I love the dancing, the dancing that you're doing here. Like, look, you were looking fine.
Jamie Nolan: A lot of people on social media responded to it. My husband and I have been together for 17 years, and so I was pretty excited to tell him about it. I'm not gonna lie.
Jigar Shah: All right, so today we are hosting Senator Heinrich. I have known the senator for a very long time, and I think he's probably one of the hardest working folks in the Senate. He is constantly trying to figure out different angles and how to get American infrastructure built. And his latest project is permitting reform, which is bonkers.
Jamie Nolan: I mean, I hear a rumor that they might get it done. So I'm very excited about this.
Jigar Shah: But the other piece of it is, as you know, energy is on the ballot, and we have that whole special series that we're doing. And I can't even imagine that this is even top five on anyone's to-do list. There's a bunch of our friends who care about this stuff, but the average voter I can't imagine is following permitting reform.
Jamie Nolan: So, Jigar, for the average American voter that is listening to our podcast because they want to understand more about energy, but perhaps they don't work in this industry, talk a little bit about what permitting reform is and why this matters. What is the legislative fix that we are seeking from this bill?
Jigar Shah: Well, the original sin, as many people know, is that when it came to fighting fracking and the Keystone XL pipeline, a lot of people weaponized the permitting process. And now that same weaponization is being used against transmission and solar and wind. And so a lot of what's behind permitting reform is eliminating the ability to use federal permitting as a weapon. You can still oppose projects locally, right? County permits, water permits, other things. But you can't get the federal government to act in a political way during the permitting process. And so that really is the main goal of permitting reform. And I'm all for it. I think that the notion that we should have the federal government treat different types of infrastructure differently depending on who's president drives me crazy.
Jamie Nolan: So what kinds of permits does an energy development need, and how long, just a ballpark guess, does it take to get those permits?
Jigar Shah: So when you think about things like the Lithium Americas project that we worked on to give a loan to, that process took, I think, 4 to 5 years to get them the NEPA and other Bureau of Land Management permits. The consultation process with the tribes, all the other work that had to be done. The same thing is true for transmission lines, which easily can take 4 to 5 years to go through the process of getting every single locality to opine on these things. And it doesn't have to be that way. When we were looking at a loan for Grain Belt, we got most of that NEPA process completed in a year and a half. And that's the National Environmental Protection Act. And so these things get weaponized in ways that make no sense. The strict work that the federal government has to do can take six months to a year and a half to get done. And a lot of times these projects stretch for 4 or 5 or 6 years just because folks want to slow things down.
Jamie Nolan: It's so true. And so the timing of this is actually very interesting in that regard, because you would think that going into this very important midterm election, Congress would be focused on the issues that matter most to the electorate. And I think the average American almost certainly has no idea what this bill will do. So I wonder if this is just the moment that they felt they could get it done. Did they feel like they needed a win? You are sitting for this interview on your own with Senator Heinrich, but I want to understand that, and what he thinks Americans need to understand about why the Senate is prioritizing this legislation at this moment.
Jigar Shah: Yeah, it'll be fascinating to hear what he has to say.
ELECTRICITY IS ON THE BALLOT
Jigar Shah: Hey, Senator, how are you?
Martin Heinrich: I'm great. Great to be here.
Jigar Shah: Well, it feels like energy is on the ballot and everyone's talking about it. I think governors from Texas to Pennsylvania are talking about it. I guess gasoline has always been on the ballot, right? And gasoline today is over $4.50 a gallon. But now it feels like electricity is on the ballot.
Martin Heinrich: I agree. And electricity was on the ballot before gasoline and the Iran war really took off. So people are talking about energy across the board. They're talking about gas, diesel, electricity, all at the same time.
Jigar Shah: So what are you suggesting to your Democratic colleagues around how they should talk about energy this election cycle? Because it's obviously something you've been an expert in for many, many years.
Martin Heinrich: I've just been urging people to focus on some of the most straightforward solutions. Things take time, but nonetheless, you have to have an agenda that says, I'm going to work like hell to make your electricity bills lower. I'm going to try to bring down the price of gas and diesel. That obviously goes back to the Iran war. But part of permitting reform is cheaper energy, cleaner energy, more jobs. Those are things regular people relate to.
A STERNLY WORDED LETTER IS NOT A LAW
Jigar Shah: So, one more question I have for you before we get into permitting reform. You're obviously from a complex energy state, one that has a lot of oil and gas. When you look at poll numbers right now, voters trust Democrats over Republicans on energy, but it's still sort of neck and neck, and there's a lot of folks who don't trust either party. What can Democrats do, in your mind, to regain trust from voters?
Martin Heinrich: In the context of this election, we have to have solutions on deck. And then in the context of if we actually win this election in both the House and Senate, we actually have to do stuff, not just talk about doing stuff. And this kind of goes back to what we're wrestling with this week in the Senate with this bill from Senator Husted. The bill basically says to the big load folks, the AI data centers, the hyperscalers, we're going to send you a sternly worded letter that says you should not pass the costs on to the public. I don't think that's a solution. I think the solution is to say in law, data centers, you're not passing your cost on to the public. If we do things like that, that are easy for people to understand and are not smokescreens, that are real, then we'll begin to win over that trust.
Jigar Shah: Okay, one more question on this, just because you brought it up. Part of my concern right now is I feel like the hyperscalers are probably doing fine, and it's the electric utilities that are playing games. In Entergy Arkansas, Google offered to pay for 100% of the costs, and Entergy Arkansas was like, we would rather that go into the rate base, and therefore we can make money on it for 25 years. Isn't this more around figuring out how to get the utilities to participate in a new way of doing business?
Martin Heinrich: No, I actually think it's the hyperscalers, it's the utilities, and it's the public regulatory commissions. They all need to be aligned that incremental costs that are necessary to upgrade the grid for whatever the large load is, and data centers are the thing that's on everyone's mind, but if it's a big factory too, should be borne not by the consumer. The consumer did not create those costs. They shouldn't be passed on to the consumer.
THE STATES CAN'T JUST SAY NO
Jigar Shah: Well, we totally agree on that. Just jumping now into permitting reform, you and Senator Whitehouse have negotiated a bipartisan permitting deal with Senators Capito and Lee, your Republican counterparts in your respective committees. Can you give us a brief overview of what the Bipartisan American Affordability and Jobs Act does?
Martin Heinrich: I'll do my best. It's a pretty big bill.
Jigar Shah: The highlights. Give us the highlights.
Martin Heinrich: As you can imagine, there are a lot of different pieces it touches on. From my point of view, I've always been really focused on transmission, because that's always been a bottleneck for getting more electrons on the grid, and especially getting more clean electrons on the grid. And so this goes further than any transmission title I've seen in the past. It goes further than what we negotiated a few years ago that made it out of the committee but not to the president's desk.
It really strengthens the federal backstop authority in a way that is going to mean that when you have whatever the large generation is, so you've got a lot of wind in the Midwest, but you need to run it across the state to get it to a large demand center, the states can't just say no, never, don't even talk to us. They get a year to come up with an appropriate route, and then it goes to FERC. And FERC has a very robust planning process built into this too, so that we can start thinking not just reactively about transmission, but what do we actually need 5, 10, 20 years from now, and build towards that.
That transmission section also does things that I think are really important in terms of, if you're going to stay in the same right-of-way, you can take a transmission line and reconductor it to some advanced conductor that moves a lot more electricity without hitting restart on the full NEPA process. We also make NEPA faster and more straightforward. You get a year to do an environmental analysis or assessment. You get two years to do an environmental impact statement. We run processes in parallel instead of in series to speed things up. So your NEPA process and your National Historic Preservation Act process run in parallel tracks.
A SHOT CLOCK ON NEPA
Jigar Shah: I love all this. As you know, when I was running the Loan Programs Office, we were trying to use 1706 to do reconductoring, et cetera. So this is going to make a lot of those tools far more effective. But one of the sticking points in passing permitting reform was the environmental review processes designated under the National Historic Preservation Act and the National Environmental Policy Act, NEPA. So how exactly does the bill change the environmental review process in regards to permitting?
Martin Heinrich: It puts a shot clock on these permitting analyses. They cannot be endless anymore. And I think that's important, because when the agency has a requirement to do things in a certain amount of time, they're going to have to meet that requirement. Before, we kind of had this endless analysis paralysis that would just never get to an answer.
You can still sue to challenge some of these decisions, but you don't get to wait five years to do it. You have to actually make comments when the government is looking at the NEPA or the NHPA at the beginning, and then you have 150 days to file your court case. You can't wait five years down the road and then file a court case.
NO NEW SURCHARGE FOR THE DATA CENTER
Jigar Shah: That's an amazing, amazing advancement. How does the permitting deal, in your mind, address AI data center buildout?
Martin Heinrich: It has mandatory statutory language that says if you bring incremental costs to an area, you can't pass that along to the consumer. So you can figure that out between you and the utility, but you're not putting a new surcharge on somebody's bill to help with the plug-in cost for that data center.
REAL FINES FOR TARGETING ONE INDUSTRY
Jigar Shah: That's great. We've seen the Trump administration slow-walk wind and solar project approvals. How does the Bipartisan American Affordability and Jobs Act protect certain energy projects from being attacked and targeted by the executive branch?
Martin Heinrich: A couple of different things here. One is we were making a lot of progress, actually, with the White House about, if we land this permitting bill, you need to release these projects, whether that's wind or solar. And then last week things got a little rocky, where the White House tried to speed up the process. But in my view, we had some risk that by speeding things up, we were actually going to force people into no votes prematurely that would get stuck at no, because they had voted once against this package. We had to kind of slow things down, come up with a process that both sides could support, and we're going to have to re-engage and make sure that those projects are going to get what we were discussing in those negotiations, which was sort of permitting by regular order.
There's also substance in the bill that makes it very uncomfortable for an agency to not process permits. And there's a large litigation risk if you single out a single industry separate from the others. So if you're permitting along in 2023, 2024 for solar projects, and then you hit 2025 and it goes off a cliff, and you can show that your industry has been singled out, there is additional recourse that you can get from the courts that is quite expensive for the administration. So we put some real fines into the legislation if you're targeting single industries.
WHAT 60 VOTES COSTS
Jigar Shah: Which goes both ways.
Martin Heinrich: That's right. And that's the balance of this legislation. We were not going to pass an Inflation Reduction Act in a bipartisan Congress. We have to build 60, 70 votes. And that means that we're creating a lot more certainty for wind, solar, batteries, renewables. Geothermal gets a lot in this bill, which we should probably talk about as well. But it also means that Republicans who were invested in reforms to the Clean Water Act, because there were certain states that were using the Clean Water Act basically as a veto for any new natural gas infrastructure, they got certainty around that too, and the same sort of rebuild in the same right-of-way that transmission gets. And that's the balance that allows us to put a bipartisan bill together.
HARDER TO DRILL THAN AN OIL WELL
Jigar Shah: Give me more on geothermal. What do we get in geothermal here?
Martin Heinrich: Right now it's so much harder to drill a geothermal well than it is to drill an oil and gas well on the same acre of Bureau of Land Management land. And this language tries to level that and make it a non-major action when a single well is analyzed. You shouldn't have to do NEPA for every single geothermal well. It should be more like oil and gas, where you know that there's going to be certain impacts and you have to analyze for those, but you can do it on a whole host of wells at the same time.
PLUGGING IN A REACTOR FASTER
Jigar Shah: I think you know that nuclear power is particularly complicated. Is there something special here on nuclear, or is that mostly dealt with in the ADVANCE Act or other pieces of legislation?
Martin Heinrich: Not as much in this legislation, except that we make it easier to plug into the grid across the board. We kind of tried to do what ERCOT in Texas does in terms of letting people plug in easier. The Republicans did not want to accept mandatory curtailment language, but we keep the ability of the regional transmission authority to require that anytime you get grid congestion. So this is a version of connect and manage. And we also require the RTOs to start using actual automated modeling, so that if you're going to do the grid study route and want 24/7 firm power anytime you want it, you can automate that. So you can do it in a matter of months, or maybe even weeks, instead of years. So generally, whether it's a large old-fashioned light water reactor or a new SMR, your ability to plug into the grid is going to move a lot faster.
JOBS ARE NEVER A BAD MESSAGE
Jigar Shah: So part of what we talked about earlier in the conversation is that energy is on the ballot this year. But I think you and I would agree that the average voter probably is not steeped in permitting reform. So how do we get all these senators to prioritize it right now?
Martin Heinrich: Well, the House and Senate have not done a lot to lower energy bills. So I think there is an opportunity for folks who support this to at least be able to go back to their constituents and say, this is what I'm doing to lower your energy costs. And jobs are never a bad message for any elected official. So the amount of construction work that we would be unleashing, of linemen and laborers and all the different skilled trades that are involved in the buildout of transmission and pipelines, that's substantial as well. So I think there is a real winning message here. There are going to be folks at the edge of the hard right conservatives that we lose, and that's okay. And there are going to be some folks on the left that we lose, and that's okay too.
Jigar Shah: That's how you know you got a good bill, probably.
Martin Heinrich: There you go.
A HOUSE THAT'S NEVER IN SESSION
Jigar Shah: And so I think the House has announced that they're out of session until the election. Do you know that you have the House votes here?
Martin Heinrich: I've never seen a House that's been out of session as much as this one. But what has changed in the last few weeks is the engagement of the White House. They seem to have really woken up to this legislation and the fact that they have an energy problem generally. So I do think the House tends to follow the president. I think we're going to be able to win over a number of Democratic votes because of the clean energy and transmission and geothermal stuff that's in here. Things that are a little more in the weeds, too. I know some of my House colleagues who really care about grid enhancing technologies and requiring those to be analyzed, so that if you've got a cheaper way to do power flow controls instead of building a brand new transmission line, that's in this legislation. Virtual power plants are in this legislation. Distributed energy is going to have a seat at the table in the wholesale power markets now. I know there are some House members on the Democratic side who care a lot about those things. So hopefully we can put the coalition together. We've got our work cut out in the Senate first, and that's what we're focused on right now. But the work is going to start building in the House as well.
Jigar Shah: Yeah, I was super impressed to see the Department of Energy put out their Spark program and the $1.9 billion for grid enhancing technologies and advanced conductors. So it does feel like there's starting to be some understanding that you can't have energy dominance without all of the solutions on the table.
Martin Heinrich: Yeah. And we're going to need a lot of those grid enhancing technologies and virtual power plants and demand response, and a lot of tools in the short term, because it's going to take time to build that transmission down the road. Those projects are large, they're linear, they take time to both analyze and to build. And in the meantime, we have this grid that is hungry for new electrons.
WHY NOT WAIT FOR THE GAVEL
Jigar Shah: Well, look, you've been leading in this area for a long time. There's obviously an election this fall. There's a chance that the Democrats take the Senate, and then you'd have the gavel. What is the plan in your mind? What are some of the highlights of what we would have to do to really reduce the cost of energy for the broadest number of people?
Martin Heinrich: I think this is a great start. And my take on things is, some people have asked me, why don't you just wait until you have the gavel? There's probably a 55% chance that...
Jigar Shah: 56%, I think, today.
Martin Heinrich: All right, it keeps going up. I like that. Why wouldn't you wait and just cut a deal in the next Congress? And what I've found is, when you have an opportunity to do something that is good policy, do it. And then in the next Congress, whatever got left on the cutting room floor, start working on that.
I would love to do more on small modular reactors. I think that's a space that is gaining real traction and interest in my state. Obviously, the price point there is still a challenge. I want to go further on geothermal, and there are several different avenues of advanced or enhanced geothermal that get at these problems in different ways. Having those options for the baseload clean power to complement wind, solar, and batteries, long-term storage, is something I think we need to continue to incentivize. There's going to be plenty to work on in the next Congress without even getting to oversight of some of the silly things that have gone on in the last two years. And then there's just the work that the committee does on public lands, that people are really engaged in right now because of the budget bill's effort to sell off public lands. That is the one issue that has united my constituents across the electoral spectrum.
ENERGY IS CHEAPER WHEN IT ISN'T POLITICIZED
Jigar Shah: It does feel like the Inflation Reduction Act and the OBBBA in some ways politicized energy. And it does feel like this bill is your valiant attempt to depoliticize energy. And it feels like the White House is meeting you halfway to realize that, look, America is stronger when energy is not politicized. Is that your sense?
Martin Heinrich: And energy is also cheaper when energy is not politicized. The irony of the last two years from this administration is that almost every action that they have taken, I would argue, had the incremental impact of raising energy prices. So instead of taking a project-by-project approach, say, to liquefied natural gas exports, they basically threw the doors open and said, it's all good, we're going to process as much as we can. Well, eventually, when you hit a threshold, that starts driving up the actual cost of residential gas, of gas to the manufacturing sector, of gas that spins turbines for electrons. If you look at what they did on coal-fired plants, requiring these clunky, old, on-their-last-legs coal plants to stay plugged into the grid when there are much cheaper alternatives for those utilities and co-ops, that's keeping energy prices higher. They were also, as you mentioned, keeping the cheap green electrons off the grid. All of that added up. And then we got this war in Iran. And because of some of the impacts I've seen there to refining capacity in particular, I think we're going to see these diesel prices high for a long time. So anything we can do to help that other stuff, to put more electrons on the grid and pick the cheaper generation, that's the stuff that we can take back to our constituents and say, hey, we're working on bringing down prices for you.
IF YOU'RE CALLING PEOPLE RATEPAYERS
Jigar Shah: One last question from me. It does feel like, for as long as you and I have been working on these issues, the electric utility was the go-to expert on figuring out how to provide reliable electricity to people. It feels like the confidence that governors have that they're getting the straight scoop from electric utilities is waning. And that's why you're seeing a lot more pressure to put innovation back in the system, whether it's grid enhancing technologies or virtual power plants, et cetera. How do we convince electric utilities that they need to reorient themselves into the public good? Because it feels like they were, in some ways, preferring shareholders over ratepayers a little bit too much.
Martin Heinrich: Well, I think if you take the temperature of ratepayers, you would know that that is how they feel about the situation. And it is a balance. You have to reinvest and serve those customers, but you should also do it in a way that is most efficient, not in the way that rate-bases the most expensive equipment, for example. I think it's a cultural challenge for utilities to, one, be less conservative, small c, meaning that once technologies are truly proven, be willing to implement those technologies, and, two, be customer oriented. If you're calling people ratepayers, you're probably making some mistakes in policy and in generation and in transmission too, because you're just viewing them as who pays the bills so that we can pass on dollars to our shareholders. The connection between customers and utilities has a lot of room to grow.
Jigar Shah: Well, I think that's exactly right. Senator, I know you're busy. Thank you so much for spending time with us. And hopefully, congratulations on a successful permitting reform bill, because I think that America needs to do big things again, and this is what it takes.
Martin Heinrich: Couldn't have said it better myself. Thank you.
DEBRIEF
Jamie Nolan: It was so good to have Senator Heinrich on. He is such a class act, and I just can't even imagine the process he had to get through to get to this point.