 Yeah, welcome back to Think Tech. I'm Jay Fidel. This is Energy in America with Lou Pugliarisi of EPRNC. He's president of EPRNC in Washington, D.C. And he joins us to talk about national and international trends in energy. So nice to have you on the show, Lou. Good to be here, Jay. So we're going to talk today about Joe Biden, about the appointments he's making and what that tells us about the future of energy under his administration and climate change under his administration. So we have a pretty good smattering that's not complete yet, but we should be able to at least get a handle on what he's thinking. We should also talk about how much of that he can realize, Lou, because it's still in play, isn't it? Yes, absolutely. And we live in a political town here in Washington, and we have a lot of policy matters which are based on substantive a lot of political concerns. And I thought what we would do tonight, this afternoon, is talk a little bit about what the existing appointments tell us about where President-elect Biden is going, what the lack of appointments we've heard so far and some of the other critical agencies to energy and climate also tell us and see if we can put a framework on what we're likely to see and what we're likely to accomplish in depending upon your point of view. We'll dig into all of this a bit. So good. And so we have one, I think we have one picture today. We can put that up on the board. Yeah. So I think that the first thing to talk a little bit about presidential transition. And most administrations, they usually leak like a sip. The interesting thing, the only time these administrations seem to do a good job is in the transition. Everyone's afraid if they open their mouth, they'll lose their job. So people pay attention to the rules. They don't leak information. They say they don't know anything and they wait for the big guy to make the decisions. So we have a lot of what we call message discipline going on now. And the interesting thing is we have some information on what's going on, but we only have one directly relevant energy pick. And that's the well-known windsurfer and husband of the Heinz Foundation heiress, John Kerry. And he's the special envoy designate for climate. Some people might, you know, he used to be Secretary of State, but I think he now will be calling himself Secretary of the World. Is this a new job? This is a brand new job. Of course, presidents have the ability to point these czars, give them very lofty titles, let them sit in on cabinet meetings, but he will not be an official member of the cabinet. He can, at the discretion of the president, sit in as a member of the National Security Council along with the power ministries. So he's given a lot of status, right? But we're going to get into a little bit more. But still unknown, and we'll talk a little bit, is who the climate energies are going to be because we need a climate energy czar as long as a world energy czar. We don't know who the head of the Environmental Protection Agency, although Mary Nichols, the current head of the California Air Resources Board, a young woman in her mid-70s. We don't know who the administrator of EPA is going to be. I mean, we don't know, Mary Nichols, as I said, we don't know who the energy secretary, but there are several good candidates out there, including the former Secretary of Energy, Ernie Moniz, sort of really brilliant physicist. We don't know who the Secretary of Interior is, but the former Senator Udall appears to be campaigning for the job issuing press releases on his great that climate work. And we don't know who the head of the Council of Environmental Quality is going to be, but we'll know more later. And I think the other thing is where we get into some of these candidates here and what they mean, and you can stop me whenever you want, is that I'm pretty sure we're going to have a divided Congress. That is, we're going to have require, I would bet not a lot of money, but a good portion of money that the Republicans will pick up at least one of the two seats in the Georgia runoff election. One will be enough to give them control of the Senate and for Mitch McConnell to remain as majority. Let me ask a question at this point that's waiting for my opportunity. Can we put that chart back up on the wall? How many of these people require Senate consent? All of them? No. No. Only three of them. I'm pretty sure possibly the Director of National Economic, clearly Kerry does not require, but Anthony Blinken, Secretary of State, Secretary of Treasury and the Director of OMB, Niranati, who has said some very unpleasant things about certain members of the Republican Senate. So whether they will ask her to apologize, I don't know, but she's going to have a rough road in her confirmation process. I'm pretty sure Anthony Blinken, Janet Yellen, and Brian Deese will sail right through. And I'm almost sure Brian Deese is a direct appointment by the President doesn't require confirmation. Well, you say sail right through, but we live in new times. Yes, let me tell you a story. That's worth talking about. The Secretary of Transportation, Elizabeth Chu, right, is the wife of the majority leader. McConnell. McConnell. She used to be, she previously served as Labor Secretary, she has an impeccable record, but under pressure from the progressive wing of the Democratic Party, particularly Schumer felt a lot of pressure. And he literally tortured that nomination and strung it along for a long, long time. She was kept, and you know, this is quite, in my view, this is, it's not only that she was a very well established and middle of the road kind of candidate for Secretary of Transportation. She had been confirmed as Secretary of Labor. She was the wife of the majority leader. So one can only imagine that there might be some residual resentment in the Senate, and that some of these appointments may get, may get tortured through the process. Why not all of them? Why not? We are at war between the Republicans and the Democrats. I don't think so. I'm pretty sure, first I think the so-called power ministries will get approved quickly. They're not outside the mainstream. There may be some concern over the defense pick, General Austin, but I think that's more because he is a former retired Army, general of the Army, and we need a waiver to have a former general be defense. I mean, a lot of Democrats don't like that. They want a civilian control of the Defense Department. I'm pretty sure Anthony Blinken will go through Secretary of State. I don't see a big problem with that. That's my political. Okay. Well, let me just add my point that I started making before. That is that if this is war or a continuation of the war with the Republicans, either Republicans, they're not going to, they're going to delay everything. Merritt Garland was a good example of how you can delay, never bring it to the floor, never do anything, leaving the president who wants to appoint these people as swinging. And I just wonder, maybe you know the answer. Suppose he can't get his cabinet through. Well, actually, Trump has a lot of experience with this. This is exactly, Trump was the most penalized presidential president in terms of his holding up his cabinet appointments. Now, I don't want to get into, you know, what the specifics are. I'm just talking the reality. The reality is that I will hope that the Republicans will say, look, it's time to put an end to this stuff. There's a few of these candidates that you have any indication of that because right now, they're all solid like a rock. They're not even admitting that Biden won the election. Most I don't see that as a problem. That's going to Biden will become president on January 20th. And the Republicans will recognize that he won. This just has to do with the Georgia election. And figuring out, remember, remember, the interesting thing about this is on January 21st, Trump is the front runner for the 2024 election in terms of the Republican primary. Now, whether he would actually run in 2024, I don't know. But in any kind of objective analysis, he's the front runner. You know, years ago, years ago, I was a member of the Republican Party. To me, he's the front runner. He's the captain of the head, as he used to say in the naval services. So let's go on. So I do think so. I sort of want to focus this a little bit more on energy and climate, but we can get back to the politics. So if you have divided government, there's those things Biden can do on a regulatory side that can make a difference. And even there he has to follow the law. It's not so easy to turn around a lot of these regulatory programs. And it's not easy to do programs which cost a lot of money. He's going to have to figure a way to navigate with a divided government. And that's good and bad news for Biden. Biden is not a radical progressive. In my mind, he's an old-fashioned Democrat. And he doesn't really like this stuff. He fund the police, have everyone eat mung beans and drive their bike to work. He's not for that stuff. Well, and the whole new green deal creates a problem. What I am concerned about, I meant to say this before we began the show, is that here's a guy, whether he seems like it or not, he's in a fragile position. He's got to get his act together. He's got to deal with all these onslaughts of insults and ridiculous lawsuits and so forth and failure of transition. And so he's got a lot issues on his plate. And now he's got some of the sort of the left-hand side of the Democratic Party saying his appointments aren't so good and his policies aren't so good and they want more representation among his appointees. And it's already a squabble. And I'm saying this is the wrong time for a squabble. There ought to be solidarity, don't you think? Wouldn't that be better for the country? At some point he's going to have his sister soldier moment with the far left. He's just going to have to point out to them that their strategy is a loser for everybody. But I don't know when that's going to happen. On the other hand, as we were talking before the murder, he probably secretly, in his room at night, prays for a Republican Senate so he doesn't have to do a lot of these crazy things. I don't think he believes in a lot of these crazy things. Well the problem is he may not be able to do anything. That's not true. That's like a suicidal wish. By the way, he has to in my view, although climate is a huge feature, right out of the box, he has two major legacy requirements as a probably a one-term president. One, get this COVID thing under control. I mean, people like me who live in an energy environment, we think that's the world. That is not the world. The world are two things from Biden's point of view. One, he's got to get this COVID under control. He's going to put a huge amount of his political capital into that. Two, he is going to be spending an enormous effort in building back American alliances around the world. Those in my mind are the two main issues he's going to focus on for the first two years. Yes, climate is going to be a big feature, a big concern, but he's going to be limited by a divided Congress and a budget problem. We have huge budget problems. Going back to the point about building alliances, Kerry, the creation of Kerry's job and Kerry's appointment is probably pretty smart because it doesn't require the consent of the Senate because he can send Kerry out there to negotiate or renegotiate these relationships through the lens of climate and environment. For example, the Paris Accord is largely a diplomatic affair. The two are inextricably intertwined. That is building our relationships back and also entering the climate accord. Kerry is the guy at the point of that. It's just practical. It's what's going to happen. You're going to see conflict between Kerry and the National Security Council and the State Department. Here's why I believe that. I believe that these are traditional, security-oriented Democrats. They have a lot of experience out of the Obama administration, but I don't believe if Kerry came to that and said, look, we need to give the Chinese a pass on Line 9 and Tibet because they're going to sign up for the climate accord. Those guys are not going to go for that. They're going to say no. The security comes first, then comes climate. I think that's where there's going to be a conflict because the Chinese are very smart. They're going to say, look, they've already announced we're going to go to net zero. Let's all get together. It's going to be fine. Someone's going to raise their hand in one of the power ministries and say, what about Line 9 and the human rights of the Uyghurs and the destruction of Democratic rights in Hong Kong? What about all that stuff? Do we not care about that anymore? I see that that's something we need to watch. It's going to be very fascinating to see how they square that circle. I agree with you. There's a lot of issues, and they're all intertwined. They all touch each other. It's a complicated ecology right now. Yeah, and I do think that we have to remember, Biden did announce in the campaign a three basic goals. One, we're going to change the fuel mix in the transportation sector, and we're going to radically reduce our use of fossil fuels, gasoline, diesel fuels for electrons, batteries, electric vehicles. We're going to do a massive program on that. We're going to head to net zero. We're going to get the grid to net zero by 2035 and the whole country to net zero by 2050. By the way, I believe that's an impossible task. I believe they have no idea of the dominance of fossil fuels and how hard and a heavy uplift it is to do that kind of transformation, even in 30 years. Yeah, I agree. Very hard to reach those targets. The only kind of government that is capable of reaching those targets is an absolute government like China. So we may say Biden's going to hit the ground running, but it might be an uphill climb on a rocky path. That's all I want to say. Well, let's talk about his appointment of EPA and Energy. What's the problem about making, why hasn't he named anybody? Is this a politically dangerous set of appointments? I think they are. I mean, I think that there's a couple of other themes I think he's working through. I think one is that he's an old union guy. He believes in labor. And if you look at his secretary of treasurer, the council of economics chair designates Cecilia Rouse and the members, all of that, I think you're going to see a lot of emphasis in structural inequality, even environmental justice. So I think the social justice and environmental justice, that poor people are more subject to environmental degradation, these are going to be major themes. So when we get, so I think he really hasn't really worked out the politics of those other appointments yet. I'm pretty sure as somebody of mine, and he's also balancing this identity politics with the substantive issues he's interested in. And I think we can... But what about backlash? If you appoint the wrong person, you get backlash. Just I'm making this up, but if you appoint somebody who's too far left and has all these progressive ideas, then the right is going to oppose it. And if Mitch McConnell is in charge of the Senate, that's a big problem. If you come too far... If McConnell will be in charge... If you come too far right, then the left side of the Democratic Party is going to oppose it. I mean, he's walking a very narrow channel here, and it's easy to make a mistake. Yeah. And I think, you know, it's not like he has some dinner plans. It's hard for me to think that he doesn't know what the dangers are. And then he's not... And he does have a relationship with Mitch McConnell, and I suspect he will use that. Now, let's see what comes of that. But how much compromise are both sides willing to make? And so would you advise him to wait until after, say, January 5th and the runoff elections in Georgia before making decisions on these environmental and energy posts? So my guess is he doesn't need to wait until January 5th, because even if the Democrats were going to win both of those, and technically they have a tiebreaker with Kamala Harris, the nature of the Senate is that you don't win too many things about 51 to 50. You've got a moderate Democrat... I mean, there's a couple of themes out there, and you know what I mean? Like they're really down on Rahm Emanuel who's being considered for transportation or something. I don't know what... But he's a very hardball, hard-headed, thinking politician. And look at what happened in the last election. They were supposed to control the Senate. They literally... They put hundreds of millions of dollars in candidates, and they lost. They put $140 million to go after Lindsey Graham. They were supposed to gain seats in the House, and they lost at least 10 seats, almost all of them to minorities and Republican women. And the House is at extreme risk of going Republican in 2022. It's very common for presidents to lose a lot of seats in the first-term presidents in the midterm. And the trend in the House is very... So Biden's not stupid. He's been... Well, you know, he said he was not going to appoint sitting members of Congress to these jobs, because he wanted to preserve the Democratic majority in the House. But he appointed two of them already. But who's he appointed? Two in the last couple of days. Fudge was one of them. I don't remember the other one. Oh, yeah, maybe out of the House, but he's not going to appoint anybody out of the Senate. No, that would be crazy. House is not that important. Yeah. The party in the House is thin also, you know. It is, but probably if he appoints them from a safe district, they can win in a special election. That'll be okay. The House problem is more when the whole House runs in two years. That's his problem. And he's got to know, looking at history, that he's a huge risk of losing the House. So I guess, you know, when you say that his appointments reflect the future of energy and climate in this country, and certainly they do. I'm saying they reflect what he's trying to do. Yeah, okay. All right. What he's trying to do. I guess there's so many questions built into that. One is, can he get his initiatives through? Two is, you know, is he right? And what will ultimately be his decisions about these things? Because he's got, he's in a minefield of, you know, various contentions. We could take a look at each one of these appointments quickly here. For Kerry, I think he may want him to play more of a role in export relevant discussions with the European Union, right? Maybe methane strategy, carbon border adjustment mechanism, these kinds of things. For example, if the EU, what are the problems with individual countries undertaking a climate initiative, which affects the structure of their economy, they can penalize certain industries, which will not be competitive, and then imports could flow into substitute for those. It could be steel, it could be, it could be anything. And so you need some kind of border adjustment. And that's what the European Union is pushing now. They said, look, you want to ship LNG to Europe? You have to, that LNG meets a certain, from the production of the gas to the liquefaction of the gas to the shipment of the gas, that it is meeting certain standards. If it's not, we're not going to let it in, or we're going to penalize it somehow. So that's going to be, I think Kerry is going to be wrapped up a lot in that kind of stuff, those kinds of negotiations. Carbon border. Then the other question is, we have something called the US Development Finance Corporation, which has been very involved in supporting LNG projects, some fossil fuel power systems, mostly natural gas around the world. So what, you know, are they going to step in and stop that kind of thing? I just don't think, I find it that they'd be awesome. I think when you get to Secretary of State, Anthony Blankin, I'm sure he's going to be actually relatively hawkish on Venezuela, on oil producer, and Iran, also an oil producer. Although he worked on the Joint Comprehensive Plan of Action. I mean, there's a lot of talk in the post, in the times about them re-engaging with the Iranians. That's a long road. Oh, they've said as much. Yeah, yeah. And actually, we don't know yet how Kerry is going to interact with the rest of the agencies, which have very standard kinds of responsibilities. I think the interesting to watch is this near attendant. She has been nominated to be the head of the Office of Management and Budget. She's the head of the Center for American Progress, a left-leaning think tank that has reportedly received donations from fossil fuel companies. So she's going to get some attack on the left, but she, you know, I think she's likely to be very active in this social cost of carbon debate. That's kind of an inside baseball issue within the US, but social cost of carbon and calculating carbon emissions and cost benefit analysis and approving projects was a very big deal in the Obama administration, and it was largely repealed by Trump. And that's the question of how should you, if I'm developing an oil and gas project or getting approval for a pipeline, how should I account for the carbon emissions when the government decides it? Should there be some calculation of a damage function from that? And so that's going to be that, so much as a kind of very inside the Beltway fight, that's going to be very active. Well, she may not get the first base on that. If there's one of his appointments that is looking for trouble is her, then you can expect a big fight about her. I expect her to be one of the toughest nominations out there. Yeah. I mean, at least in the energy environment. Yeah, what is, but what does that mean, though, in terms of the ultimate policy? Actually, the ultimate policy is going to be largely regulatory initiatives, mostly in the power sector. There may be other issues in what you could accelerate research for batteries and R&D and cooperative R&D. It is not going to be substantial movement in costly measures for energy transformation in the next four years. There's just not going to be that. There's just no concern. That takes a consensus. If you're going to impose large costs on the American people, you need a consensus. Throw something at you. Yes, I mean, I think there'll be arguments about it. But Biden has to, initially, he has to fix the things that got broken during the Trump administration, which were often for bad reasons or no reasons except personal reasons. I mean, it's just perfect where right now the Trump administration is going after Facebook. And the reason is that Facebook made warnings about his remarks over the election. And it's clear that it's not a matter of policy. It's just a matter of his personal view of things and using the whole government as a way to get even. It's just really despicable. But there's a lot of things that he's done for the wrong reasons. And Biden is going to have to address those things. It's going to take him a while to reverse those things. And he really can't get to taking new initiatives in a direction he would like to see until he deals with the problems that Trump has left him. It'll take a while. But I would be careful, because I think there are plenty of people on the left who also think these technology companies have too much power. So I would be cautious saying that there isn't a left, right nexus to kind of reign these guys in a bit. Each group has a different view of what the problem is. I wouldn't disagree with that. I think they should be reined in. The problem is, for all intents and purposes, a lot of the things that he has done are personal. And they are not based on policy or considerations or the benefit of the country or good American interests in general. They're just stuff that he has come up with. I remember he went after TikTok because they fouled up his appearance in Tulsa. Remember that? And nothing to do with whether TikTok was good or bad or even the China connection. It was because he was ticked off at TikTok. So we can't afford that. And I think under Biden, we're not going to have that. If you want to look for distinction, that would be one major distinction. I would argue that that's absolutely correct. We're going to have something what we used to call a regular order. In other words, we will have substantive reasons. We will probably do something to TikTok. We'll have nothing to do with making Trump look bad. Because TikTok represents certain security concerns that intelligence agencies are quite nervous about. But we're going to have, I think this will be the positive, what I consider a very positive aspect. Trump was a very chaotic leader in this. Can we quote you on that, Lou? And that with Biden, you're going to get, I'm not saying you're, I'm not saying that people in the lab or conservative people, you might consider me slightly right as Senator, you're not going to see people like me necessarily agree with everything Biden does. But I think it's going to be a substantive fight. It's going to be, okay, this is what we want to do is they're going to make the case for it. And it's not going to be personal. It's going to be policy. It could still be wrong. Well, you know, I, you know, I agree with you. And I think that from the Biden side of this and his appointments, you know, which are the subject of our discussion, we're going to see policy, policy people doing policy. It's not going to be personal. It's not going to be political. It'll just be policy. On the other hand, and maybe this is something you and I should follow and down line shows particularly about energy, we have to look at the Republican side too. And if you take a page out of Mitch McConnell's book and the Republicans look how tight they are even in, in, you know, in this crisis right now, there's a fair chance they're going to continue the same kind of thing that Trump was doing and that McConnell was doing. And they're not going to be looking for policy as befits the country. They're going to be looking for policy as befits the politics. And that is really tragic. And if you ask me which side, you know, the Democrats or the Republicans are more likely to do that. Clearly it's the Republicans. Well, I'm not going to depend on the Republicans on this, but Nancy Pelosi said on a $1.8 trillion package for COVID. She's now saying that Biden has won the election. She can agree to $800 billion. So she had $1.8 billion in the bag, but it wasn't enough. So the both sides have their, they're up to their necks in politics. They're not, I mean, I would be cautious about, don't fall in love with either of these guys. Okay. I do think the benefit of Biden, as I said, is we're going to get regular order. That's actually worth a lot. But politics never goes away. That's the nature of Washington. I mean, you know, okay. All right, Lou, one thing is, one thing is clear, we're going to have this conversation again. And we're going to have it with the, you know, indubitable benefit of seeing it unfold now and in the future after the inauguration day. And we will, we will ask this very question again and see who's doing what and why and the benefit to the country. And of course, the benefit to our energy policy. This coming Tuesday evening, 7 p.m. Eastern Standard Time, we're going to be doing a very large open webinar on the future of LNG in Asia. So I'll send you a link. Be happy to share the invitation with anybody. Okay, great. We need to know about that. We need to follow that. And that is, you know, totally related to our foreign policy in Asia. So we need to look at it because that's the future. Thank you so much, Lou. So nice to have you. Good to be here. I'll see you and talk to you and have these discussions with you in these very difficult times. And I hope to see you in person one of these days. Looking forward to that. Aloha.