Fast-Track Hack

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Good morning and happy Friday,

A recent analysis of the IRA's impact shows that for every $1 invested by the government, the private sector has spent nearly $5.50, although attempts by Republicans to “repeal or otherwise roll back provisions and funding sources in the IRA is making some investors squeamish.”

Meanwhile, Beijing is doubling down on solar and seeking to “master global markets and wean itself from imports.” And even though Florida doesn’t have wind energy, lawmakers want to ban all wind power anyway, including offshore wind turbines in state waters.

And while climate change may be a key differentiator in presidential politics, its influence doesn’t stop there – it’s a high-stakes issue in many down-ballot races as well. ‘Bring it,’ says Biden’s climate chief, who argues that clean energy spending is winning over Americans.

Read on for more.

Fast-Track Hack

We’re all familiar with the real estate maxim “Location, location, location.” Well, if a wonky pop star has his way, many clean energy advocates may soon be saying “Co-location, co-location, co-location” – as in, co-locating wind and solar projects on federal lands that have already been approved for oil and gas production. Here’s the idea:

It’s no secret that permitting is “causing a devastating slowdown” in the clean energy transition, as thousands of megawatts of wind and solar projects languish, mired in red tape.
Adam Met – the A in AJR, a multi-platinum New York indie pop trio he formed with his two brothers – is also a policy wonk with a PhD in sustainable development. His plan to expedite the transition to cleaner energy is simple: piggyback on existing energy permits on public lands.
In theory, this could work – once a particular use of public lands has been authorized, the Bureau of Land Management can authorize additional, compatible uses – and the agency “recognizes the potential value of co-locating renewable energy projects with existing fossil fuel resource development.”

⚡️ The Takeaway

Innovation needed. This short video offers an overview of the plan, and Met says his team has “identified some 23 million acres of land that is already producing oil and gas that might also be suitable for wind and solar development.” Innovative ideas like this are certainly needed. As Invenergy founder and CEO Michael Polsky articulated in the WSJ, “the energy industry is a problem-solving business,” but politics and bureaucracy can bring infrastructure projects “to a screeching halt.”

Budget Briefing

On the heels of the SOTU address last week, President Biden introduced his proposed $7.3 trillion budget for fiscal year 2025, which included several items of interest to the energy sector. Here are a handful of highlights:

The Department of Energy non-defense related spending (about 35% of the department’s overall budget) would increase to $17.9 billion, including boosts for State and Community Energy programs, grid deployment, the EIA and the Office of Energy Efficiency and Renewable Energy.
Biden requested $17.8 billion for the Interior Department, and $11 billion for the EPA, in addition to asking for more than $1 billion to “strengthen environmental review and permitting processes across the government” – an area where Senator Manchin is renewing his focus.

The proposed budget also calls for an additional $5 million to support the $27 billion Greenhouse Gas Reduction Fund. If you need a cheat sheet for this weekend’s cocktail parties, here’s a long list of all the things Biden’s proposed budget offers in terms of climate and energy.

⚡️ The Takeaway

AI-eyes on the markets. The Federal Energy Regulatory Commission makes its own budget, which, for the fiscal year 2025, proposes to increase by 4.6% to $532 million. This includes a 32% jump in funding to support investments in IT, with a focus on artificial intelligence. The agency notes that using AI “promises to enhance efficiencies across various FERC program offices,” which may be a reference to its duty to be on the lookout for market manipulation in the power and natural gas markets.

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AI, Feed Thyself

Technology, and particularly AI, uses a LOT of electricity – an obscene amount, in the words of Elizabeth Kolbert, a Pulitzer Prize-winning author and staff writer at the New Yorker who covers environmental issues. “How can the world reach net zero if it keeps inventing new ways to consume energy?” she asks.

Good question – and the statistics she presents are sobering. One estimate says ChatGPT alone is consuming more than a half-million kWh of electricity (about the same amount as 17,000 U.S. households) every day, a figure that is expected to grow.

And a paper published last fall estimated that “if Google were to integrate generative A.I. into every search, its electricity use would rise to something like twenty-nine billion kilowatt-hours per year. This is more than is consumed by many countries, including Kenya, Guatemala, and Croatia.”

Bitcoin is another energy beast. The watchdog website Digiconomist tracks the staggering environmental impacts of cryptocurrency, which include consuming more electricity and producing more CO2 emissions than entire countries, not to mention an iPhone’s worth of e-waste for every transaction, and water use on the order of two trillion liters per year.

Yikes. But fear not – the AI industry is working on finding solutions, “partly to fuel itself,” with a focus on nuclear fusion. Let’s hope AI can crack this code quickly!