Podcast - Clean Energy, Part 1: Opportunities

Jim Davis: Hi, this is Jim Davis with Holland Knight, thanks for joining us for this podcast. With me today are Vanessa Sciarra and my law partner, Francisco Sanchez, and we'll be talking about clean power opportunities and challenges. Vanessa is vice president of trade and international competitiveness at the American Clean Power Association. She has been a leader in Washington for many years in the trade community, including more recently as vice president for legal affairs and trade investment at the National Foreign Trade Council. And before that, a very successful lawyer in private practice with Holland & Knight in Miami and Washington, D.C. Francisco Sanchez is also joining us is a member of Holland & Knight. He is a former high-ranking Obama administration official in the Department of Congress. He was the undersecretary of commerce for trade. He also served in the Department of Transportation under President Clinton and is a graduate of the Kennedy School at Harvard. So thanks for joining me today. We're going to be talking about the American Jobs Plan proposed by President Biden in a two-part podcast. Our first will be on opportunities and the second section will be on challenges.

The American Jobs Plan, which many of us are familiar with by now, is the boldest initiative of President Biden. Beyond getting control of the COVID situation and vaccination, it is his plan to keep a campaign promise to invest in American infrastructure for the sake of competitiveness, both at home and abroad. Also, his commitment to restoring high-wage jobs, particularly labor jobs in distressed parts of the country by building high-end, long overdue infrastructure. And thirdly, in many ways, most importantly, to advance his commitment to meaningfully tackle climate change and to not just restore infrastructure, but to modernize it with respect to clean energy and renewables. So these will be the topics we'll be discussing today. The American Jobs Plan is being negotiated now, and it's unclear what the magnitude is going to be. But clearly, the ingredients I cited were going to be essential to a bill that is passed in Congress and ultimately signed by President Biden. So let me go ahead and turn it over to Vanessa.

Does Infrastructure Include Clean Energy?

Vanessa Sciarra: Thanks, Jim. So I am the vice president for trade and international competitiveness at American Clean Power Association, which is a new trade association. So ACP, as we call it, was created a few weeks before President Biden was inaugurated, and it was created to create a trade association that would work towards the same climate goals as the administration, approaching issues of clean energy from across the range of technology. So we represent wind, solar, storage and transmission companies. We champion policies that will transform the United States power grid, aiming at a low-cost, reliable renewable power system for all Americans. And the key concerns of our members are policies which support that clean energy deployment at a utility-scale level. So we are talking about really large projects that will serve relatively significant utilities and communities. I thought I would cover three topics that Jim touched on in his introduction. First of all, the question is clean energy infrastructure, which is an interesting discussion we're having across Washington. Secondly, I'm going to talk about domestic supply-side incentives in manufacturing in the U.S. And the third issue I'll touch on is workers and workforce concerns because I think that's very important in the debate.

So first of all, what is infrastructure, and does it include clean power? I would answer unequivocally, yes. When I think of infrastructure, I think of a range of clean energy options to serve American energy needs. And that to me has to be infrastructure. In my mind, looking across the American economy, those clean energy solutions are as important to our communities and our workers as bridges, roads and ports. The reality is that America's electricity grid is aging, and like many of our other infrastructure programs, it is 50 years old and that is an old age for infrastructure. With that aging grid comes challenges, and I think we've started to see some of those challenges in some of the critical failures that we've witnessed most recently in Texas. The problem is that you have to build for the twenty-first century and you have to invest in modern transmission infrastructure in order to provide reliable, safe cost-effective power. Again, because the system is older, we're already behind the curve on infrastructure for energy generally and for clean energy particularly. So that's sort of the first part of our platform, is that we believe that clean energy is infrastructure and should be included in any infrastructure legislative solutions.

In my mind, looking across the American economy, those clean energy solutions are as important to our communities and our workers as bridges, roads and ports. 

What Does It Mean To Increase the Domestic Footprint for Clean Energy? 

Vanessa Sciarra: The second issue to talk about is what does it mean to increase the domestic footprint for clean energy? So people often think about taking the U.S. economy and making everything here. And the reality is that's a very tall order. We have obviously seen a lot of our clean energy technologies move to Asia, and I'm not going to hide the ball here. We know that many of those solar and wind capacities have moved to China, particularly in Asia. So I often get asked, well, why don't we just adopt some of the Chinese solutions and learn from people who have been really effective at building out these sort of manufacturing supply chains. I think the simple answer is - we're not China. And because we're not China, we don't want to engage in economic policies, which frankly are entirely inconsistent with our values and with market principles. Those types of economic levers that the Chinese government has used include heavy state subsidization, frankly, theft and copying of intellectual property and trade secrets and predatory pricing behavior in third-country markets, many other things. But these are all economic tools that we would not want to engage in necessarily, because, as I said, they're inconsistent with how the American economy and the American value system are built. So then the next question I get asked is how is the United States supposed to respond to that? At ACP we talk about this a lot. We think the U.S. agenda should focus on incentivizing industry but allowing market forces to work so that U.S. industry can do what U.S. industry does best, which is innovate and be nimble in its responses. The American technological growth clearly shows that we are great innovators and we are very good at finding solutions to problems, even when those problems seem very difficult. And I think we can all agree that in the clean energy space, we have a lot of innovating that we still have to do. But the overall goals need to be that we're not going to mimic Chinese behavior, but we need to protect the critical technologies that we developed. I think there have been problems with that type of protection in the past. We need to be better at protecting how we innovate. So on the legislative side, when we look at what we call supply-side incentives, what does that include? And for clean energy, that includes a range of basically tax-driven credits to incentivize the expansion of existing capacity and incentivize the building of new twenty-first-century manufacturing capacity in the solar, wind and battery space. That has to be balanced with a wariness that you can invite too much government interference and too much bureaucracy into what industry needs to do to be nimble like I said before. So in our minds, an example of that would be burdensome domestic content requirements that in some ways can hobble industry from building quickly. But obviously, there's a concern that we have enough of a U.S. manufacturing footprint. So how are those balanced? And that is a really important discussion to have - how you balance those things.

We think the U.S. agenda should focus on incentivizing industry but allowing market forces to work so that U.S. industry can do what U.S. industry does best, which is innovate and be nimble in its responses.

Clean Energy Employment

Vanessa Sciarra: Lastly, and not least is workforce concerns, so we know that the Biden administration is very focused on a worker-centered policy, both in trade and manufacturing. How are we contributing to that discussion? And I have a great answer in the form of a Clean Energy Labor Supply Report that we just commissioned. It just went live a week ago, and you can find a link to that in the podcast information. This is a great report to explain in great detail how current clean energy employment and unionization rates reveal that American workers are in good-paying clean energy jobs right now. But more importantly, there's a potential for large job growth in this sector, particularly if we're trying to meet these very ambitious renewable goals of 50 to 70 percent of electricity generated from renewables by 2030. This 2030 date you'll hear a lot about from the Biden administration. Our study does an economic projection where it shows that we're talking half a million new jobs could be created in some very important sectors, including manufacturing and engineering, particularly in the wind tower area. There's a lot of need for engineers. So these are very good jobs. Many of them involve union jobs. And we are very committed to making sure that as our members build out their clean energy capacity, that they are providing good, you know, sort of steady jobs for Americans, particularly Americans who may be moving out of other sectors that are contracting in energy space. So those are sort of the main points I want to make. I'm going to turn it back to Jim and Francisco.

Jim Davis: Francisco, we turn over it to you to offer some comments on how the Biden administration is approaching this or, in your judgment, should be approaching it.

The Politics of Creating an Infrastructure Package 

Francisco Sanchez: Thank you, Jim. It's a pleasure to be with you and Vanessa. I think it might be helpful, before I talk about how Biden is approaching this, to really talk about some of the dividing lines, if you will, politically on the infrastructure plans that are out there, President Biden's as well as some that are floating around in Congress. If you had to net out two of the biggest questions on what an infrastructure package will look like in its final form, you have to start with how policymakers and politicians are defining infrastructure. Vanessa did a great job of outlining a more broadened view of what infrastructure looks like from what it has traditionally been, including clean power. She mentioned worker-centered investments and to that extent, under the Biden plan and some of the more progressive Democratic plans, you see things called human infrastructure that includes child and eldercare. But the dividing line on the definition then is - infrastructure - should it include all of these things that we've just mentioned, or should it be focused on what we have traditionally called infrastructure, specifically things like bridges, roads and ports? The second big issue is how do you pay for this?

The Biden plan, as well as the more progressive Democratic plans, call for tax increases. The more progressive Democratic plan calls for new taxes totaling as much as about $2.5 trillion. On the other side, you have Republicans and some conservative Democrats who, number one, define infrastructure in more traditional terms and do not want to pay for any of this with a tax increase. So as we go forward and as the Biden administration goes forward in trying to get something passed, he's getting challenged from both the left and the right. The right saying, "I'm not going to increase taxes," and "Your plan that is in excess of $2 trillion is too much." And then on the left, you have progressive Democrats who are saying, "Well, if we don't increase taxes and get some of this human capital focus on clean power," many of the things that Vanessa mentioned, "then we're not going to be in as well."

So where do things stand? Well, the Biden administration first approached this trying to seek a bipartisan solution, meaning with Republicans, that did not play out so well. And more recently, and perhaps more optimistically, a bipartisan group of senators has come up with their own plan that's costing, I think, a little over a trillion dollars. And there's true bipartisan support, 10 Democrats, 10 Republican senators that are moving this forward. That looks to me like the best possibility of moving this forward. The challenge there may well come from President Biden's own party who still want to see investments in a broader definition of infrastructure. President Biden and the administration are supporting the idea of getting some of those things, if not all of them, in a subsequent package under reconciliation. But a lot of these Democrats are not clear that can actually happen. They're somewhat suspicious, somewhat concerned, and they want assurances that if they support this bipartisan bill, or something very close to it, that they'll get support from some of their more conservative Democratic colleagues. So the challenge for President Biden will be to help the progressive Democratic wing feel confident that a reconciliation bill will follow this first infrastructure bill, that a lot of the broader infrastructure initiatives that they are advocating will be there, that they will be funded with tax increases. This is not going to be an easy chore, an easy assignment for the president, but I believe it's the best chance he has at moving forward with both an infrastructure package that could very well be with strong bipartisan support and then a subsequent reconciliation bill that includes new, and I would say very important, human infrastructure and climate change initiatives.

So the challenge for President Biden will be to help the progressive Democratic wing feel confident that a reconciliation bill will follow this first infrastructure bill, that a lot of the broader infrastructure initiatives that they are advocating will be there, that they will be funded with tax increases. This is not going to be an easy chore ... but I believe it's the best chance he has at moving forward.

Jim Davis: Thank you, Francisco, we have time for maybe a question, maybe two. Vanessa, you mentioned the American Clean Power Clean Energy Labor Supply Report, which you all have invested a lot of effort in. It's very specific. Can you elaborate a little bit on the potential for significant high-wage job creation, labor in particular, if Congress gets it right and truly invests in renewables and clean power in this infrastructure bill?

What Types of Jobs Are There in Clean Energy? What Kind Will Be Created?

Vanessa Sciarra: Sure, so the reality is there's sort of two answers to that question. One is today's jobs and one is tomorrow's jobs. So in terms of the jobs that are available right now, particularly in the wind turbine manufacturing sector, we have great opportunities and there are good jobs on the solar side. They tend to be primarily some in module manufacturing, but largely in deployment. So building the solar fields and then doing the construction work on those. But there's some really exciting stuff that's going to come online. So within the next two to five years, I'm predicting that we will actually start making offshore towers in the United States. We don't currently make them here. We import them, but they are quite impressive. If you've ever seen an offshore tower, it's an order of magnitude larger than some of the land-based towers, and the added complication is they're in a marine environment which requires them to be serviced by mariners. There are a lot of great, really high skilled jobs that relate to servicing those turbines offshore in an admittedly difficult environment, but very important jobs similar to the kind of jobs where people work in the offshore petroleum industry, where you need highly specialized workers and very well compensated. And the other thing I would say is I think in battery storage and in solar, we're going to see new technological innovations. The pace of innovation in those industries is really dramatic. And as those innovations come online, that's going to produce new manufacturing opportunities with very high skilled jobs and well-paying jobs in those sectors as well. So a lot of potential, particularly on the growth side.

Jim Davis: Thanks, Vanessa. I think we've got about a minute or so left. Francisco, any closing comments you'd like to add or Vanessa?

Francisco Sanchez: First, it's been a pleasure to be with you and Vanessa on this podcast. There's a lot of exciting opportunities here in the infrastructure packages that are being discussed. I know a lot of our colleagues are monitoring this bill in particular, and we're going to keep doing this because I think there's going to be a lot of good opportunities for our clients going forward.

There's a lot of exciting opportunities here in the infrastructure packages that are being discussed.

Jim Davis: Vanessa and Francisco, many thanks. Please stay tuned for the second part of this podcast where Nasim Fussell, our law partner, Vanessa and Francisco will be talking about some of the challenges associated with these issues. Thanks for joining us.