Podcast: Election Impacts on DOE Funding, Clean Tech Legislation and Energy Innovation

Taite McDonald: Hello and thanks for joining us today. I am thrilled to be here on the H&K podcast again with my new colleague, Elizabeth Noll. For those of you who do not know me and the industry, or those listening to this, I am Taite McDonald, and I am a partner here in Holland & Knight, and have spent my entire career focusing on the U.S. Department of Energy (DOE) and other agencies across the federal government with regard to energy and clean tech and energy innovation. For today we're going to focus on the election impacts and what to expect after the election. We've had an insane, wonderful few months of lots of action on the Hill, but now what does the election mean for us? So, Elizabeth, why don't you introduce yourself and open us up, and then we'll go back and forth on the topic.

Impacts on Clean Energy After DOE Committee Changes

Elizabeth Noll: Thanks, Taite. Hi, folks. Elizabeth Noll, new to Holland & Knight. Very happy to be here and on the clean tech, clean energy team. And just by way of background, I most recently was at the Department of Energy and the Congressional and Intergovernmental Affairs Office. So I think it's very timely to talk about how does the election outcome impact the prospects for clean energy moving forward. And I think bottom line up front, there was no red wave, and that is really positive for clean energy and our ability to really cement the wins of the last Congress and be able to have a glide path and a path forward. So I think we're in a really good position. Just a couple of highlights, I'm sure you've heard this on all of the other podcasts. The House has secured the majority for the Republicans, a very slim majority. So there's not a lot of wiggle room, but it will be in Republican control in the next Congress, and the Senate will remain in Democrat control. We're awaiting the results in Georgia, but that won't change party control. A couple of things to expect in the next Congress. Given the divided Congress and given the razor-thin majority in the House or the razor-thin division in the House, I would say that there's going to be not a lot happening. But I think that the bills that we will see moving forward in the next Congress will largely be "must-pass bills." That will include appropriations and funding for the federal government and then things like the National Defense Authorization Act. A couple of leadership changes that will be interesting to see in next Congress. On the House side, the Democrats will be the minority. The Republicans will be the majority. And there's been a big shake up in the House leadership on the minority side, on the Democrat side, with Nancy Pelosi saying that she will be stepping down from leadership and making space for some of the up and comers. That's really exciting to see. Not a lot of changes on the Republican side, but we will see, on the energy committees, Cathy McMorris Rodgers will be the chairwoman of the Energy Commerce Committee and Frank Pallone, New Jersey, will be the ranking member. And then that is, aside from the flip in party power, but they've been in this role previously, so that won't change. But subcommittees will likely have new leadership with the retirement of Congressman Rush. On the Democratic side, we'll see a new energy subcommittee lead, as well as McKinley losing his primary. And so there will be a new energy subcommittee chair for the Republicans. And then on the Senate side, I think the big change is that both Republican and Democrat leaders for appropriations have retired. And so we'll see a new Democrat in the chair position with Patty Murray from Washington and then Susan Collins from Maine for the Republicans on appropriations. So that's really exciting. And those two senators will play a very important role in the next Congress, given the focus on "must-pass bills" like appropriations. So that's kind of a just a snapshot of the landscape. But I will love to turn it back over to Taite today, what does this mean for energy and in particular with DOE funding?

A couple of things to expect in the next Congress. Given the divided Congress and given the razor-thin majority in the House or the razor-thin division in the House, I would say that there's going to be not a lot happening. But I think that the bills that we will see moving forward in the next Congress will largely be "must-pass bills." That will include appropriations and funding for the federal government and then things like the National Defense Authorization Act.

Taite McDonald: Yeah, great question. And this is a question, goodness, we get like two to three dozen times a day for over the past few weeks from new clients, folks reaching out regarding new engagements and existing engagements. But the bottom line, again, up front, is that this is actually a very positive result for DOE funding. We've already been getting DOE as a result of the stemming from the Infrastructure Investment and Jobs Act or the bipartisan infrastructure law, which gave DOE over $40 billion of appropriated funds for grants. And then after that, the Inflation Reduction Act funding that was added across a few different programs essentially gave us a lot of funding that will get dispersed over the next five to 10 years. That part is known now. But the outstanding question is what does this change in Congress mean for the DOE funding over especially the next two years? And the great news is really we expect everything to stay status quo as it was before. There are a few things that are going to be a little different here that we'll touch upon today. But DOE is getting money out the door. It started with the bipartisan infrastructure law battery grants for just about $3 billion [that] were announced just a month ago now. So significant. That was essentially the first large chunk of capital that was awarded by DOE. So, it was a huge deal for an industry that hasn't seen that type of money awarded in over a decade. And even when it was awarded, during our and not at that level and this is just the beginning. So moving into the remainder of 2022, we just got through submitting hydrogen hub concept papers all in regular course of business. We are wrapping up this year submitting carbon capture solicitations, and now we are moving into grid funding. And then next year — I just did a list the other day, actually Elizabeth — next year we're going to start with charging funding, then go right immediately in Direct Carbon Capture (DAC) Hubs. Of course, we don't know the order yet. We won't know the order until this moves forward. Then we'll go into the full hydrogen hub solicitations. But really the list goes on. And that's what's important to note, that it takes time for the department to get this money out. It is going to be a work in progress. Some of these programs will just get announced once, some will be announced on a rolling basis over the course of the next five to 10 years. But bottom line, nothing's changing regular course of business or new business — I guess a new course of business, I guess I'd call it — and that we expect this to continue. There will be a few differences, and that's why Elizabeth opened with the changing committees, and then we'll talk a little bit about oversight. But, companies looking to pursue this money, don't let any of this deter you from building government strategies that are full speed ahead. Now, before we go into some other options and other things that may occur like oversight and appropriations and what that change in the election outcome means for that, Elizabeth, why don't you talk a little bit about the other question that we get asked a lot, which is what about community benefits plans? Community benefit plans and Environmental Justice40 (EJ40) are a huge amount of everything we are doing for clients. But is it going to change with the election?

It is going to be a work in progress. Some of these programs will just get announced once, some will be announced on a rolling basis over the course of the next five to 10 years. But bottom line, nothing's changing regular course of business or new business — I guess a new course of business, I guess I'd call it — and that we expect this to continue.

Engaging Early and Building Trust

Elizabeth Noll: Yeah, great question, Taite. You know, I think it's no surprise the Biden-Harris Administration from day one really made equity and place a priority. They said on the campaign trail, bottom up, really working with the grassroots organizers and making sure that they were engaging communities, and middle out, meaning we really want to create a middle class that can make it. And there's an investment in the middle class in labor, in job creation, and so that's been a big priority. We saw that reflected in the legislation that passed, and you're seeing that reflected in how they are developing these solicitations. So for clients that are interested in pursuing grants, engagement with communities that you're looking to operate, to build, manufacture, that's got to start now. And I think some folks might be like, what is community benefits and why should I do this? What are these investments? But think about, this is not only good for the community, this is also going to be good for your business. Engaging early, building trust, building partnerships is a mitigated strategy as much as it is anything else. It's really going to help create the trust and the relationship at the front end that could help to mitigate against opposition or backlash down the line. So, really think about it as the way that you want to ensure that you're not going to get to the five-yard line and then have a court challenge or some community backlash. So, that is what this is really meant to help facilitate. And those can be things that you already as a company might already do, like you might already be engaging with a community college in your area, and then that's built on that. So, create workforce development plans that are really enabling a workforce for the next generation, for these new technologies like batteries, like carbon capture, how do we ensure that we're simultaneously investing in the technology and in the people. Consider engaging labor, project labor agreements. It's not a requirement, but it is something that you can consider and might be something that you're already doing within your normal course of business. Talk to your human resources department about what kind of things do you do as a company that are related to diversity, equity and inclusion. Do you have unconscious bias training already in your corporation? Those are the kinds of things at the base they're looking to accomplish with this. And I think it's really important to understand that this is about people. This is not about progressive liberal ideology. This is really about how we're investing in people and how that's going to help facilitate the clean energy transition. But, I do think that we need to recognize that this focus on people, that this focus on Justice40 targets, is going to have a target on its back. It's going to be something that is likely to be the focus of oversight investigations and kind of what is the role of the federal government in ensuring that we're not leaving communities behind. So, I do think that we need to be super aware and conscious of the fact that the threat of oversight, given the shift in power in the House, is real and that there are going to be investigations, and those investigations, there's good faith oversight. That is, how can we be good stewards of taxpayer dollars? And there is bad faith oversight, politically motivated oversight that's really about getting a sound bite or pushing back against the Biden-Harris Administration and their agenda. And so, Republicans have been very transparent in saying that they're looking for "the next Solyndra." And so I'm going to turn it back to take to talk about what is Solyndra and how are they going to find one.

This is not about progressive liberal ideology. This is really about how we're investing in people and how that's going to help facilitate the clean energy transition. But, I do think that we need to recognize that this focus on people, that this focus on Justice40 targets, is going to have a target on its back. It's going to be something that is likely to be the focus of oversight investigations and kind of what is the role of the federal government in ensuring that we're not leaving communities behind.

Taite McDonald: As you know, I know this question well. And this is something I've actually spent my career making sure that when we do face the next round of oversight investigations on the energy and clean tech industry, we are ready for it, and the industry is ready for it, and the programs are ready for it. So, the good thing about where we are right now, and what I always say, is there's not that much to investigate. We have the program, especially the loan program. In 2010, when Republicans came into office, I was trying to look for the exact number, the exact number's not out there, but there were at least over a dozen loans done. And it was a new program that was just getting set up. Now, the loan program, and of course a lot of this work we've actually done in updating and writing the program and making sure that the program is risk mitigated. So really, as a result of the history and the strength of the program now over the past ten years and surviving oversight before. The bottom line is, the industry and the programs are in a much different position than before. So overall, we expect some oversight, and there will be some oversight. But from a holistic perspective, because the industry is in a much different place and the programs have been around for another decade than the last time we went through this, we really don't expect the oversight investigations to move forward that we had in 2010. Now, moving forward, there will continue to be, especially on the grants, the over $40 billion that was distributed to DOE like Elizabeth started with on the community benefits plan. There is going to be a lot of oversight on that, and there is going to be a lot of questions. This is where it's really important for the companies that are applying for the grants and recipient of the grants to essentially continue to engage. I mean, after the battery grants, which we won a significant number of seven out of 20, after the battery grants — and actually even before they were awarded — we made sure we were up on the Hill talking to Republicans, talking about why all these programs are bipartisan and why these programs are structured in a way that we don't expect there to be the oversight that there was before. So, great news is that as long as we continue to engage, and as long as especially the areas funded by the bipartisan infrastructure law, which include hydrogen, carbon capture, batteries, as long as the applicants that are pursuing that funding and recipients of that funding, as long as we continue to engage with Capitol Hill, we really think we're going to be in a much different position than when we're in 2010. And again, to sum it up, just to be clear, it comes down to these programs have been established for decades now. And the important part here is it makes it a really exciting and amazing time for us and really for the industry as well. Over the past few months, even since you joined us, we've had some amazing conversations with thought leaders in the industry, whether they're investors or large banks and whatever nonprofit organizations (NGOs). What we all agree upon that have really been all of us that have been trudging through this industry and have survived, is that now is the time, now is the opportunity. And I think the most important thing for folks to think about this opportunity is Washington is key to the opportunity. And that means that we have to continue to promote where the industry is, the program set up and what's been done to date to essentially ensure that these programs work to move the industry forward but aren't a detriment to taxpayer dollars, which we are currently really excited about, I think. I know I am, but I assume you are as well, Elizabeth. The other thing I just want to touch upon before we wrap this up is the importance in engaging on appropriations. Yes, these dollars could be rescinded. They very well will likely be under attack if there's not enough engagement and good projects moving through. We don't think that's the case from what we're submitting and the amazing clients that we're working with through these programs. But the bottom line that I just want to make sure we reiterate on this is engagement is key and engagement on both sides of the aisle, essentially to promote the industry and the value that the industry can have for America overall, whether it's innovation, national security, economic advantages, especially for people in rural communities. The benefits that this industry and these dollars can have for the American people overall are really the most important message to continue to share now. So we're ready for the engagement, right? And that's one of the reasons actually why we brought Elizabeth on, because even though we have the funding, the engagement is more important than ever. So, Elizabeth, what did I miss?

So, great news is that as long as we continue to engage, and as long as especially the areas funded by the bipartisan infrastructure law, which include hydrogen, carbon capture, batteries, as long as the applicants that are pursuing that funding and recipients of that funding, as long as we continue to engage with Capitol Hill, we really think we're going to be in a much different position than when we're in 2010.

Closing Thoughts

Elizabeth Noll: I mean, I think just to summarize that last kind of where we see ourselves looking at this next Congress, you know, looking back over 117, historic legislation was passed. Looking forward, we're not going to see that. But we are going to need to continue to engage because the level of investment in public-private partnership, the role that the federal government is playing in partnering with the private sector, is that nothing we've ever seen before. And so I do think that's going to require continued engagement, articulation of the benefits, how this money is being spent, how it's delivering value, wealth creation, job creation, all of the things that it's intending to. And just a reminder, Taite said this, but these bills, even though one was passed in a totally partisan way, was built on bipartisanship. There is a lot of support for clean energy, clean tech, moving toward a clean energy future. And so there is a lot of support for this. But we just need to continue to tell the story and make sure that it is not undermined by one bad actor. I like to tell a little story if Taite will indulge me. The CHIPS and Science Act, which was another really big piece of legislation that passed in July of this past year, was very bipartisan, but then got mixed up in partisan politics. And while it moved to the House to be voted on and the Republican leadership was whipping against it, 24 Republicans voted for it. Of those 24, eight members of Congress were from Ohio. And the reason they were supportive is because Intel was committed and had announced that they were going to be building a semiconductor manufacturing plant in Ohio. And I think that just tells the story of, these members knew what was going on in their communities, they knew what was going on in their states, they knew our investment that they were drawing in economic opportunity that was being led by congressional statute, and they were supportive of that. And so I think we can continue to build on that support by demonstrating value. It's just going to be a continual conversation with Capitol Hill.

There is a lot of support for clean energy, clean tech, moving toward a clean energy future. And so there is a lot of support for this. But we just need to continue to tell the story and make sure that it is not undermined by one bad actor.

Taite McDonald: I was going to say we actually haven't said this yet, so this is the first time, that implementation equals engagement. And I think if there's any big takeaway — and it was actually something we learned in the battery grant analysis — that nearly all of the recipients were actually engaging, and not in a lobbying capacity, but just in promoting projects, making the value of their projects known. So of course, there's always going to be some lobbying capacity, but with regard to the projects and the awards, promotion of projects, telling people what you are doing, getting communities excited, just like Elizabeth said, getting folks excited on the ground and in Washington is just critical. And honestly, that will help to get Congress and members of the Department of Energy excited for the next project, too. It's about your project, but it's about the industry as a whole. So, I think we have a takeaway that we didn't expect. But implementation of these bills over the next few years should equal continued engagement as well. So thank you all for joining us today and we look forward to continuing the conversation on another one moving forward.

So of course, there's always going to be some lobbying capacity, but with regard to the projects and the awards, promotion of projects, telling people what you are doing, getting communities excited, just like Elizabeth said, getting folks excited on the ground and in Washington is just critical.