This episode was recorded just three days after the U.S. presidential election. My guest, UT Law Professor David Spence, recently published an exceptional book Climate of Contempt: How to Rescue the U.S. Energy Transition from Voter Partisanship. I believe this book is perfect for this moment and one of the best I’ve read on climate policy—and I read a lot on climate policy.

David and I dove into the roots and contributors of America’s current partisan and ideological divides which have grown rapidly over the past few decades. We discussed not only the challenges this divide presents — though we talked about those extensively — but also some possible solutions. David shows how we can bridge these divides, re-establish trust, and find common ground. We also talked about the Inflation Reduction Act and why energy policy could, maybe, be a unifying area in an increasingly polarized landscape.

I found this conversation both important and thought-provoking, and I hope you will too. I highly recommend David’s book; it’s a remarkable piece that is particularly relevant now. If you’re interested in the energy transition, the history of energy-related regulations, or want a deeper understanding of our current political landscape, especially as it relates to climate and energy, I think you’ll enjoy this episode as much as I did.

As always, please like, share, and leave a five star review wherever you listen to podcasts. Thank you for being a listener.

Timestamps

2:31 - The major ideas in Climate of Contempt

4:06 - How the thesis of the book connects to the outcome of the US presidential election

5:54 - Discontent with the status quo in the US

8:09 - The depth of the ideological divide in the US

13:27 - How to bridge ideological divides and actively listen (and why it’s so challenging)

17:51 - Effectiveness of deliberative polling and in-person, offline interactions. The role of media and social media in driving polarization.

23:52 - The importance of active listening, education over persuasion, and not being too sure you are right.

29:05 - Is energy a place we can find more common ground? Challenges and opportunities.

37:54 - The future of the Inflation Reduction Act

43:31 - Regulatory uncertainty… what happens next?

Show Notes

Climate of Contempt: How to Rescue the U.S. Energy Transition from Voter Partisanship by David B. Spence

David’s website and blog

EnergyTradeoffs.com

Works from Katharine Hayhoe

”Spirit of Liberty” – speech from Judge Learned Hand

Advanced Manufacturing Production tax credit

Transcript

Doug Lewin

David Spence, welcome to the Energy Capital Podcast.

David Spence

Happy to be here, Doug.

Doug Lewin

It's great to have you here today. You have written what I think is a really remarkable book and I hope it is read widely. I think it is really illuminating for the moment we're in. We'll of course put a link in the show notes so people can find it easily, but it's called Climate of Contempt, the subtitle, How to Rescue the U.S. Energy Transition from Voter Partisanship. We're recording on Friday, November 8th, the Friday just after the reelection of Donald Trump. So I think that this book is even, I thought it was incredibly relevant before the election, I think it's even more so now. Can we just start David with you just explaining the thesis of the book generally, but also in light of the political earthquake that happened this week?

David Spence

Sure, happy to. So the main point of the book is to try and reintroduce into the popular debate and also parts of the scholarly debate what I think are some underappreciated forces that are driving regulatory politics and, in the case of what we're both interested in, energy transition politics. And that missing element is what I would call the bottom-up forces that are driving what particularly members of Congress, but all elected politicians do. We hear a lot about the top down forces, about how elites are controlling the regulatory process or the policymaking process. And that's part of the story and not an unimportant part of the story, but a really neglected part of the story is how receptive and sensitive elected politicians are to what voters want or more particularly what they don't want. And so politicians work hard to avoid the kind of mistakes that might lose them the next election. And those forces I think are much more important than most people realize. And that's what the book explores and applies to the energy transition.

Doug Lewin

Yeah, and so talk about that a little bit in light of this week.

David Spence

Sure, sure. So we've all seen probably 40 or 50 takes on what happened the other day in the election. In fact, the New York Times alone has had at least 10 different takes depending upon who's doing the writing. And voters' decisions are complicated. They only get to choose one of two choices, but they're motives and reasons for making those choices are varied and complex. And so among the takes we're seeing are takes crediting fears about inflation, racism, sexism, Harris being too progressive, Harris being not progressive enough, other worries about all kinds of other issues.

And again, these tend to be the kinds of things that pundits look at, but among the takes that the New York Times had was one today in which a writer said that what Trump was betting on was that he could make a majority of voters believe that the situation that they face is miserable and getting worse under Democratic administrations. And that's the take that probably comes closest to the way I analyze politics in my book, which focuses on how the changes in the modern media environment make it harder for the truth to win out. And so I analyze that in the pre-election environment, but we can see that same sort of dynamic at work in understanding the results of the election the other day.

Doug Lewin

Yeah. And I think, to that latest take, there's also some really good data floating around on the internet now about anti-incumbency globally. This is, I believe, one thing I saw was this is the only time in recorded history, which for this particular metric goes back to 1905, that every incumbent party lost voter share in developing countries. That's never happened before. That every single, whether they were right, left, moderate, that the incumbent party lost voter share. So if Trump's strategy was to lean into the anti-incumbent sentiment, he was definitely picking something up in the zeitgeist here and globally. And sometimes we forget here that we do exist in a global context and media is very global at this point too.

David Spence

Yeah, and on that, you meant developed countries, right? You said developing, but you meant developed.

Doug Lewin

Developed, excuse me, developed, you’re absolutely right.

David Spence

Yeah, and there's no doubt that the disruption of the pandemic had a huge effect on people's perceptions of where the economy is and where it's going. If you look at charts comparing inflation in the United States, coming out of the pandemic with inflation in other countries. It went up everywhere because of the supply chain disruptions. While we were able to get it under control right before the election, that doesn't mean that voters weren't sincerely shaken by the influence of inflation on their everyday lives. So I'm not meaning to discount economic forces entirely here. But clearly there was a belief that all sorts of conditions of daily life were a lot worse than they actually are heading into the election. We can see that in the exit polling.

Doug Lewin

Yeah, I think we all feel it to a certain extent. Like every time I go to a grocery store I'm still kind of shocked at what the prices are. There's obviously some truth to all that and I think that that's why the anti-incumbency sentiment is there.

But here's what I wanna zero in on a little bit, David, from your book that I think is so striking. And this has been written about obviously other places, but I think you do a great job applying it to how we deal with energy and climate issues. The ideological divide has gotten so strong. You summarize some of that research. Can you talk a little bit about just how bad it's gotten? And I know people have probably heard this before. Where I want to go with it is really where you go in the book, which is how we actually have conversations across these ideological divides. So let's do both of those things. Part A, the ideological divide itself and how strong is it, sort of this partisan, almost like tribal partisanship. And part B, what is at least part of the recipe for dealing with that fundamental problem.

David Spence

Sure, so I break that divide into sort of two main parts. One is the familiar ideological polarization, which has been getting worse since the mid to late 1980s. And we measure that as political scientists. And the book summarizes those measurements. But both in the electorate and in Congress, we have seen a steady divergence ideologically between the parties.

It started with the Republican Party moving to the right after the Reagan administration. And a couple of decades later, the Democratic Party started moving to the left. And we are now as measured by political scientists, at least in Congress, further apart than at any time since before the Civil War. So those philosophical ideological differences have gotten very sharp, which makes it harder for voters to find the ability to talk to one another across these partisan divides, particularly difficult for members of Congress to reach across the aisle and get things done when there's not somebody in the other party with whom you share at least a little bit of a policy framework. We used to see ideological overlap in both houses of Congress as recently as 25 years ago. There's none in either now. And so that's half the story in terms of how voters have changed.

The other half is really what you referred to as tribalism and what I do as well in the book. And this is really what political scientists would call affective partisanship or negative partisanship. This is animosity or even in some cases hatred of the other party that we're also seeing in the data. And we see this in a number of polls that are administered by Pew Research and by the University of Michigan under their national election study. But they show sharp increases in the 21st century, so this is a little bit more recently, we've seen sharp increases in dislike of the other party by members of each party. And those, the levels of animosity that respondents are showing is getting extremely concerning. And so these two things together give members of Congress and other elected politicians the incentive to not cooperate with the other party and to express their contempt for what the other party stands for and what it wants. Hence the first part of the title of my book. And so, reaching across the aisle, working together, talking to one another has gotten very difficult. And I argue that the modern media environment, that is the replacement of traditional daily newspapers, daily news, network news, or the displacement of that in today's information flows by much more fragmented sources of information, a lot of its ideological media, along with bots and press releases and all this other stuff that's trying to persuade us more than it's trying to educate us. This exacerbates both the ideological polarization and the partisan tribalism. And as we start talking to each other more online and less offline, we end up in these echo chambers that amplify these effects even further. And so that's the problem, that's the part A, as you put it in your question.

The part B is about breaking down those barriers of communication and talking to one another more. After this election this week, I'm seeing more people emphasizing that, which is really encouraging. In my book, in the final chapter, that's the prescription I offer. It's not quick. It's not a magic bullet. It's not the only thing that will get us back from the sort of decline in our democratic institutions and norms that we're seeing. But I think it's an important part of the solution. And I can go into that in more detail if you'd like.

Doug Lewin

Yeah, yeah, I do want to talk more about that, but I just, first of all, yeah, I want to give you a quick break, but also just kind of add in a couple other notes from your book that I think are just spot on in this particular situation. You talk about, I'm not sure this is in the book. I may have actually heard you speak about this when you're lecturing or when I've heard you speak other places, and you just said it now, education, not persuasion. I think part of that too is that really active listening component, really trying to understand where somebody else is coming from. You have two quotes in your book that I particularly love. You might be the only person to quote both Ted Lasso and Learned Hand in your book. Congratulations. I should have written down the whole Learned at Hand quote. We'll put it in the show notes. I don't know if you've memorized it, but it's the spirit that is not too sure, right? That like we enter a conversation not thinking I have the right answer and my job is to get you to adopt the same answer I already have. And building on that, you quote Ted Lasso saying, be curious, not judgmental. Because if you do enter a conversation with like, hey, I'm right, you're wrong. If the other person doesn't end that conversation with your same belief, you're going to end up being judgmental. And there is so much of that going on across the partisan divide right now. So the spirit that is not too sure it is right, this openness, this willingness to listen to others, I think is really fundamental to this. And so you can, I want you to elaborate on that, but I am also curious about, I wanna hear more about what you go into in that last chapter of the book of how, what are the actual mechanics? Because I agree with you, I'm hearing that sentiment a lot this week. But what I don't see a lot is the how, and you get into that in your book.

David Spence

Yeah, so the Learned Hand quote that you reference is from a 1944 speech he gave back in the days when a judge who's not a Supreme Court justice could be famous and a public figure. He was asked to give a speech on Constitution Day 1944. So we're coming to the end of World War II, fighting against fascism in Europe and worrying about another authoritarian type of regime, communism in the Soviet Union and ultimately, a few years later, the Eastern Bloc of Europe. So he had those two things in mind when he talked about what he called the spirit of liberty. And that's the name of the speech. It's a short speech and I consider it a brilliant speech, but he says the spirit of liberty is the spirit that is not quite sure that it is right, that weighs the other person's view. These are not precise quotes, I'm paraphrasing. Weighs the other person's view without bias, at least to the extent you can. And that is something that sort of modern psychologists might call actively open-minded thinking, or we might call it fallibilism. The idea that I might be wrong and I can learn by having other people audit my beliefs. That's the spirit or the idea or the mental state that I think is really hard to sustain in today's political environment and the modern sort of information environment, particularly social media and ideological media makes it even harder to sustain. And I explain in chapter four of the book, the sort of structural reasons why that is. It's not that people are lazy or people have become less tolerant. It's that the incentives they face are pushing them toward premature certainty about things, which makes it harder to entertain the possibility that we might be wrong about this or that or this aspect of our beliefs.

And so recovering that actively open-minded thinking, being curious, more curious and less judgmental, in Ted Lasso speak, means that we have to find places where we can talk across ideological and political boundaries with people in ways that can be productive. And that sounds really difficult to modern audiences because we are fed a steady diet of the most unreasonable representations of those on the other side of the political divide. And it seems futile. If you're watching Jordan Klepper interview people at a Trump rally, and that's your conception of the Trump voter, it probably feels like a futile thing to try and talk to people across the political divide. But there are ways to do it. And so as you say the last chapter of the book gets into what a lot of the research suggests about how to be influential and how to maintain that actively open-minded thinking mindset while having dialogue with people who think about politics differently than you do. And I'm happy to go into that in more detail unless you want to sort of steer me in a different direction.

Doug Lewin

I do want to talk about that at least a little bit. I do obviously encourage the audience to get the book. And again, we'll have a link for how to find it. But I would like to get into that a little bit. I have been thinking a lot about, and I've talked about this on the podcast before, there were in the 1990s as Texas was looking to restructure the electricity market, a series of meetings in Texas. I believe according to Pat Wood, the chairman of the Public Utility Commission under George W. Bush at the time, 16 different meetings, 16 different cities. They were one- or two-day long meetings. They had 100 to 200 people at each of them chose randomly across a broad cross section of Texas. They paid them for their time to come. They gave them some education. It was education, not persuasion, right? You have a chapter on energy trade-offs. It was exactly that kind of thing, right? Here's the benefits of this kind of generation and the pros and cons of each one. And this was an extraordinary process. And Pat Wood says it was one of the reasons they were able to pass the restructuring bill with near unanimous votes in both the House and Senate. It's almost hard to imagine such a massive piece of legislation passing with that kind of support. But people understood, the legislators understood, that the people of Texas had a chance to learn about this, voice their opinion about it. I've been thinking about that a lot. That was a system developed by Professor Fishkin at University of Texas called deliberative polling. Maybe we need something like that these days. Cause where else are we going to have an opportunity for people from around the state of totally different ideological backgrounds, like you said, to not see each other as a caricature. But to actually… and we don't, David, like I coach my kids' baseball team. I don't know what the politics of the different coaches are, but I love all those guys. They're great. They would do anything for those kids. I don't ask them what their, there's no litmus test out there. They're good people and they probably have, many of them have very different political beliefs than me.

But again, like to your example of the Jordan Klepper interview, and this happens, whether it's left looking at right or right looking at left, and I do think we wanna be careful about equivalency, we should talk about that. But there is at least a large part of that going on on the left and the right. So I'm interested in your thoughts on deliberative polling, like is there maybe the potential to get people together to have a chance to actually talk about policy in an environment where the temperature is turned down in exactly in that Learned Hand ‘the spirit which is not too sure that it's right,’ where people can actually listen to each other and actually find solutions. Cause I'm just worried at this point, when you see those charts of how far apart we have gone, that we are further apart ideologically, thinking lower of people that are different than us, politically than at any time since the Civil War. That's terrifying. Like we need to have structures where we get together and talk to each other and realize we're Americans and Texans first and fill in the blank with whatever adjective, conservative, liberal, Republican, Democrat, left, right, progressive, conservative, et cetera. Like that is second, third or fourth. So that's one I'm curious about your thoughts on deliberative polling. And then what are some of these other mechanisms where we can actually get people together and learn from each other and talk to each other across the ideological divides.

David Spence

So a couple of reactions to that. So those meetings were probably, what 2000, 2001?

Doug Lewin

A little earlier 90s. Yeah. You're close, 96, 97, 98 right in there.

David Spence

Yeah, the full effect of the modern media environment hadn't kicked in, at least on politicians at that point. But you're right that those were face-to-face meetings. That's sort of a key factor here. We're talking to people face-to-face. The way we talk to each other face-to-face is different than the way we talk to each other online. In a face-to-face conversation, you are more respectful, you're more civil, you're more cautious, you're exploring each other's views. You probably in many cases want to maintain the relationship you have with that other person. If it's you and the other coaches, you don't want to alienate them if you talk about politics. But it's important that we do talk face-to-face about politics across these divides because it's virtually impossible to sustain productive conversations online.

So the benefit of those meetings and the benefit of deliberative polling is that people see each other face-to-face. And the second benefit is that they have a common source of information. What Professor Fishkin did in those experiments was he took people who disagreed on a subject and gave them what experts on both sides of that issue agreed were the sort of common facts that they both shared, the truth. The stuff that they could both agree was the truth. And we found that when presented with that information and given the opportunity to talk across perspectives about it, that their views came closer together. So we can work out problems, we're more likely to work out problems face-to-face.

The difference, the reason I asked you about the timing of the Texas meetings was that in Congress, the people who get together and talk about things face to face have to face the voters later. And the voters that are driving their futures are the voters who vote in primaries in most cases, because most members of Congress represent safe seats. And so these are the most ideologically extreme members of their own party and the most negatively partisan members of their own party. So whatever action they take, even if they can sort of privately agree with people on the other side about what a constructive solution to a problem is, they're gonna have to answer those voters. And right now, anyway, those voters seem to punish cooperation and punish working across the aisle with the other party. And that's what we have to change. We have to change that voting behavior, which is a lot, you know, it's a slow process. We have to talk to one another more productively across these boundaries.

And I don't know if this is the point you want to get into how that happens, but there are bodies of research out there from a number of different disciplines that all seem to point in the same direction about how to sort of put into practice that Learned Hand/Ted Lasso advice. And it really involves stuff that we do instinctively when we talk face to face with family and friends. And that is essentially starting a difficult conversation, one we expect to be difficult, with questions. Asking the other person what they believe and why they believe it. And then really hearing, you use the phrase active listening. Another quote I have is from a friend of mine who's in the communications business who says that active listening is more than waiting for your turn to talk. It means actually hearing what the other person is saying, considering it, giving it some respect and formulating a follow-up, question usually, based on what you hear. And so it might be something as simple as well. Okay, I can see why you'd be concerned about that. What if that wasn't true? Or what if we could change that? Would you still feel the same way about this issue? So that's just one example. And I give lots of examples in Chapter 6.

But those kind of iterated, careful, respectful conversations, I think, can be successful with a significant subset of voters on the other side of an issue. And the size of that subset is debated by scholars. We talked the other day when I was visiting your class about Katharine Hayhoe, who's a climate scientist who specializes in climate communication. She's very optimistic that these methods can work on most people. The polling data that I cite in the book suggests that they ought to be able to work on about a third of the people out there, but that may be enough to make a difference for the climate future. And so I think this is a necessary part of regaining our democracy, the least functioning democracy, the way it functioned when you and I were young.

Doug Lewin

I agree. Actually, I found the quote from your book from Learned Hand and we will include a link to the full speech, but I do want to just read the part that is in your book. This is the quote from Learned Hand in his Constitution Day speech. “What then is the spirit of liberty? I cannot define it. I can only tell you my own faith. The spirit of liberty is the spirit which is not too sure that it is right. The spirit of liberty is the spirit which seeks to understand the mind of other men and women. The spirit of liberty is the spirit which weighs their interests alongside its own without bias.”

It's just an incredible quote and I think one that we all, regardless of background, really need to think about, the language you emphasize in the very next paragraph in your book: not too sure, seeks to understand. The fact that he included men and women in a speech in 1944 is pretty remarkable as well.

David Spence

Yeah, he was a brilliant jurist. He was widely considered the most brilliant jurist, even though he served in a circuit court of appeals, not the Supreme Court at the time. There is a wonderful biography of him that sort of gets into his judicial and political philosophies. And he's a really admirable person because he lived out or tried to live out that ambition that he articulates there.

And that was at a time when the specter of authoritarianism was looming large. And as you know from reading my book, there are a number of historians that see that specter looming large again. And so it seems like an appropriate reminder about the norms of political communication that we need to maintain in order for our democracy to function well.

Doug Lewin

Yeah. Well, and really when you talk about that one-third, and I really hope it's bigger. I want to believe it's bigger. I want to look at the data you're referencing and get really familiar with this because I would definitely want it to be bigger, but let's say it was a third. I mean, really what you're talking about is the center, right? And there is this, this is one of the biggest problems here is when you do move to the poles, you know, to the extremes on either side and there's not equivalency there and it'd be interesting to hear you talk about that too, cause there is some really good empirical data on this, that the right has moved further to the extreme, although the left is moving further in that direction actively as well. When that happens, there's not enough left in the center. And I think what really starts to happen too, is we get into this situation where it's a very zero sum thinking kind of an environment where somebody's like, I'm winning, you're losing, rather than, and I think this is part of that Spirit of Liberty too. If I may expand on Judge Learned Hand's brilliant concepts here, it's not just that spirit, which is not too sure that it's right, it's also that spirit that is willing to give something. It is the same spirit, I think, right? Because I may not be exactly right, the things that I exactly want may not be the full gamut.

And this is a place, and this is where I want to go next. You can comment on any of that you want, obviously, but where I want to kind of go next is I really do think that energy and climate, though climate is so partisan coded at this point, but let's stick with energy for a minute. Energy is one of those places where I think we can find common ground. If we can get people to a place where they are in-person and they are active listening and they are not too sure they are right. And they are willing to compromise. We can make major progress because fundamentally, I think most people want the same things. They want a reliable grid. They want lower costs. Many people, and this is true right and left, like you have a very strong group on the right that really wants solar and storage wherever they live because, I don't want to be so reductive as to call it prepper, cause that has like a very negative connotation for some people. But if you think of it in terms of like, take the baggage away from the term prepper, like they want to be prepared. Like whatever happens, a winter storm, a heat wave, God knows what. They want to be ready for it. And having power at their house is one of those things. The imperative at this point for the United States to be globally competitive, to not cede industries of the future to China. That was one of the rare places where Biden sort of continued a lot of Trump's policies that were pretty tough on China and really trying to incubate and grow energy industries here in the United States. I'm curious of your thoughts on that, the opportunity maybe for energy, if folks can get out of the persuasion mindset and into the more listening mindset, like there might be a whole lot more common ground on energy than we're acknowledging.

David Spence

You're right that there is an empirical literature measuring the spread of misinformation and false belief and negative emotional messages online. There's an entire set of scholars that study that, and I link many of them at the website for the book. Those scholars document more misinformation flowing, more right-leaning messages that are false messages spreading around the web than left-leaning messages. And that's probably an artifact of the fact that right-wing media, ideological media, has grown quicker and is much more popular than at least so far, than ideological left-wing media. So the history of Fox News, Fox sort of pioneered an approach to broadcast cable news and punditry that MSNBC and other left-leaning outlets have followed to a certain extent, but Fox is much more popular. It has twice the audience of MSNBC and three times the audience of CNN.

So you're just gonna see more of this kind of messaging sort of floating around and more sort of online and radio sources that sort of follow that same model. More of those exist on the right or at least the more popular ones are on the right than on the left. And that could change, again, the right got started on this unfortunate project before the left did. And so it may be that Democrats and liberals are catching up on that. So that's one point.

And in terms of sort of putting this open-minded thinking, this Learned Hand philosophy into practice in the energy space, I think you're absolutely right. And people who follow your podcast and your Twitter, you know, will learn about the particulars of this. This will resonate with them because they understand the particulars of Texas energy better than the people who don't follow your work. But yeah, there's lots of common ground in the energy space if we're focused on trying to solve problems. And the right-left divide doesn't map that neatly onto energy arguments right now anyway. So if we go beyond Texas, there are people on the left that are sort of really strong proponents of the energy transition who would like to see competitive markets in their state and they don't have them. And there are other people who are strong advocates of the transition who think that it should be led by investor-owned utilities that are traditionally regulated or, and there's another set of people who think that it should be public power and there's another set of people. So these ideological divides don't fit the energy sector's problems all that neatly. On the other hand, the intense partisan tribalism does seem to be creating a national Republican brand that can be hostile to anything that mentions climate change, as you noted in your question, and increasingly anyway, to utility scale renewables as well.

And so we saw this week, one of the Trump advisors sending a note to the FERC chairman telling him to stop doing controversial things, by which I think he meant, you know, pro-renewable energy, pro-clean energy things. Trump has sort of himself famously opposed wind energy. And so we have these two forces butting up against each other, the idea that there are probably practical solutions that have common ground associated with them if we just get together and talk about solving these problems. But we also have the fear of voter punishment for sort of cooperating. And we'll see how it all plays out. I think you know that there are some Republicans in the House that would like to preserve the Inflation Reduction Act and the incentives it provides for energy transition technologies, how many they are and whether their expressions of that preference will translate into votes against repealing it. We may find out if the Republicans take the house. So I share your optimism about the possibility of bipartisan solutions and of finding common ground if we can get away from these political election forces that sort of distort that process.

Doug Lewin

Yeah, and I think it's important to acknowledge and this again, to a large extent, because there was that whole process of deliberative polling, when Texas was restructured, it was really a conservative policy that put in place, a market structure and energy-only market as it's often called, which means that only that energy that's producing gets paid. It's highly competitive. But it is, it has been very, very good for clean energy because clean energy is incredibly low cost. It has, according to a colleague at UT, Josh Rhodes, you know, $31 billion from 2010 to 2022. And that was because of a conservative policy that sometimes will drive the left or liberals sort of in general crazy when they look at Texas and they're like, wait a minute, how do you guys have more wind, solar, storage than any other place? But you didn't have a policy adopted by a Democratic governor and Democratic legislature. Important to note that in the nineties, there was a Democratic house, right? It was Speaker Laney at the time. So it was divided government. And that is a really important point, but there was compromise across the chambers. Then Governor Bush wanted to run for president and talk about renewables, he actually would talk about renewables as one of the things he was for, but those conservative policies really did lead to more clean energy, which again, it was a different time, but, and maybe I'm just grasping at straws, but I want to at least think that there's the potential of something to build on there.

David Spence

No, I think you're absolutely right. Part of it's conservative, most of it's conservative. We have very few barriers to entry at the generation stage here in ERCOT. So it's easy to build. We happen to have good wind and solar resources, and we happen to have hungry cities that are growing that want those resources. But let's not forget, and I know you know this and have said it before, that we also socialize the cost of building big transmission lines out to those windy and sunny areas which also were part of the story of how at least the wind grew so fast, to sort of dwarf wind generation in other states. And I think that's why there are strong energy transition and climate advocates who look to Texas as a model, or at least to competitive markets as a model, for building more wind and solar because they see traditional investor owned utilities as obstacles to that kind of progress.

Doug Lewin

Let me just also ask you about the Inflation Reduction Act. You referenced, I think this is really important and I think will get a whole lot of coverage in the coming months and really over the year, because where they would, where Congress would sort of dismantle the IRA, if they choose to do so, assuming the House is Republican, which it looks like it will be. We’re recording on Friday, November 8th. So when you're listening to this, you probably already know whether the US House is going to be led by Democrats or Republicans, David and I do not. But it looks like it will be Republican. And if that's the case, it would be through budget reconciliation. So this project is going to this, this process rather, will play out over the course of a year.

But as much as anything is clear to me right now, and not a lot is very clear, I don't think the entire thing will be taken apart. There will be elements of it that survive. You mentioned the 18 Republicans who sent a letter to Speaker Johnson saying while it was flawed. And so it wasn't like a full throated endorsement of the IRA and they didn't vote for it when it came through. They did say that there were aspects of it that they wanted to preserve. Can you kind of look into the crystal ball a little bit, not asking you to make predictions, but sort of based on probabilities and you're smart on this stuff and follow this stuff. What are some of the areas where you think the IRA might be able to continue? One of those that I think is really interesting is what is called the 45X. It's the manufacturing incentives, right? And we've seen a lot of manufacturing in Texas, but even more so in South Carolina, Georgia, Tennessee, a lot of states, obviously with Republican governors that are very, very excited to have that manufacturing there. And frankly, like President Trump could go around the country cutting ribbons and take credit for what – I mean, it would be bizarre and weird, but it could happen, right? They could take credit for a lot of the things that were passed if they don't dismantle it, in which case, if they don't dismantle it, they might deserve a little credit. So maybe the manufacturing, are there other elements that you're looking at? Like, hey, heading into this new era, whatever it is, here's some areas where there might be some potential.

David Spence

Yeah, I will be actually posting a blog on the book website. I do blog regularly, but one of the posts that will be coming up in a couple of days looks at those 18 letter signers and their electoral circumstances heading into the election. And to the extent that there are results, most of them have, their race has been certified by the AP by now, but four or five have not. 14 of the 18 were from districts that Cook Political Report would call relatively competitive. They were either toss-ups or lean one way or the other. Those are the relatively competitive districts under their taxonomy. So these were people that probably had to worry about the other party, Democrats in this case, since all the signatories were Republicans, had to worry a little bit about gaining some votes from the other party. And four were not, four were from very strong Republican districts. And they happened to be people who were getting a lot of IRA or infrastructure bill money. And so you can sort of see this as a contest, or we can look at these 18 letter signers and say, this is sort of the struggle between bringing home the bacon to their district, the economic sort of incentive to make their constituents happy that way versus the sort of partisan side of things. Those four that were in solidly red districts, are they gonna be punished at the next primary for cooperating or for expressing preferences for something that the Freedom Caucus doesn't like? They want to see the entire IRA repealed and they objected to the letter that the 18 sent. And so that'll be interesting. It'll be interesting to watch their futures. Most of them won or look like they're going to win. A few probably will lose. But that'll be interesting to see where they end up. In terms of the kinds of things that could survive in a partial repeal, I share your sentiment that it's probably the things that look more industrial or likely to create permanent high paying jobs. That's another way of looking at it, right?

Wind and solar jobs tend to be construction jobs. Building a carbon sequestration facility probably creates more, at that facility, probably creates more permanent jobs. Same thing with a hydrogen production plant or even a geothermal plant, all those kinds of things, or manufacturing, solar manufacturing and so on. Those are permanent jobs. And I imagine they'd be the kind of things that Republicans might be more comfortable with. See them as serving the people they see as their main constituents and their needs, even in a solid red district. And as you know, and probably have said already on your podcast, most of the money is going to red districts. And so it'll be interesting to see how they respond to that. If they repeal popular parts of the IRA, it'll be interesting to see what happens in the 2026 elections to see if they pay for that.

Doug Lewin

Yeah, and a lot of the things you just mentioned,you know, geothermal uses a lot of the same skills for oil and gas workers. A lot of oil and gas execs are leading the most prominent geothermal companies. Fervo, Sage, headquartered here in Texas, are two very prominent examples. Hydrogen, carbon capture, even solar to an extent, right? We're seeing oil and gas companies in Texas really wanting to connect to the grid because the power is cheaper from renewables than from diesel generation. So I think that's going to be an interesting dynamic too is how does the business community and particularly some of the industrial players, the oil and gas players. You know, Trump keeps talking about drill, baby drill, the CEO of Exxon, before the election gave an interview on CNBC. And he said, I don't know how drill, baby drill translates into policy because we're already at record levels of drilling. We drilled more in the United States last year than any country has ever drilled in the history of the world, including Saudi Arabia in any year. And if you do end up finding a policy that causes more drilling, guess what happens to prices, right? They go lower and now your oil and gas companies are going out of business. So how does that business voice exist in a second Trump administration is going to be interesting. Happy for you to comment on that if you want. I am going to turn that into a question because you are a professor of law. One thing that companies of any kind really sort of universally disdain is regulatory uncertainty. We are heading into a time of, I think, extraordinary regulatory uncertainty, both because of the election, but also because of some of the things the Supreme Court has done. Can you talk a little bit, I mean, in your book you spend a lot of time on regulations and how they've evolved, just a little bit on kind of where we are with that, some of the things the courts have done recently and how you see that changing in the new political environment?

David Spence

Yeah, it depends on how far back we go. Certainly when there was more common ground, there was more policy stability. And the historical part of my book talks about those eras when there was common ground and there was sort of more policy stability. But ever since the sort of end of the 20th century, we've started to see, at least in terms of executive branch policies, fairly sharp pivots, what one scholar calls regulatory oscillation, in energy and environmental policy generally, not just climate, but all sorts of environmental policies and energy policies have flip-flopped back and forth, depending upon which party is in control of the White House.

Now, there are limits to this that are mostly right now about the attention span of the executive or what they tend to prioritize, because the executive branch produces a whole lot of policy. And so it's impossible really for a president to prioritize everything and to sort of change everything they might want to change. They have to invest resources in changing rules, which require new rule makings, which require following the Administrative Procedures Act, publishing the proposed rule, listening to comments, getting through judicial review. So there's a lot of transaction costs associated with reversing federal policy. But nevertheless, we've seen Democrat and Republican presidents prioritizing environmental issues and climate issues recently enough to want to do that. And so we will see a repeal of the Biden power plant rule and we'll see a repeal of the vehicle standards and other sort of climate initiatives from the Biden administration. Chances are, if the previous Trump administration is any indication, chances are there'll be a lot of litigation associated with that. Presumably, his advisors have learned from some of the failed litigation they had. But now, I would expect to see more and more regulatory oscillation for as long as the negative partisanship and polarization continues to increase. And which is why I spend so much of the focus of the book on trying to change that through promotion of more productive forms of dialogue across party lines.

Doug Lewin

Yeah, it really would make a big difference, not only for our society, like first and foremost for our society and the continuation of that spirit of liberty and democracy itself. That's the sort of first order thing, but there is a second order thing there that I think the policy outcomes on energy and climate would be a lot better there too.

This is great. I really love your book. I think anybody that particularly for those that want to understand energy policy and energy regulation at a deeper level. Obviously there are things in the book that I already knew, but in the spirit of Learned Hand, there were quite a few that I didn't. As people who listen to this know, I'm kind of a nerd on this stuff. And I pride myself on knowing a lot of things, but I learned a lot from your book, there were many different aspects of the regulatory history I was not familiar with. So I really can't endorse the book more strongly. I hope folks give it a read. Tell us where they can find you. We've mentioned a few and we'll put them in the show notes. You've mentioned your website where you blog, which is climateofcontempt.com, right? Where else can folks find you?

David Spence

Well, I'm on the University of Texas Law School faculty pages, which advertise some of my work. I have another website that I am just getting going again after going dormant in the pandemic called energytradeoffs.com. And otherwise, I'm around Austin.

I appreciate the kind words about the book and right back at you. I've learned a lot from your podcast and especially about Texas markets. I think we all depend on you among a few, very few others to sort of really get the sort of nitty gritty about Texas electricity markets. And so I appreciate that.

Doug Lewin

Thanks, David. Anything I should have asked you that I didn't, anything else you want to just say in closing?

David Spence

No, I really enjoyed the conversation and I appreciate the opportunity to get a little bit deeper into this sort of philosophy of actively open-minded thinking. Not everybody asks me as much about that as you did and I think that's really a crucial part of the book. So yeah, I've enjoyed it.

Doug Lewin

I mean it is the way out of this mess, like, if this experiment in democracy is going to work, we have to get better at that. I firmly believe that. And I think your book is a contribution on that and on the other stuff, which people probably ask you more of, and I think is incredibly important too, obviously, but I really do think that piece is foundational. Hey, thanks for being on the podcast. Thanks for writing this book. The last thing I'll say is I'm going to need to have you back at some point as these different legal processes start playing out. I mean, it's going to be, there's going be a lot to unpack, in the next year or two. And I'll look forward to having you help us do that, David, if you're willing.

David Spence

It's been my pleasure, Doug, and I'm happy to come back anytime you want.

Doug Lewin

Thanks so much.

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How to Overcome Ideological Divides and the Climate of Contempt

Energy Capital Podcast (private feed for [email protected])

How to Overcome Ideological Divides and the Climate of Contempt