Navigating energy policy in the evolution of powering America - Jason Grumet

Hello, I'm Paul Yeager, inside the MToM podcast studio at Iowa PBS. And we're also part of the Market to Market TV show. By the way, if you want any of this cool stuff that maybe you see me where you see one of our market producers, where when we're out and about, you can take part in our store, which is available in our new Market Insider newsletter. Haha. See how I did that? I tied everything together. You can subscribe to the newsletter at our website. Market to market.org. Find out behind the scenes information about the show, who's coming up, what stories we've looked at, what we've talked about and trying to put the TV show together, and a little bit more about who and how we put TV together each and every week. It is our 50th season, by the way, so there's all sorts of fun information going on with a sign up today at Market to market.org. Scroll down to that page, sign up today and get a new email each and every Monday for me. I'm Paul Yeager. I think I've already said that. But today we're going to talk with Jason Grumet. He is the CEO of the American Clean Power Group. And clean power is something those in agriculture and in farming know very well. Ethanol. Wind. Solar. What else is out there? What is ahead for this industry? What's the biggest story that is impacting how we get power that's generated in rural areas, to urban areas and everywhere in between? That is where a big challenge awaits in the power industry. And it also comes down to security. National security. We'll talk about that with Jason. Find out about some of his part of his job and how it is a tough balancing act of trying to navigate these waters. We'll also talk about the hurricanes and something that has been revealed. That is a challenge with the power grid in this country. New episodes of this podcast come out each and every Tuesday. Now let's talk clean power with Jason Gromet. I've seen you testify in Congress. It's kind of fun to go back and look at those, past recordings of you. What goes through your mind when you're. You're asked to testify.

[Jason Grumet] So first of all, you know, great to be with you. Congress is, you know, our nation and at times, you know, the world's greatest deliberative body. so it's just a tremendous opportunity to sit down with, obviously, you know, bipartisan group of, you know, a few dozen legislators and engage on these key issues. You know, one of the things about energy policy that's historically been really constructive is, you know, it's really been more of kind of a regional conversation than a partisan conversation. I think that's certainly been the case around kind of the transition to clean power. It's certainly the case around, you know, fuels like ethanol and other things that are really kind of centered in certain parts of the country. And so there's an opportunity on energy policy to really bring a more diverse, you know, kind of legislative coalition together than is the case on a lot of other issues.

[Yeager] Do you find that, I mean, like in the farm Bill, there was always this rural and urban parties that came together, usually in the past. not necessarily now. but do you find that there is a rural urban thought on renewable policy?

[Grumet] Yeah. Well, look, it's a, you know, really good instinct, right? The farm bill had always been one of the kind of signature efforts of, you know, urban, rural, bipartisan collaboration where there were significant investments to maintain the capacity of one of our nation's obviously most important, deeply rooted industries and also address hunger and poverty and I think that was a kind of a compromise dating back to, you know, Dole and McGovern. And, unfortunately, that's frayed a little bit in the last few years. But as a model, I think we do see versions of that. So when it comes to, you know, clean and renewable power, the vast majority of the deployment is in rural parts of the country. And, you know, from a political standpoint, actually, over 80% of all of the revenue flowing out of the recent congressional, incentives are landing in district currently governed by congressional Republicans. A lot of the, manufacturing and a lot of the kind of really, you know, deep interest in making sure that we have reliable energy is coming out of the dense urban parts of the country. And so there really is, a compact there, between, you know, the places where we produce the power and the critical places where we use the power, which is not different from oil and gas. Right? The majority of oil and gas is produced in the more rural parts of the country and consumed in more urban parts of the country. So that compact is there. and, you know, the fact that we're making those kind of investments in manufacturing and deployment in rural parts of the country, I think also kind of elevates the potential for really kind of a good national story.

[Yeager] So why then, is there resistance to renewable energy in rural places, or at least on the Republican side, that I hear about, read about constantly?

[Grumet] So, you know, there are very real issues that require serious engagement around land use and kind of, you know, cultural consistency and making sure that the benefits are free. So those are the real issues. And then there's a whole bunch of just kind of background partisanship where people are trying to kind of weaponize the real issues to serve a different kind of audience. And, you know, a lot of that just kind of think about the currency of these issues and the congressional law that was moved forward at the beginning of the Biden administration. And so the irony here is that the argument over clean energy policy for years had been the kind of progressives arguing for regulation and taxation, things that would essentially make polluting industry more expensive, with conservatives arguing for innovation and investment. The actual guts of this significant law, it's innovation and investment. There's essentially no regulatory obligations in the Inflation Reduction Act. It's all about animating, you know, private capital with more consistent, predictable tax policy. So the bones of it are actually quite broadly acceptable. And a lot of the components of it are pieces of legislation that long have been supported, you know, with Republican and Democratic, consideration. And as I mentioned, you know, the implementation of it is actually benefiting, you know, conservative districts much more than Democrat districts. If you really want to, you know, focus on that kind of economic reality. The issue is the process, right? Every recent president has done one I won you lost. Big piece of legislation. You know, President Trump did it with the tax cuts. You know, Biden pushed forward with the clean energy agenda. And, you know, in both cases, like significant public policy was advance, which is benefiting the nation. And in both cases, a tremendous amount of kind of process. Enmity was kind of the hang over there. And so, you know, we're working through that issue and actually making a ton of progress, right. The kind of legacy issues of the process are fading as the benefits of the law are moving forward. But there is still that kind of remnant of the climate change battle. And, you know, while the actual industry has moved forwards. Right. We're working extremely closely with the American Petroleum Institute, the American Gas Association. You know, in the real world, all of our electrons, whether they come from gas or coal or renewable oils, have to interact together. There's a legacy of organizations who, for the last 30 years, have kind of defined themselves and defined their funding based on the battle, and they just not want to give it up. Right? Like, you know, the last 30 years, the people who have been most successful have been the brawlers. And for the next 30 years, it's going to have to be the builders, right? So we're making that transition. You know, we can stop. But I didn't really fully engage the, you know, the real substantive issues at the local level, which we should also talk about.

[Yeager] Well, and I there's always seems to be more money or air used on the fight, not the substance.

[Grumet] Yeah.

[Yeager] And that to me is frustrating to see and I, and I would imagine it's probably frustrating for you.

[Grumet] Like this is our, you know, kind of daily existence which is trying to vindicate substance over partisanship. And again, like, you know, we're selling ice cream, right? Like we are bringing power to this country that is affordable and secure and based in America and clean. And so we ultimately believe that if we just going to keep our eye on the ball and step away from the background, politics like this effort will be vindicated because this is, again, just about the American economy. You know, like Iowa, just to, you know, has been the kind of the trailblazer on clean energy, you know, 40 years ago, first state in the country to actually require that a certain portion of the energy sold was coming from wind power, that 60% of all the energy use in Iowa is coming from clean energy. So, like, you know, I was ahead of the curve. And so our goal has been to work with the representatives there. You know, Governor Reynolds has been terrific. Senator Grassley has been terrific. You know Miller-Meeks. None. Feenstra. Like, you know, we have a coalition of support, you know, conservative support in Iowa for this agenda. And that's just really what we're trying to kind of drive forward.

[Yeager] And I know that clean power doesn't necessarily fit, or ethanol doesn't necessarily fit in there, but ethanol even before wind energy, Iowans have been used to that corn state. folks have been used to that. Now you have the wind, now you have the solar. Is there one that helped the other break ground or make the road easier to get something built?

[Grumet] So, you know, like, I think, you really did just kind of describe the trajectory, though I would not say anything at the moment is easy to build. But, you know, ethanol was the entry point. And, you know, I've had a lot of opportunities over the years working with Senator Grassley and National and others to make sure that biofuels achieve the same goals of affordable, reliable, clean, that created it kind of, I think real excitement in Iowa around the idea of alternative energy generally, wind showed up next. And that's really been kind of dominant in the last, you know, 20, 25 years. And now we're seeing solar start to enter the fray. You know, across the country nationally solar and battery storage are really surging. And so I think, you know, Iowa has such a history and such a great resource when it comes to wind. You know, I expect that we will continue to see I would be a wind dominated, renewable energy state, but solar's got a lot of great attributes and some challenges. Right. But so that's how we're trying to engage the local communities.

[Yeager] Well, like you mentioned, I think this whole conversation about where things are generated, the oil derricks are in the middle of where no one lives. wind turbines, you could say, in the middle of where no one lives. and the energy is needed in these large cities. It's getting it from one area to the other. Is also an issue that you've been involved with transmission lines.

Right?

[Grumet] So when we think about like, what are the major constraints in terms of achieving the goals of affordable, reliable, clean energy? The two most significant are transmission and workforce. The workforce is a great problem to have, right. We need to hire about half a million people to create the, you know, parts for this industry and run the facilities and park that for a moment. Good problem to have, but a real issue transmission is the toughest. You know, the United States does not have a mature transmission infrastructure that is capable of securing our economic and national interests, as well as capable of providing the cheapest power to the people. There's a big discussion about that in Congress right now. And a really, I think, very significant piece of bipartisan legislation and Senators Barrasso and Manchin have put forward. 

But just to kind of bring it home, right. This is obviously important for moving the most cost effective power to the cities. But if you think about what's just happened in the southeastern part of this country with Hurricane Helene, 6 million people have been knocked out of basic modernity. And one of the real terrible things about the current system is that it's totally balkanized. We have about ten different kinds of regional power pools in the country, and we can't move power between them. We don't have inter-regional transmission. And so what that means is when you have these kinds of storms, I mean, when there was the, you know, super Storm Uri people actually died in Texas for lack of power and all the rest of the country was had plenty of power.

[Grumet] We just couldn't get it where it was needed. And so there's a lot of opportunity to advance that. The challenge is, you know, the fancy word is linear infrastructure, whether it's a transmission line or a pipeline. Skinny and long things are tough to say, right? They just they go for hundreds and hundreds of miles and there's lots of different, you know, local communities and regional organizations and national processes. It takes about seven and a half years on average, just to permit the transmission line, you know, major lines on Zia, which is bringing kind of solar power from, you know, the Southwest to California. It took 18 years to permit and 18 months to build. So that's not that's not modernity. And Iowa has had, you know, some significant issues around pipelines and power lines, which, again, is a place where the country's just got to get better.

[Yeager] Well, I can think of plenty of signs, even in an area where I grew up. it's I always get these notes from friends who are farming who say, hey, what are you hearing about such and such transmission line, project X and or whatever it's called. And I'll say, well, let me look. And then I have a farmer who's in a proposed dairy says, you know how many people have come to visit me, about wanting my land? And farmers are very hesitant to give up that. Right. And of the land for I mean, is it the greater good that we're talking about?

[Grumet] There's two parts of this. And any public policy should be thinking both about equity and local impacts and the national interest. Right. So if we are going to have a secure country with a strong economy, there's tremendous demand now for energy. We are going to have to produce more and more energy around. Right. And that's the national interest. We're all in this together, and every part of the country is going to have to experience some aspect of that process. If we want to have a secure country, if we have the, you know, the data centers necessary. You know, I think, you know, President Trump and others have said if there's another world war, it's going to be fought, you know, in the cloud with computers, right? This is a national security question. We're trying to bring manufacturing back to the US, making a ton of progress in clean energy. 170 new manufacturing facilities just in the last two years. They need electricity, right. So there's a national interest that if we are all kind of patriotic citizens concerned about the economics and security of the country, that we have to think about, and we've got to make sure that, you know, in this country, local land rights have always been sacrosanct. And these are, you know, private landowners. They need to be compensated if their land is used. You know, where this gets tricky is you'll have 735 folks who are like, good. And 1 or 2 who are that's, you know, that's where you kind of have to think about the collective interest of the country. And those are those tough decisions. But, you know, ultimately, if we're going to have a modern nation, you know, we built roads before we built railroads before we like having them now. They all had those same challenges.

[Yeager] You could do copy/paste on that answer right there for basically any part of the country on any of these issues. Yeah. Pipelines or transmission lines. but I want to go with let's, let's say it takes 18 years to, to build something that we need or permit something we need before we can even build it. What about localized energy? So solar is one of those where yeah, I get the I just had a solar interview here last week, and the comment I received back was, well, let's just slap a bunch of solar panels on top of those manufacturing facilities and that at least they are the the Amazon distribution or whatever. The big box is out in an industrial park. That'll solve it right.

[Grumet] So like it helps. And because transmission is so tough, there's a significant movement to bring the industry to where the power exists or put the power right, where you need it. I think when it comes to these data centers, which are getting talked about a whole lot, or very significant new manufacturing, it used to be they build the facility and then say, come, bring me the power. Now they say, where's the power? Let me put the facility there. And, you know, the other thing that's happening is we're seeing, you know, kind of what they call these microgrids or localized solutions, where you want to have a new manufacturing facility and you will be, you know, wind and solar and batteries be able to, you know, basically support that energy need. Primarily, you're going to need natural gas and other backup power, because as everyone knows, you know, you don't always have wind and sun and batteries are making a lot of progress. But in order to have 24/7 reliable foreign power, you've also got to have access to natural gas. And so I think you are seeing, because of the constraints around transmission, a different kind of conversation between the energy demands and the energy production.

[Yeager] And that is not, a discussion that's almost, I guess, forcing our hand. But you could also say that the market is working itself out. I mean, that's what we kind of talk about in the economy side of things. That's kind of what it sounds like is happening.

[Grumet] Well, and again, you know, there's a when people think about, you know, private property rights, you know, there's two sides of that equation, right? So, you know, wind in Iowa is bringing $75 million a year of payments to private landowners, farmers who wanted to augment their income with that other reliable, since it's almost like another crop. And we are seeing, obviously, the farms in this country tremendously challenged economically. And many, many, many are being either consolidated or turned into, you know, basic, you know, kind of condo associations. in a lot of cases, the ability, the income that farmers will bring in from choosing to have wind power on their land is what allows them to keep the family farm $75 million of resources coming to local communities from the tax dollars paid by this new industry, which is critical to supporting communities that people want to live in. Right. One of the biggest challenges we have in rural America is a sense that there's just not the opportunity to maintain a youthful, vibrant population like this helps with that. So there's, you know, there's a lot of, you know, freedom to pursue economic interests, which can be interrupted if you have, you know, a couple of people or some outside groups kind of weaponizing opposition at a local hearing. And so they're just there's just two sides of the conversation that both need to be taken into consideration.

[Yeager] Let's go back to the very beginning of what we talked about, I guess, to put a bow on this discussion, what your job is a challenge in the sense of energy is a regional approach. But everybody in Washington wants a national answer. But everybody in Washington also comes from a local issues. That's a heck of a juggling act that you have to do in there, Jason.

[Grumet] Well, so thank you for that empathy. but it is essentially the premise of our democracy, right? This kind of without getting too fancy. And you like going back to the very formation of the country, it was that tension between national interests and state and local rights. That was the reason we have a House in the Senate. It's the reason why we have members of Congress who are obligated to, you know, act in the national interest but have to get elected by local communities. And so it's not a new tension. again, there's so much upside right now in American energy, right? We are the largest energy producer in the world. We are producing more oil and gas than ever before, more renewable power than ever before. And so it's nice to be part of that kind of uplifting economic story when trying to figure out how you blend national, local interests for industries that are starting to fail. You know, deprivation is a terrible place to try to come up with new national policy. So, you know, we feel pretty fortunate. But yeah, it's a tough job.

[Yeager] I guess I should have asked this. This should have been the very first question is like, just give me the makeup of American clean power, because who are you answering to in working and when you're having these conversations.

[Grumet] Yeah, sure. So you know, the history of this industry, like a lot of new industries, was pretty segmented. There were folks who really just focused on wind power. And then there were folks who said, wait a minute, what about offshore wind power? There was another organization focused on solar. There was another organization focused on battery technology, and there was an appreciation several years ago by the major companies deploying these technologies. Wait a minute. We do all of them, right? The technologies actually fit together in significant kind of economic ways. In the real world, you want to combine in many cases, you know, batteries with wind and solar. You're finding situations where having wind and solar working together make sure that you have clean. So the companies were like, look, we're major fortune 500 companies. We are thinking about these technologies altogether. We need an association in Washington that has that similar kind of capacity and breadth. So all of those smaller organizations were kind of brought together into one new kind of super renewable group called the American Bar Association. We also have a really diverse group of kind of different business models. So the utilities have a whole bunch of interests that are pretty different from the interests of the independent power producers who are trying to sell power into regions that historically had been kind of controlled entirely by utility. So we're dealing with a lot of kind of cross technology collaboration. We're dealing with a lot of business model tension, which is actually, frankly, a lot, a lot harder. and we're also trying just to kind of recenter the understanding that, you know, we are an American manufacturing association. We are building plants and facilities and energy that is supporting a core economy. So we're also working much closer with the rest of the energy industry. I think there is a recognition now that we are all going to be challenged by this new demand. If you take the best aspects of all of these technologies, you can actually see a future where we keep the country clean and secure and safe. but only if we really work together. And so that's been a big focus of my time at ACP.

[Yeager] Jason, thank you so very much for your time, I appreciate it.

[Grumet] Been a pleasure. Take care.

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