With California’s energy transition well underway with broad public--and now, federal-- support, how is the state transitioning from ambitious goal setting to the “Age of Implementation?” VX News transcribes and excerpts, from this May’s VX2023 plenary moderated by former LADWP General Manager Marcie Edwards (pictured), with Congressman Mike Levin, Department of Energy Loan Program Office’s Arnab Pal, California Energy Commission Chair David Hochschild, and current LADWP General Manager & Chief Engineer, Martin Adams, who discuss the lasting value of the last Congress’ historic Inflation Reduction Act and also the importance of improving the local and national permitting processes to realize the promise of this domestic industrialization strategy. In particular, the climate leaders highlight the necessity to drive permitting reforms forward with a focus on equitable and innovative solutions.
Marcie Edwards: Good afternoon.
Today's panelists have been invited to address how can we expedite sustainable projects from policy to shovel ready and do so in an equitable manner. I'm fairly sure most of you in the room are aware of the steps we need to take, at a high level, to streamline: policy, regulation, ensuring adequate communication, community engagement, addressing the environmental concerns, adding inclusive structures, job training, incentives, ensuring access to financing, fostering collaboration--have I chewed up your panel yet? The last is finding an equitable distribution of cost benefit and burden, which always ends up to be, I think, the most difficult part of really any equation because where you stand depends on where you sit.
Today, we have some experts in these areas that are available to address the challenges. What I'm going to do rather than do a painfully long introduction is I'm going to ask each of them for a quick self-introduction. Then, we have a couple of questions, but the discussion will go how the discussion goes.
With that, Congressman Levin, would you kick us off, please?
Mike Levin: Hi, everybody. I'm Congressman Mike Levin. I represent the 49th District of California. My district is 52 miles of beautiful coastline from Dana Point down to Del Mar.
Prior to serving in Congress, I worked in clean energy. In fact, I attended this conference 10 or 11 times before ever serving in Congress. In Congress, I have served on the Select Committee for the Climate Crisis before Speaker McCarthy disbanded that committee this Congress. I have also served on the Natural Resources Committee, specifically the Water and Energy Subcommittees.
All the issues that are being discussed this week at VerdeXchange are right in my wheelhouse and the work I'm trying to do in Congress. I look forward to speaking a lot more about all that, but I will yield the floor.
Arnab Pal: Hi, everyone. My name is Arnab Pal. I'm a Senior Advisor with the Department of Energy Loan Programs Office. Because of the great work of our Congressman here and his colleagues, we passed the Inflation Reduction Act, the Bipartisan Infrastructure Law, and the CHIPS and Science bill. Because of that, we have $350 billion in loan authority to execute upon over the next decade.
Our job here is to work with people in the State of California and other states around the country. I partner with developers and community groups to be able to get those project dollars out, so I'm looking forward to talking about this flow. It should be good conversation.
David Hochschild: Good morning friends. I'm David Hochschild, the Chair of the California Energy Commission. We're a 700-person state agency focused on getting California to 100 percent clean energy. We're working on offshore wind, lithium development, microgrids around the state's energy efficiency, building out the ZEV charging and refueling infrastructure, and much more.
I want to just say it is such a pleasure to finally have the wind at our backs with this incredible federal policy: 10-year tax credits for solar, for wind, for geothermal, for electric heat pumps, for hydrogen, for energy storage, and so much more. We've been coming to these conferences for a long time, and it had been kind of lonely without that support. Finally, we have an incredible partnership. This feels like an extraordinary window to finally get some big wins over the finish line.
We're in a period right now I would call the Great Implementation. We're really all about getting it done. Thanks for having us.
Marty Adams: I'm Marty Adams. I’m the General Manager and Chief Engineer of the LA Department of Water and Power. The lights are on, so it’s a good day; my job is done.
The City of LA has a lot of really strong green goals and initiatives. When I look at all the city's goals, about 75 percent of them fall on the Department of Water and Power to do differently than we've done in the past.
I've been in the department two months shy of 39 years. I’ve seen a lot of changes over the time, but one thing that's exciting right now is the move toward renewable energy and how we plan to get there. It’s not just accelerating the goals, but also trying to set a model of how to get there with a lot of reliability, while keeping the lights on, not being subject to brownouts, and also trying to develop new fuel sources, which for us is green hydrogen.
Also, on the water side, there’s the fact that we're trying to be less reliant on traditional water resources from the state and all the imported water. We want to really develop local water resources.
There's a lot going on in Los Angeles. We're the largest municipally-owned utility in the country, which is great because it means I have a lot of resources. It also means sometimes it's very hard to steer the ship a different direction. We're working very hard to steer ourselves toward a very sustainable future and really lead the way for change, not just for Los Angeles, but for California and the nation as a whole.
Marcie Edwards: As you can see, we have quite a bit of talent up here. With that, I'm going to move into the discussion.
Congressman, I'm going to start with you, if you don't mind. Given your current role and amazing background, of which I am fairly conversant, could you give us your thoughts on what policy and process changes you would enact to help us achieve the desired outcomes?
Rep. Mike Levin: I think that the idea of this being the “Great Implementation” period is spot on, but I do worry about some of the things I'm seeing in this new Congress. Over the past number of months, we've seen direct efforts to try to unwind some of the progress that we've made by undoing some of the key tax provisions with the Inflation Reduction Act.
I know that there's so much that we have to do. There were recent analyses done by Jesse Jenkins at Princeton that suggest we need around 1.2-1.3 terawatts worth of clean energy. It just so happens that there are around two terawatts that are stuck in interconnection queues all across the United States right now. There was recently news of one project, TransWest Express, which is a three gigawatt project to take Wyoming wind and get it out to California. That project took 18 years before they finally got it permitted. We're going to need more like 18-36 months rather than 18 years.
There's no question we need to do something around permitting reform. In Washington D.C., you're hearing about this notion of permitting reform; what permitting reform needs to be is figuring out how we accelerate the deployment of these multi-gigawatt, multi-state, clean energy projects, not more oil and gas.
Unfortunately, there are a number of my colleagues that see this as an opportunity to negotiate on behalf of the fossil fuel industry to try to double down on the dirty energy policies of the past, rather than advance the clean energy policies of the future. With the tax credits, we’re making sure that they're there for the long run; that they're predictable; that they're stable; and that they can be counted on to finance projects on the basis of this 10-year window. That's so critically important because, arguably, that's been holding us back more than anything else. A lot of people that would have invested in these sorts of projects in the past 5 or 10 years have opted to put their dollars elsewhere. We're right on the cusp of great things.
The last thing that I will say about the Inflation Reduction Act is something that hasn't made as much news, but as we look back, maybe, 20 or 30 years from now, it could be just as consequential as any provision in the bill. That is one sentence that somehow made it across the finish line. It allowed, specifically in statute, the Environmental Protection Agency to regulate greenhouse gas emissions. If you remember, in the Obama administration, they had the Clean Power Plan. There was all sorts of pushback saying under the Clean Air Act, they couldn't actually regulate greenhouse gas emissions. We stuck that one sentence in there, and now we've got the Biden administration with a plan to actually do what the Obama folks had started. Now, they have the statutory authority to do it. You look at that and can see what it'll mean for things like carbon capture and utilizing so many other great technologies.
It really is an exciting time for implementation and going forward towards the future. Everybody here is going to play a big role.
Marcie Edwards: Thank you, Congressman. Mr. Pal, I would ask you not only to amplify or grow out those remarks, but also if you can blend in your work on expediting the whole deal flow in an equitable manner. I'd really like to hear a little bit more about that.
Arnab Pal: First, I think the Congressman was pretty much spot on with what he talked about on what the last Congress said. I want to take a step back, before we get into the deal flow, and really talk about what the last Congress did. I think when you hear IRA, it’s like, “Oh, there's a climate bill.” There are these great justice provisions, labor provisions, and all these great clean energy provisions.
What the last Congress did is historic and really something that I don't think this country has seen in over 60 years. The combination of the IRA, the CHIPS Act, and the Bipartisan Infrastructure Law has basically put in place a domestic industrialization strategy for the United States of America. It's something that we've been trying to do for decades.
What I mean by domestic industrialization strategy is these bills essentially figured out how much is the cost difference between building things overseas and building them in the United States. They are taking that difference, putting it in the context of grants, loans, and tax credits and basically incentivizing the market to bring technologies back, so we can build them in the United States.
The reason why I started off my introduction with an applause to Congressman Levin and the last Congress is because I think that's an underrated fact of what we've done. Yes, we passed a climate bill, but what we did was pass a Rebuild America bill.
I'll give one example from the Loan Programs Office, and we have many. One of them is, a few months ago, we approved a conditional commitment for a loan in Ohio called Altium Cells. Altium Cells has an agreement to build batteries for General Motors for the next half decade. Without the financing from the Bipartisan Infrastructure Law and the Inflation Reduction Act, we would not have been able to do that. That's a $2.5 billion battery facility. We're going to be able to build batteries in the United States and be able to supply our vehicles from United States’ manufacturers.
That's really the story. Yes, we have a climate bill. Yes, we're going to do all these great things. But we're doing it in the context of rebuilding America. As we move through this, we need to talk about that more because there are so many opportunities that will come from it.
Now, my role at the Department of Energy is to help process some of this deal flow and get people in the room. The way I like to look at it is, how are we going to solve this problem? We never even had the pieces before, but now we have the puzzle pieces. It's about putting them together to create the puzzle. It's about asking what projects do communities need and how do we get the environmental justice advocates, the labor advocates, and the city planning folks together in a room to figure out what we need? Then, it's working with us on how to finance the project.
The last piece of it is that someone's got to buy. That's where Marty comes in. Between myself, David, and Marty, we all have part of the chain. Between so many of you in this room, we have the components. Now, we need to build projects. Over the next 5-10 years, it is about putting the puzzle together. That's not about resources. That's about getting the right people in the room and getting the projects built.
Marcie Edwards: Commissioner, this is a topic that's well in your wheelhouse. I'd like to understand your thoughts in terms of how we expedite and do it equitably.
David Hochschild: Well, first of all, I want to, in addition to thanking the Congressman, recognize Arnab and your colleagues at Department of Energy because there's never been a higher impact moment to be in public service right now. This is true for us at the Energy Commission. We're hiring over 200 people this year. All public agencies are only as good as the people that they can bring in. Really, we need a call for top talent to come in and do exactly what you're doing, and you're leading the way.
Just to take a step back, what's happening with the electric grid right now is climate change is making it harder to fight climate change. By that, with utilities, for example, they're diverting staff that would otherwise be focused on interconnecting storage systems. I think this is especially true in Northern California. We’re having to do storm response and vegetation management. There are only so many folks they can afford to hire under these rate cases, and that is slowing down interconnection.
We had a meeting with the five big utilities last week. With PG&E, as mentioned, they're only they're tracking their ZEV installations on-time record, and only 5 percent of the EV chargers are supposed to be interconnecting or going in on time. That's a problem. We need help on that. There is talk of a climate bond of some sort to help provide additional resources to scale up because we need these solutions to go faster.
I think there's also some process improvement. I'm working a lot on offshore wind right now. To construct an offshore wind project in the State of California requires 32 permits. So, there is a lot to be done. We're putting together a permit roadmap, and you have this irony where some of these laws intended to help protect the environment can actually slow environmental solutions. I do think we have got to look at how to make the process of installing clean energy more friction-free. That goes for things including electric vehicle chargers too. The average time to install an EV charger is like 60 days now in California, which is too long.
I really mean what I said about the “Great Implementation”. We don't really need new big new goals. We have adopted those already. We're going to 100 percent clean energy; we're going to 100 percent carbon neutrality. Those are in statute. We have all these goals in place, including on the building side. It's really about just focusing on making the process friction-free. That's the top priority.
Marcie Edwards: I’m still hung up on 32 permits. Is that local and state?
David Hochschild: Local, state, and federal.
Marcie Edwards: We'll come back to that.
Marty, you are where the rubber hits the road, so to speak, in terms of implementing all of the direction. You heard about the challenges and resources. I know you experience it every single day, but if you could address that for us.
Martin Adams: First of all, with the comment about the permits and the Congressman's comment about the interconnection time, these are real issues that make it difficult to implement projects.
When I think about the whole issue of how to do this in an equitable fashion, the first word that comes to my mind is participation. This is one of the challenges that we see in moving projects forward: how do we get everybody to be able to participate.
One of our baseline pieces of history that we look at is on solar rooftops. LA's the number one solar city for the last eight or nine years--we got beat by somebody in Florida one year, and we're not going to let that happen again.
We’ve got a lot of solar rooftops, but the rooftops are all done by people who own the roofs, which is a little more than a third of the people in LA, which means two thirds of the people in LA could not participate in a program like that. Arguably, some people want to reduce their impact on the environment, but most people are looking at zeroing out their power bills. That's the name of the game, right? How do I reduce my power bill?
When we look at the future, how do we go about this equitably so that everybody is able to participate? One of the challenges for us, as we move forward, is how to develop and design our programs so there's something for everyone. We had state law mandate for solar rebates on rooftops. Those are long gone now. How do we create programs that invest that same kind of money in other communities so that they can participate in renewable projects that affect them and their power bills and their neighborhoods as well?
For us, part of the challenge is assessing where the needs are, assessing what our programs address, and where gaps are. It's difficult, when people are renters, to encourage the building owner to invest in a solar system when the power bill goes to the tenant. There's a disconnect there. It's something that we're working on, and we have programs now to try to bridge that gap.
We know we need more local, sustainable energy sources. For a lot of us here in LA, that means more solar on roofs. How we go about developing that and increasing these partnerships with more businesses and more people? Whether it's through our Feed-in Tariff program, rooftop solar, energy storage, or incorporating more batteries, how do we get those programs in place and the people signed on to participate? Can we can do it in a quick fashion?
Of course, a lot of it comes down to funding. Are we going to be able to rebate those programs? Can we assess where the rebates have gone in the past to look where the gaps are? Then, we can square that up with the rest of the population.
When I think about equity and all this moving forward, and also getting to shovel-ready, there’s a lot of other things that are issues. Everybody mentioned jobs and personnel. Equity takes a lot of forms. It's not just, “do I have a solar panel?” or “Do I get a way to reduce my power bill?”
Equity could also be job creation. How do we look for underserved communities to fill the huge needs that we see in the labor force? I will tell all the folks that want to do business in LA, this will be a focus for us in the future: what are your labor sources? Who are you contracted with? Who are you subcontracting with? We need to develop people in this industry. People who will take on good utility or utility-style jobs. People who are looking for a pathway to the middle class, where we know there's a huge labor shortage and huge amount of opportunity. For us, equity in the job market is a huge piece of how we move forward as a city.
Another issue for equity is contracting. Marcie knows this, but contracting is difficult. What do we do as engineers? We put together the biggest contracts we can because we don't want to go through it twice. Then, all of a sudden, we get the same handful of people who can bid on jobs, partly because that's the only people who have the resources or who can wait two or three months to get paid for the job or who can handle the liability and insurance.
One thing we're doing is trying to revise our contracting process. This is something that Mayor Bass has emphasized. How do we get more local money to stay local? How do we get more money into small business hands right here in the City of LA? At the Department of Water and Power, we’re spending about $1 billion dollars a year in power capital and about $1 billion dollars a year in water capital. That's $2 billion. How can we get a lot of that to stay in LA to help ourselves and help our local economy? That's a huge part of equity as we move forward in actually putting projects into place, and that relies on how we contract that out.
Another piece of equity is the environment that we leave behind. There's a lot of talk about Measure W. You have a lot of water collection projects, and then people want to see open and park space in what’s left behind. In the power world, it’s the same kind of thing for the environment. What are we what are we leaving behind? Are we reducing heat island effect or the heat conditions that people experience in their homes? We have product programs for insulating homes, especially because so much of the housing stock in LA does not have proper insulation.
Then, the last piece is bills. When we look at bills and costs, we see people have shifted off power use because of renewable energy. They've been able to install themselves, and then the infrastructure they use doesn't get paid for, except by the people who still have a power bill. With the issue of equity, the state's been dealing with net energy metering in LA. We're constrained by our rate structure, which is tied to the city charter. We have to address that because we need to modernize rates, not to make people pay more, but just to make sure that everybody contributes. As people who have the means to reduce their electrical demand or zero out their net energy use, that means the burden of infrastructure is going to be shifted to the people who don't have that ability and cannot afford it.
These are the challenges of actually implementing the projects. We are clearly charging ahead, maybe kind of boldly, into the cannon fire. We have a lot of lofty goals in Los Angeles and a lot of deadlines that we've imposed on ourselves that we intend to meet. To do that, we're going to have to have huge partnerships with industry, and we're not going to build every project ourselves. We're going to have to have people who bring us projects and who take advantage of our programs. We need to look to take advantage of those programs in a way that serves disadvantaged communities and makes sure that everyone participates in the green future.
Marcie Edwards: At the beginning of this discussion, I was thinking, “Oh, we have resource issues. I'm available on an hourly basis.” By the time you’ve got done, I’m thinking, “Oh, thank God I'm retired.”
I'd like to circle around to the 32 permit issue. Is that a legislative fix? Is it a regulation fix? Is it state-local tension? How do we fix that?
David Hochschild: We are doing a permit roadmap right now at the Energy Commission, trying to work through that.
This is one of the realities of the State of California. We love coastline, and we love our natural lands. There are a lot of entities set up to protect those: the Ocean Protection Council, the Lands Commission, the Coastal Commission, the Natural Resources Agency, and the Energy Commission. That all has to be worked through.
I do think it's very helpful to have the goal. In the case of offshore wind, we set the goal last summer, at the direction of the Legislature and the Governor, at 25 gigawatts, which is colossal. That represents over $100 billion of infrastructure to come into California between now and 2045. We're really all about getting that done.
The first tranche has been now set. We've leased 582 square miles off the Central Coast and the North Coast. That's been won by five bidders, who are now transitioning from being competitors to being neighbors. These are going to be floating wind turbines. They're massive. Just to give you a sense, one rotation of a turbine powers two houses for a day. That's the amount of juice that'll coming out.
Marcie Edwards: How far out are they? Are they visible?
David Hochschild: The build starts at 20 miles out and goes to 30. They're large turbines that are going to get even larger, which is good for cost reduction, because it means you actually have to put in fewer turbines, but there's a lot to work through.
I think nobody wants no permitting. You want to have careful oversight, but I think looking at things that are now done sequentially could be done concurrently. That's kind of what we're getting into right now.
Marcie Edwards: Mindful of time, I'm going to offer each of you a minute or two to make sure anything you want to make sure that got said, got said. With that, Congressman.
Rep. Mike Levin: Thanks again to VerdeXchange for all of your leadership.
It's really an inflection point right now over the next couple of months to try to figure out a path forward on the debt limit. That's on my mind every day and every night that. I think Secretary Yellen is going to be making an announcement, if she hasn't already, at some point in early June when she believes we have to fix this challenge because of some tax receipts in April that didn't come in as quickly as they thought.
Why is this important in the context of permitting reform and clean energy? Right now, there are those in Congress who would use this opportunity and this negotiation over the possible default of the United States as an opportunity to unwind a lot of the progress that we've made in the past few years. We cannot allow that to happen. I personally will not allow it to happen.
What it means is you’ve got to have a clear counteroffer when they start talking about permitting reform. They have, again, a laundry list of what the fossil fuel industry folks want to see. We have to come back and talk about clean energy and transmission and the need to get from point A to point B.
That's what we're trying to do. It won't be easy, but I don't think it means undermining 70 years of bedrock environmental law. The National Environmental Policy Act passed in 1969; Richard Nixon signed it into law. The vote was 372 to 15. It was broadly bipartisan. The Clean Air Act, the Clean Water Act, and the Endangered Species Act were all broadly bipartisan. Here in California, with everything we did around AB 32, we had a Republican governor at the time.
Growing up here in Southern California, remember the smog alerts we always had? I went to high school not far from here, and you'd run a couple laps around the track and your lungs would burn. We've come a long way because of the great work done by many people in this room. We're not going back. We cannot hold hostage our fiscal stability to try to unwind our environmental and climate progress. That's my great challenge in the coming weeks.
Arnab Pal: That all sounds reasonable to me. The debt limit is the reason why I don't work in Congress anymore. Thank you, Congressman, for fighting that battle to make sure that we have the full faith and credit of the United States restored.
I would just leave on two points. One is, for the most of you are here who are Southern California based, you’ve got to remember that Los Angeles County's got 10 million people, and greater Southern California is 20 million plus. This is a large country in itself. If you take the whole of California, you have one of the largest and most economically prosperous countries in the world.
California has always led on these issues. Now that we are in the implementation phase, California is well positioned to do so again. I hope you guys take this opportunity as an urgent chance to build upon all the things we've done since AB 32 back in 2006. This is really the exclamation point that we can put on the movement that's been fostering since the 1970s. I think all the tools are there.
The last point I'd make is that when it comes to different community groups and bringing everyone together, we have a community benefits agreement for all of our loan applicants. That means they have to show the labor and environmental justice benefits. Oftentimes, we get pushback on the labor front. What we've learned is that looking at what's happening in the next 10 years with building these infrastructure projects, one of the biggest limiting factors is we might not have enough trained workers. The labor unions are providing an incredible asset here by having those workers ready to go and training them for us. What we've been able to show to some of our applicants is working with the labor union is actually an asset more so than a liability.
David Hochschild: In Chinese script, the word for crisis is just two other words put together: danger and opportunity. There's always opportunity inside of crisis. What I feel right now with California is we've been on the brunt of the climate impacts, but we're doing things right now where we're leading the world. That is what keeps me going.
I just want to share two things that we've been spending a lot of time on the last year that bring me a lot of hope. The first is we're submitting, on May 19, to the Department of Energy, the largest tribal energy proposal ever in the United States. $500 million to do tribal solar battery microgrids for 15 tribes around the state to support tribal energy sovereignty. This is a real moment for the tribes to finally get some agency back and to contribute to climate solutions and energy reliability. We think we have a really good shot to win.
The second is something that's happening just two hours east of here, which is Lithium Valley. We are geographically blessed to have one of the largest reserves of lithium in the world here. It's in a superheated geothermal brine a mile and a half underground.
It is by far the greenest way to produce lithium in the world. Most lithium comes from four countries. In Chile and Argentina, where it's evaporation ponds, you produce 20,000 tons and impact 30,000 acres. If you get it from hard rock mining in Australia and China, you're impacting 3000 acres. You do it from the Salton Sea area, you impact just 30 acres, and it's powered 100 percent with geothermal energy. We have heavyweight lithium developers now making massive investments.
I just spent three days there with 15 Department of Energy colleagues, and the vision is to scale that up. 600,000 tons annually can come out of that site; the global market for lithium last year was 400,000 tons. The market is growing 30 percent a year, but we can bring battery manufacturing back. That stuff just keeps me going.
Martin Adams: My only message is that there's a lot of things moving in this space. Of course, we look at federal regulation, funding opportunities, and state laws that are all changing.
One thing I will tell you is that we are charging hard in Los Angeles. We absolutely are looking for partnerships. We're looking for people to work on bringing us projects. We have open RFPs for energy storage projects. With renewable energy, it's all about storing it because we have plenty at the wrong time of day. We don't have it at the right time of day. We need to continue to develop those technologies and take advantage of them.
But we are open. We are looking for partners, and LA is absolutely open for business. Please bring us your ideas and your projects. We will see how they fit into our system and what we're looking for. Also, remember it is key that that there's something in it for everybody in LA so that we can all participate together in the clean energy future.