Right of Way Ep. 1: Energy Policy Whiplash

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In this episode, we discuss:

• The aftermath of the One Big Beautiful Bill

• Foreign entity of concern requirements

• The breakdown in advocacy and political miscalculations

• The path forward for permitting reform

Right of Way Ep. 1: Energy Policy Whiplash

w/ Liam Donovan and Yogin Kothari

Thomas: Welcome to Right of Way, a podcast about energy policy, energy politics, and above all the upcoming permitting reform negotiations. I’m Thomas Hochman, director of infrastructure policy at the Foundation for American Innovation, and I’m joined by Pavan Venkatakrishnan, an infrastructure fellow at the Institute for Progress.

In recent years, permitting reform has come into the spotlight as deregulatory-minded Republicans and Democratic climate hawks have found themselves blocked by the same barrier: a set of environmental laws, passed in the 1960s and ‘70s, which were created with good intent but have since morphed into a years-long paperwork and litigation gauntlet. Whether you're trying to build a natural gas pipeline or a solar farm, the National Environmental Policy Act (or NEPA), the Clean Water Act, and a web of other requirements can stretch projects out for years or kill them entirely. Now, a new round of bipartisan negotiations is underway to reform these processes, and we're expecting things to kick up here in the coming months.

This fight is important on its own merits – but it will be especially interesting because it’ll play out in a particularly weird moment in energy policy.

In the last five years, we’ve seen massive, party-line energy packages from both Democrats and Republicans. Democrats, with the Inflation Reduction Act, or IRA, created a suite of new tax credits for clean energy production, manufacturing, and consumption – from renewables to batteries to electric vehicles. Then, Republicans’ One Big Beautiful Bill, passed earlier this year, cut or phased down many of those credits – but also left or bolstered a number of others, from the so-called baseload carveout for nuclear, geothermal, hydropower and storage to the now-expanded carbon capture credit. All of this has created a great deal of policy whiplash for the energy industry, and has left the US without a clear long-term energy policy vision.

So, on Right of Way, we’re going to talk to experts, advocates, and industry representatives with a stake in this permitting reform fight. And we’re also going to try to understand what this push – whether it fails or succeeds, and regardless of what shape it takes – tells us about where we’re going over the next few years.

Today, we’re going to do a little bit of scene-setting. We’re going to talk about what happened in the reconciliation bill, what the short and long-term outlook for the energy industry is based on that outcome, and how that’s going to drive policymaking efforts – including permitting reform efforts – in the near-term.

Pavan: We’re fortunate to have two legends of energy policy joining us today in Liam Donovan and Yogin Kothari.

Pavan: Liam Donovan is the President of the Risk & Reputation practice at Targeted Victory, a leading political strategy and marketing agency. He has more than two decades of experience at the intersection of politics and policy, having held senior roles at a national trade organization and a global law and lobbying firm. His bylines have appeared in the New York Times, the New York Post, and elsewhere, and he has appeared as a political commentator on CNN, Fox, MSNBC and CNBC. Finally and perhaps most importantly, Liam is a prodigious and prolific Twitter poster, and listeners should go follow him there.

Thomas: Yogin Kothari is the Chief Strategy Officer at SEMA, the Solar Energy Manufacturers for America Coalition. He has a decade of experience serving in both Congress and the nonprofit sector, serving on the staff of the Senate Homeland Security and Governmental Affairs Committee, where he advised on regulatory affairs, the environment, and beyond.

Pavan: Yogin, just to kick us off here, it would be great to have a brief readout of the One Big Beautiful Bill’s energy title. So what did it keep, what did it cut, and what did it add?

Yogin: Hey, first of all, thanks guys. Thanks for having me on. I'm really excited to dig into this with y'all and appreciate all the great work you guys have been doing over the last several months leading up to OB3 (The One Big Beautiful Bill Act) and now in implementation.

So, you know, from where I sit, OB3 made some fairly significant changes in the energy title, right? Most of the modifications significantly impacting solar and wind. I think the headline for most has been solar and wind ending up being treated differently than the quote unquote “baseload” or “clean firm” technologies like storage, nuclear, geothermal, hydro, et cetera, as well as the incorporation of prohibited foreign entity restrictions and material assistance restrictions.

But, for my members and members of the Solar Energy Manufacturers for America Coalition, the headline for us was what was kept the same, and that's section 45X, the advanced manufacturing production tax credit. Bipartisan support for the first time on the record, meaning Republicans and Democrats on the record strongly supporting efforts to onshore these critical technologies. So, was happy to see that.

There were some other changes around the residential credits, EV credits, things like that all being eliminated. I think that was fairly an expectation for anybody who was following these issues and the politics going into the debate. 45V got a little bit of a haircut there as well. And, you know, now I'm excited to focus on implementation now and get past all of the congressional lobbying.

Thomas: So, first of all, I have to say “OB3” is a term that I've not heard used yet, so it's gonna save me a ton of time instead of saying O-B-B-B-A into the future. But Liam, on your end: It seems like the GOP rejected this premise of tech neutral support for energy technologies, right?

It seemed like one of the bets of the Inflation Reduction Act was that by making that investment credit and the production credit tech neutral – meaning that: not just wind and solar, but geothermal, nuclear, hydro, et cetera could be eligible, that it would end up creating durability for all of those sources and the entirety of that credit.

So, why do you think it is that the GOP rejected that premise? And was it fundamentally ideological? Was it budgetary? A combination of both?

Liam: Yeah. I think it's overdetermined in a lot of ways. To understand this bill, even zooming up out of the energy title, you have to understand the dynamics within the Republican coalition right now, which is transitional.

This is not yesterday's party. It is not the 2017 Republican Party that gave you the Tax Cuts and Jobs Act, even though the core of what this ultimately did was extending those legacy policies.

I think the treatment of the energy credit regime owes to a number of things.

Number one, there's a “Willie Sutton” issue of how do you offset the things that they wanted to do. There were only so many pools of cash to go after. It's why you went after mandatory programs, namely Medicaid, got a trillion dollars out of there. There were only so many other pools to go after, and IRA was a ripe target, especially given the fact that every time you went back and had JCT run the numbers, the cost ballooned.

So it went from being a $300 billion tax title in 2022 to a trillion dollars, depending on who you ask, in 2025. So I think that made it a ripe target. I think the politics are certainly – whether or not I'd say it's ideological, there's certainly a partisan lens. Because even though, as we know on this podcast, what IRA became was far different than what the progressive vision had been and what BBB looked like – this is much more of a Manchin-flavored energy package – it was always coded as “Green New Deal,” lefty Biden stuff.

And when Trump and the party of 2025 is very keen on rolling back any traces of Biden-era policy, I think that made it very compelling. And, at the end of the day, even if you think through how Republicans think about tech neutral… because remember Chairman Crapo back when he was just a senior member of the Finance Committee, had his own tech neutral regime, but when he thought about tech neutral, it was meant to reward different things. And so wind and solar wouldn't have been eligible for that because they’d had too much penetration in the market. So I think there's a way to reconcile the concept of tech neutrality, and not going back to the hodgepodge of tech-specific credits, while still preserving what it did and being more punitive in areas where Republicans thought either it wasn't their constituencies or perhaps these are mature technologies that shouldn't need indefinite help.

Pavan: Right, so, relatedly, I want to talk about a little bit about the advocacy here, right? Because part of this is a partisan issue and the other part is like, what were the industries doing here to try and protect their tax credits?

So, just zooming out, looking retrospectively on the advocacy end, was there more that could have been done from renewable technologies? And why is that? Liam, I'll go to you first.

Liam: It's a really tough question, in part because people at this point have to justify what they did, which is a different question.

It's a different question of whether it was a reasonable strategy that was undertaken versus, knowing what we know now, could things have been handled differently? I think there was a number of miscalculations, not least of which: most of Washington expected this fight to come much later. We expected that in July of 2025, there might have been a first bill in the mold of the Senate vision. And that end-of-year was, of course, as ever, when Congress would tackle tax policy. So I think there was a late scramble to catch up to the reality on the ground, which was, oh wait, they're really doing this, and they're really gonna have a second quarter strategy.

The July 4th deadline is not just an aspirational goal; they're dead serious about this. So I think that was a miscalculation. I think there was a strategy or a premise that had operated for the last year – two, three years – since the implementation of the IRA that, of course, because the dollars flowing into these districts disproportionately was going to Republican districts and deep red states that necessarily (this is the old defense base strategy of, well, because of a part is built in every district that couldn't possibly go after these contracts).

I think that for the first time faltered and you had Republicans who either, and perhaps this is a, Biden handcuffing, the Biden administration through their implementation strategy and their regulations didn't allow some of these things to move forward as quickly as you'd need them to be mature enough, shovels in the ground, steel in the ground, jobs in district to where, it just wasn't as compelling as you might have expected if companies went into members and said, “Hey, but I have these billions of dollars being invested in your district.”

As long as that wasn't already actualized, there was little that was seen as risking. I also think the broad handholding that I think papered over some of the risk here, where you had a very good job by industry, building out a broad but ultimately kind of shallow coalition within certainly, the House. If you thought about the Garbarino-Kiggans letters and coalitions, on paper, it looked very strong. If you parsed the language, there was not a firm commitment to much other than, “don't repeal it in its entirety, give some level of certainty and stability because these are important.” But it never identified necessarily what these were.

That's a lot of different credits, a lot of different industries, and at the end of the day, members of Congress are parochial creatures. And so when push came to shove, not only were they interested in different elements of the law and preserving different elements of the law, but also if you're Andrew Garbarino, let's say, or Mike Lawler or a half a dozen of these members who were ostensibly the bulwarks against significant reforms and repeals, they had bigger fish to fry, whether that was the treatment of SALT, whether that was Medicaid. I think that's ultimately the story of “OB3,” if we're calling it that, is you had the same people fighting on really three different issues, and it was a binary fight between the conservatives that just wanted either pat faster or more punitive, and the moderates who wanted accommodations in all three of these areas. And at the end of the day, they indexed more to where their political peril really lied, in the case of certainly SALT on the first go-round, and Medicaid, which they entrusted to the Senate, which I think ultimately proved unwise.

Thomas: So, just quickly to jump in there, I think one of the things that we're really interested in was the “if we just spend money in these districts, there will be a ton of political support for the credits in general.” And then there's now this sort of retrospective, “well, okay, maybe the steel in the ground element of this was really important.”

We've also heard a theory of the case presented that there's this really meaningful distinction between generation versus manufacturing. And, Yogin, I think you can probably speak to this, but to your point: 45X, including 45X for solar components, was maintained, right? Whereas obviously, solar and wind in the tech neutrals were phased out.

How should we understand this, right? As we think about, like, how do you create durable industrial policy, durable energy policy, and, thinking about what the political theory of the case in 2022 got right and wrong, what do we come away thinking about here?

Yogin: Yeah. Look, I'll be as candid as I can be here. I think the bottom line is, over the last decade or two, we have lost a lot of our manufacturing base across not just these advanced energy technologies, but across the board to China, right? China, Southeast Asia, and we've been living in this whack-a-mole trade regime for the last 10-15 years, especially when it comes to solar.

And it’s pitted the industry against each other in some ways, right? The handful of manufacturers that I would get to work with on a daily basis, versus all the developers. And the way that we like to think about it is: When it comes to solar in particular, do we want to take control of at least our portion of the supply chain? And I think there's a national security imperative to do so.

But unfortunately, the industry – the broader industry, the developers and everyone else – wasn't collectively able to make that case. And you saw the politics of this, and I think Liam to your point: this whole “Hey, if there's something in my district, that person's gonna be for it.”

I mean, there are Chinese companies invested in Ohio building five gigawatts of solar panels, and Bernie Moreno and Jon Husted are not gonna be championing that factory, right? And so there is this distinction, and the writing was on the wall going back to last year when Sherrod Brown introduced one of the first foreign entity of concern pieces of legislation. And so if I was industry, I would be thinking back to at least last year and saying, “Hey, look, this is where the politics are going on both sides of the aisle. And we need to lean in on the manufacturing elements and elevate the non-Chinese manufacturing, and that's the way that we can make the case. And I don't know if the industry did a great job of that. Again, you got to save 45X – but the demand drivers that are associated with that, unfortunately, are gonna get tapered off relatively soon rather than later.

And I think the other technologies, they were a little bit more successful because they were able to separate themselves a little bit, partially with political momentum. I always like to point to Form Energy. They established support for a lot of the energy storage side of things. Their factory is located in this old steel town that lost Weirton Steel, which was one of the largest steel producers in the country at one point. And they're revitalizing those jobs. There's steel in the ground. There's a thousand jobs there now. That all makes a difference. And I think, collectively, the industry may have lost the ball there.

Thomas: Yeah, that makes sense. And I think this is also a good segue to talk about FEOC (foreign entity of concern) more broadly. It seems like in the aftermath of “OB3,” there are really two areas of greatest uncertainty. One of them was the status and position of the loan programs office, or the LPO, which we probably won't talk as much about here today. And then the foreign entity of concern requirements for the tax credits.

So for listeners, these are rules that strip eligibility for any project that's owned or controlled by, or receives, quote unquote “material assistance” from a foreign entity of concern. That's broadly defined to cover companies tied to China, Russia, Iran, or North Korea – China being the most important one here given their control over critical supply chains.

And there's quite a bit of concern that the rules as written – maybe they're unworkable for some companies; maybe they're just exceptionally complicated, making compliance really hard. Maybe they're workable in the long run, but tricky in the short run. How are you reading the tea leaves here? What are you hearing from folks? Is this workable? Is it unworkable? Where are we, and what does it tell us?

Yogin: Yeah. I'm happy to take that on first. Look, I think the base kind of reaction to all foreign entity of concern language in the House and the Senate bill was always, “Hey, this is not gonna be workable.”

And I don't think that was the right position to be in. I think it was – again, to my point earlier, it was clear that this is a direction Congress wanted to vote to go in, both Republicans and Democrats. Going back to Carol Miller, Marco Rubio had a 45X FEOC bill. It was all there. So what the Senate ended up doing – they really threaded the needle here and provided a pathway to allow folks to get into compliance on the manufacturing side and on the deployment side. I think it's a strong compromise.

I would even argue maybe they could have gotten a little further and strengthened FEOC, especially on solar. And again, that's a personal bias of mine. I think my member companies would've liked to see something stronger.

But I'm not gonna sit here and say it's gonna be easy to comply, but I think, once we sit down and take a deep breath and look at the rules and try to find ways to work together, I think there are pathways to get on the right side of this. And frankly, again, it's a national security issue. We should be controlling our solar supply chain. We should be controlling our battery supply chain, our inverter supply chain. Those are huge national security risks. The President's AI actions yesterday highlighted some of that too. Congress, through the appropriations bills and report language is highlighting some of the national security risks associated with this. It's a big deal. And I think the industry at large needs to take [that] a little, probably a little bit more seriously. And that is clearly where the political momentum is going.

Thomas: Yeah. I'm curious, Liam at a high level: How should we be thinking about FEOC stuff, right? Because it seems this general push towards both Republicans and Democrats being comfortable with industrial policy, with onshoring critical supply chains, et cetera.

To Yogin’s point, the writing has been on the wall. This seems to be a direction that we're all comfortable heading, at least in broad strokes. And so we're gonna be looking at FEOC structures for all sorts of industrial policy investments moving into the future.

How do we thread that needle, right? Is this, maybe we went too far? Maybe we didn't go far enough to Yogin’s point for certain sorts of things? Certainly, it was quite a bit farther than the FEOC requirements that were written into a lot of the IRA-era rules.

So, like, what's the general trajectory of things?

Liam: Yeah, to Yogin’s point, I think there was a misstep there by industry seeing this as, “oh, well this is unworkable.” I think that was a feature, not a bug to the people that wrote that. That was very deliberate. And so I think there's a good faith/bad faith version of this.

One is: this is a back door way to ensure that people aren't getting these credits. And I think that was more what was reflected in the ultimate House version. Similar to some of the phase-out rules – it was like, yeah, the unworkability was the point. The Senate was left to pick up the pieces, make it more livable. But to everything that you and Yogin just said, this has directionally been the way we've been going from – what, the advent of the FEOC concept was in CHIPS, right? The original CHIPS. And then, for the EV provisions in the IRA, you built it out a bit.

And I think – while we just eviscerated the consumer credits, I think that's really the model there. And likewise, I think while we don't yet have a coherent worldview among Republicans, because you still have this fractious coalition, everyone is much more comfortable with dealing in this space. And if you think about what the Party is likely to look like in three years, it's much more likely that you have a Vance outlook on the world than going back to anything resembling a pre-Trump version of the Party. So I think it's here to stay, and – particularly for stakeholders, for companies and industries – you need to embrace this. Embrace it to the extent that it fits your model, and you can find yourself skating where the puck's going rather than trying to play catch-up in the way that I think we saw over the last six months.

Pavan: Yeah. So, I want to move to some of the executive actions: the Interior memo, there's been a recent executive order related to “commence construction” for wind and solar. So, Yogin, can you walk us through that EO, can you walk us through the memo, and then overall, wrapping this all together, how do you think this affects overall deployment for renewable technologies?

Yogin: Yeah, the executive order was interesting because I think the initial reaction, and I'm still trying to figure this out, is: it's the first sign of the administration now trying to directly put their thumb on the scale, right, on wind and solar. We've seen some other executive orders and actions and things like that, but this will have, depending on how it's implemented, could have the biggest impact, one of the bigger impacts.

But 45 days is a quick timeline for Treasury, and getting sub-regulatory guidance or any other action like that in 45 days is probably not realistic. So we'll see what comes out, but I think what Treasury can do is send market signals, right? And indicate to developers: “Hey, look, this is where we're going.”

It's not something that only this administration has done; the previous administration did the same thing when it came to domestic content and making sure folks knew that solar wafers were gonna be part of the calculations there. I think, Treasury could say that: “Hey, we're gonna be looking at this material assistance stuff really closely, so don't try to get around it by commencing construction in the next five months and just using a bunch of cheap Chinese stuff.”

And that's not unreasonable, right? It is not unreasonable to say that we need control of our supply chains and we need to control what's going on to our grid. That is a very reasonable position for any elected official to take. And so for the industry, again, to skate where the puck's going, right? That's where we're going. So let's just buy American. Let's buy allied supply chains from the start, right? They could have done a domestic content style restriction, and they chose not to. They want to have an allied supply chain and I think that's where I see things going there.

On the Interior memo, Pavan, I know, like you and I have chatted a little bit about this from when it came out, but it seems to me they're really un-delegating a lot of authorities that have been delegated from the Secretary's office and it could slow projects down, it might politicize them a little bit further. You might have to do some more paperwork or get your members of Congress and other electeds involved in getting things unstuck. I don't see it as a total shutdown, but I think it'll just slow things down, put up some barriers and you might have to be a little bit more engaged and, again, for our industry maybe, it's a, kick in the rear to say, “hey, you need to be better about engaging with Republicans.”

And that's not totally unreasonable, but look, even earlier this week, Secretary Wright was just on Brett Baier like two nights ago, and he highlighted that solar is growing rapidly in the US and he thinks that there's a future for solar in the US. The situation on all this remains really fluid and Secretary Wright’s going out there – and what he said two days ago is very different than what he was saying a month ago – I think there's an opportunity there. And I think with the priority on the data center stuff, look, solar and storage is going to be the bridge to nuclear and all the other technologies that Republicans care about. But in the next two to three years – anything that gets built realistically – it's probably gonna have to have solar and storage as part of the conversation.

Thomas: Let me ask you both one question here, which I'm still trying to wrap my head around. A lot of folks are trying to figure out what is the coherent Republican energy policy vision in the aftermath of “OB3?” And on the one hand, it's notable that there is this “clean firm carveout” for these so-called baseload technologies, also that 45X stuck around.

On the other hand, there's this almost Biblical punishment of generation for wind and solar with the DOI memo and elsewhere. But more than anything, it seemed like there was just such distaste for anything that had the Inflation Reduction Act title slapped on it. When we were working on Loan Programs Office (LPO) stuff, they had to remove all of the LPO money and then replace it with other money because the original LPO money came from the IRA, right?

And so, it’s hard to parse apart what is just real frustration with the way that the Inflation Reduction Act came to be, and what of it represents a cohering positive vision of where energy policy should be going?

Liam: That one's tough because I think this is not a coherent moment for the Party, and this is also not a Party where if you imagine, the folks that make it up among office holders, most of them didn't come here because they were driven by an energy-centric worldview.

I do think that the encouraging thing is with the Administration's leadership on AI and the energy dominance frame, I do think that sort of leadership, rhetorically or otherwise, at least lends a vision to others to fall in line behind. I mean, we should acknowledge this on this podcast, but I think – present company between Thomas and Pavan, you guys leaned in at a very important time to try to take what was out there as a rhetorical frame for energy dominance and [show] how clean firm overlays that.

I think it was there for the taking, and you could imagine it in what Secretary Wright was saying at the time. But there wasn't a lot of energy on the Hill other than people like Senator [Kevin] Cramer speaking about it. You didn't have stakeholders leaning into that the way I might have imagined. But I think the opportunity is there. But I think you have to build it out for people, because it's not intuitive. It's not yet to the point where you have – I think there's really smart staffers, there's really smart thinkers on this, maybe it's people listening to this podcast – but it's a self-selective audience that I don't think this vision has gotten kind of breakaway velocity in the way that it needs to.

And so, the bad news is we're not there yet. I think the good news is there is opportunity to build out a coherent vision that reflects and reinforces an idea of energy dominance, an idea of winning the AI race that really does… I mean there's lip service to all the above. It's inconsistent in this application, but I think there really is an opportunity to build out something more coherent than where we stand right now.

Pavan: Yeah. So going back to the “commence construction” EO, that Interior memo – obviously there's lineage here, right? The Biden administration, they levied some punitive measures against oil and gas. To what extent, Liam, do you think that the recent actions from the administration are informed by maybe the course that the Biden administration pursued if at all?

Liam: I think the tit for tat is so easy to fall into. You can always justify things… this is where the overdetermined piece comes in. These are technologies that are coded as, and, even before Biden, these are things that, despite the fact that they had some Republican and bipartisan DNA they were certainly tainted at some level by the association with the IRA.

But even that wasn't the end-all be-all because, of course, as we know, 45Q and 45Z which are included in the IRA title – those were given different treatments. So it's not as simple as saying, “Oh, this is IRA, so it's bad.” But I do think this is a long history here.

And even going back, let's go back to the PATH Act, right? There've been so many times where industries have come back to the table and say, “We swear, just give us certainty. Give us a long-term phase-down. And we swear this is the last time you'll hear from us.” And of course, that's never been the case.

So I do think there's some residual frustration with the perpetual subsidy there. And all the overlaying Green New Deal rhetoric with obviously, President Trump. I think I may have underrated President Trump's personal determination because by all accounts, when he was speaking privately with members, he wanted this gone. People had different interpretations of whether that means stop it tomorrow, versus just get rid of it in an orderly fashion. But I think I probably underrated how much the President himself just wanted it all gone. So I think it's a little bit of everything, and at some level we should be marveling at how much survived and in a durable way, particularly on the clean firm side.

Pavan: We're talking about perpetual extensions – can't ignore the emergence of Alex Epstein and his influence on the process. There were points in the process where I was talking to people in government affairs and they were afraid of the next Epstein tweet, scared that it might tilt the process in a way that would be unrecoverable. So I'm curious what you all make of Alex Epstein and operationalizing this kind of latent discontent in the Freedom Caucus with the IRA. And in part, I think that's the reason why the “commence construction” for wind and solar was probably the last outstanding element of this overall bill.

So I'll leave it to either of you to take that.

Yogin: Yeah, look, I think Alex probably embodied a lot of where the politics of the moment were, right? If it wasn't Alex Epstein, it could have been Joe Schmo, right? And so he just happened to be the right man at the right moment, I guess, for the Freedom Caucus. Obviously, not something that we were super excited about, and we were definitely frustrated a little bit there, but it is what it is at this point. And he's out there, and we're in this attention economy, and he was able to get the attention. And frankly, he got the attention of the White House, right? He was brought into the Republican Senate lunch with [White House Chief of Staff] Susie Wiles. And that makes a difference. And that's good on him, I guess.

Liam: Yeah, I think there's a lesson here that goes beyond just energy policy, which is we're in a new landscape here where, it goes back to that attention economy point, but – you don't have to have the right pedigree or the right credentials or be associated with the right think tank or what have you to be a player here. And I think that's more important than ever.

And something again, that I think was a miscalculation by some stakeholders, some members of industry that had written him off. “Oh, that's just Alex Epstein, there he goes again” kind of thing, when they should have been probably taking him much more seriously. And in retrospect, I think even outside of this context, you have to take seriously… there are Alex Epstein analogues in every space and taking them seriously, I think, is more important than ever.

Thomas: Yeah. We've long joked about the “posting to policy pipeline,” right? But it has become immanentized in a really real way. We've also seen recently, the name is escaping me, but there's a guy down in Tennessee with a major Twitter following who has been fighting the placement of a gas plant by TVA, such that it's been elevated to the White House level. And then, sure enough, that plant got canceled. This sort of thing is really real. And I think it sounds like maybe a lot of folks underpriced the importance of that sort of thing.

Pavan: Yeah. And I would add, like you, you observed [that] on the public land stuff, right? Where this provision took off on Twitter and there were tweets with tens of thousands of likes calling for that provision to be removed. And it really did move the legislative process.

Thomas: Yeah. Okay, so last piece here. We're trying to get a sense of where we're going here, right? And, recognizing in a lot of ways the incoherence of this moment. But we're also driving towards… ultimately, this podcast is largely about the permitting reform fight. And we want to know, what's next? What's the next Democratic ask on energy policy, right?

We are still in a GOP trifecta, but we're moving towards what's likely a split Congress. And will there be another extenders fight? Will there be an effort to extend the wind and solar credits? Will there be a pivot away from the sort of tax creditification of energy policy? What’s the next big push especially some from the Democratic angle or climate angle on all this stuff?

Yogin: Yeah. Look I think Democrats are letting the dust settle a little bit here, right? I think they need to see what implementation looks like. Let's see what this next 45-day period looks like. I think what comes out August 18th, August 20th, is gonna be indicative of where Democrats might want to go.

We're not getting an appropriations – some kind of full-year appropriations – without Democratic votes. And so what Democrats choose to ask for in that will be important to follow.

If I had a magic wand, my focus would be on manufacturing and leveraging… look, manufacturers need a level playing field to compete with China's subsidies. We all know what those subsidies are. Free land, free electricity, forced labor, all that stuff. But if we want our technologies and our manufacturers to be able to compete, we need to provide that market differentiator. And so, maybe it's not a full extension of a 30% ITC or anything like that, but: Does it make sense to have a 10% domestic content bonus if you're just buying American? You get that 10% and does that level the playing field? It’s like another way to tariff, right, but more of a carrot approach.

But I, I think, [Representative] Scott Peters, the other day talked about permitting reform a little bit and said he doesn't know how he's gonna be able to trust his colleagues across the aisle. And I think that's gonna be the biggest challenge that we're gonna see in the next six to 12 months with just the way appropriations has gone and some of the impoundments and the changes in how the agencies are being run.

I think there is a little bit of a lack of trust and this trust deficit. And I think, as a former Senate staffer, I worked really well across the aisle when I was working for Gary Peters with Rob Portman, Ron Johnson, others, but only because we had that kind of level of trust between the members, between the staff.

And so, I think we'll have to see what that looks like once folks go away for August and then come back in the fall.

Pavan: Yeah. You're getting right into where I was going, which is, there's a world where you can imagine, if you're not gonna see wholesale restoration of a 30% ITC for wind and solar… the best way to bring down costs for renewable projects is permitting reform, regulatory reform. You could imagine Democrats being more motivated to pursue a deal like that, but obviously there's this issue of the EOs and the memos and this feeling of the well being poisoned.

On the flip side, Republicans could feel that they've gotten their anger out at wind and solar and the “Green New Scam,” and now, maybe they're prepared to do tech-neutral regulatory reform. So I’d pose that to both of you.

Liam, I'll begin with you. How do you think this changes the politics of permitting reform – this big reconciliation bill?

Liam: I think it's up to Republicans to begin a good-faith process that makes it hard for Democrats to say no. Because I think there's enough heartburn, there's enough feeling of unfairness throughout all this. Yogin brought up the dynamics of government funding, where, “Why would we make a government funding deal if you're just gonna take it away through the back door?”

So I think there's a deficit of trust that was always there that is now at a low point. But I think that's up to Republicans to make an offer that… even as a political matter, it's probably wiser to make [Democrats] say no rather than giving them an easy out. But I just think, and this is different than the permitting question, but as an outsider, just reacting to the last question.

I just wonder in any kind of bipartisan way or even a partisan way, let's say, flashing forward to a universe where Democrats have full control. If you think about what gave us IRA, it was the tools being circumscribed to what fits within budget reconciliation and a commitment to the carrot, which I think now has been exposed at some level.

And if you think about why we didn't have tax policy happen in the two to three year interim after passage of the IRA, it's because there was a frustration on the left that we were doing so much to give rewards to corporations and not doing enough for working families. So that's what I wonder about, is the big thing that the Democrats ask for, even in the context of, let's say, an extender-type situation. They're gonna want more for working families, they're gonna want more for the child tax credit, rather than over-indexing to anything that could be seen as a carrot.

And quite frankly, when they do come back, I think if they're looking at the balance of carrots versus sticks, they're gonna be much more inclined to force companies to do things rather than try to create incentives that can easily be taken away by Republicans when they're back in power.

Thomas: Let me ask you one quick question here, Liam, and it's something that you and I have discussed before. We've talked about how oftentimes commentators, especially those who are interested in energy policy, over-index on the importance of energy policy compared to other issues.

We were saying that, and then in the last-minute negotiations over “OB3,” it turns out that the

IRA credits were like Chip Roy's number one hang-up with the bill. Is energy policy legitimately rising in terms of individual legislators’ rank of import? Or was this just this one weird moment and maybe the House Freedom Caucus needed to have a certain sticking point and IRA was the easiest place to land?

Liam: Yeah, I think it's more the latter. I think you have to understand the internal logic and dynamics of the bargaining, because the reason it became the thing for the House guys at the end was that they thought they had their first deal. And so it was this tug of war type situation.

Quite frankly, if you think about the trajectory of this thing, there was the House Ways and Means mark, which was one thing. They tugged it even further for what got them the votes to get to the House floor.

And this was even on SALT – this was all with the understanding that the Senate was gonna have a different view of the world, and “those squishes over there were gonna water it down.” So, I just think in a vacuum, I'm not sure that it takes on the same salience, but in the immediate context, they knew that this was actually a stronger political position for them than saying, “No, we need to squeeze that much more outta Medicaid or, further water down the SALT stuff that those guys needed to win their races.”

So I think it's notable, but I also think this is just that context of those three areas that they were duking it out on, I think this was just one that ended up being what made or broke the deal. And at the end of the day, as you said, they needed to make a deal with the Senate moderates to, I guess backfill… the Senate went harder on Medicaid than I would've guessed, and they had to throw in a sop there with the rural funds. But really I think what made the deal was getting the beginning construction safe harbor in there. And I think that's what set these guys off. And quite frankly, like it's why you got the Interior memo. It's why you got the EO because you had to find overlap where really none existed. But that's just a function of the circumstances rather than I think the broader importance of energy in the intellectual framework.

Thomas: So, it's pretty clear that if permitting reform's gonna happen, it's gonna have to originate from the Republican side, with Republicans presenting a good faith structure for negotiations to start.

And it's also pretty clear then that it's gonna have to include some sort of transmission stuff as part of the package. It's long been a key Democratic ask. It was the key thing in the Energy Permitting Reform Act of 2024. And obviously, there is increasing Republican interest in transmission as well.

We're in this weird moment where, on the one hand, the Grain Belt Express loan is getting canceled because Senator Josh Hawley in Missouri is putting pressure on the President and Secretary Wright to cancel that loan. And at the same time, we're hearing that there's increased interest from the executive in grid stuff and transmission stuff. And there may be even executive action to that end coming down the pike.

How tricky is it gonna be to get Republicans to take that first step and put transmission out there? And, where is the Republican Party moving on transmission rhetorically?

Liam: The Hawley experience and the Grain Belt Express experience is certainly a shot across the bow. I think it's complicated by the rhetorical utility of calling things “Green New Deal” and everything else. And this is also one where in a vacuum it's easy for somebody like a Josh Hawley that actually looks for contrarian ways to be out there and make noise and they can do it very effectively.

That vacuum is gonna need to be filled by voice within the administration, setting the tone. Because like I said I think they've laid out some potentially very effective frames that could help to propel this effort. But as we saw even with “OB3” the reason this went was Congress coming up with a critical mass of its vision, but the Administration coming up with its non-negotiables and leading from there.

And so until you get to that point, I think it's difficult. But I think at the end of the day, Hawley is a great example, like the members can talk all they want about things they won't go for, like let's say Medicaid cuts, but at the end of the day, if the Administration's for it, they will find a way to rationalize whatever it is.

And so I think it really comes down to that leadership. And putting out an initial offer that is not just spurned as bad faith by Democrats.

Pavan: Yogin I might add: So, we talk about transmission, but in the context of the last permitting reform deal, Republicans got this lift of the LNG pause under the Biden administration. Do you think there's a world where – obviously, Democrats would like to see that in the context of any permitting reform negotiation — but what executive branch actions that Democrats view as punitive could they plausibly get in the course of a larger permitting deal? And how do you see that playing out?

Yogin: Yeah, again, I think just given where the industry is, I think there's gonna be a lot of focus on tax implementation, right? “OB3” implementation.

And I could see a scenario where Democrats start to leverage “OB3” implementation – to get votes if we get that far – and make sure it happens in a more reasonable way from their perspective in exchange for whatever it is on permitting reform.

From a Democratic perspective, there's no way Democrats can have a conversation on permitting reform that does not have a tech neutral, all the above, every technology, wind, solar, et cetera, is part of the conversation. And so, that to me is probably the Democrats’ red line or non-negotiable.

And I don't think there's as much animosity, across the Republican conference in either chamber on wind and solar as we've seen the rhetoric be, but there's some folks that again, drown out everyone else.

The Republicans that are gonna be leading on permitting reform are all rational actors and reasonable, right? And so I think they all want to see more electrons on the grid. More electrons on the grid, doesn't matter where they come from, they're not tagged as solar electrons or wind electrons. Electrons are electrons. And when you need to power 50 gigawatts of data centers in the next three years, there's not a lot of technologies that are gonna be able to meet that demand.

Liam: One thing that I wanna make sure we think about here, because I think there's the ideological tint to this, and “are things treated fairly?” I think what's been a hangup for getting to deals in the past has been on the industry side not having full alignment. I think we talk in the abstract about transmission, but on the industry side, so much of this is who pays for it, right?

And so I think that's, that has to be brought out in the open. And you need to find a way where developers and utilities and everybody's on the same page here, because until you have industry alignment… like, if utility interests are sniping at the vision for transmission that we're talking about, it's gonna be very hard to get Republicans to go along if their big utilities [are] against this. So I think that's an underrated wrinkle here.

But I think the other thing is, if we're thinking about models for bipartisan success, even amid all the tensions and partisan rancor, watching cryptocurrency have success – both in the stablecoin legislation that's going to the President's desk but also with market structure… these are not things that Democrats are all fully comfortable with, but there's clearly a level of interest in getting things done as long as you don't poison that well. And so I think there at least is a model of, to Yogin’s point, like having leaders at the congressional level that are on the level and have good relationships with their ranking members putting out a product that can be supported.

But again, that only worked because the President and the Administration came out and said, “Hey, this is a priority. We need to do this.”

And I think those two elements are really critical for the future of permitting reform.

Thomas: Yeah. Liam, to your point, I think it's underrated the degree to which the oil and gas industry, too, is not a monolith.

When we look back at EPRA, on the one hand there was the half of the oil and gas industry, which really wanted to focus on the [LNG] pause, right? And then there's another half, which wanted to focus on the conventional permitting reform, whether that be NEPA judicial review or the Clean Water Act or what have you. And I think that split was probably a challenge for getting the across-the-board Republican support, which maybe they could have gotten if there was a coherent ask there.

But just moving to our wrap-up question here. We figured it'd be fun to start ending our podcast by asking each of our guests for a hot take.

So this can be something that people are getting wrong, something you think is severely underrated, or really anything that goes against conventional wisdom in the energy policy space.

Yogin, we'll start with you.

Yogin: Yeah, I'll give you one technology one and then maybe another one.

So, my hot take is: solar is not an old legacy technology, and I'll tell you why. I was just visiting yesterday. I was in Perrysburg, Ohio, visiting First Solar’s three manufacturing facilities. And they're huge. They're amazing. Really really inspiring, and you can see the American ingenuity in that.

But they're looking at the next generation of solar, right? And leapfrogging China. And I think the possibilities there are endless. And I think if we give up on solar now, then we're not gonna be able to leapfrog China in that technology race. And I think there’s a really exciting opportunity here where you can increase the efficiency of solar panels by 25, 30, 40%. And that's… in terms of how efficient solar panels are today and where we could go. That's huge. That's a huge market differentiator, and that's a lot more electricity that we can count on, capturing free energy from the Sun. And I'm excited about that. I'm excited about what the future of solar holds, and I think in tandem [with] this perovskite technology that the First Solars and all these other startups that are in our coalition are developing – a lot of opportunity there.

And so I think when we think of solar, I think we always like to think of it as a legacy technology, but I think, again, there's a lot more innovation there. And if we can crack that code, that's where we really just leapfrog China, and I'm excited about that.

Pavan: Right. Liam? What's your energy hot take?

Liam: Yeah, I think I teased it before, but I think the thing that people aren't thinking about or talking about it so much is, the key to fixing your transmission problem is sorting out cost allocation. Because it's not about… yes, the literal permitting process is important, but at the end of the day, it's about who's paying for the wires.

And so I think that's a sleeper issue, that if you are working for one of the tech giants or for a utility, you understand this. But I think that's a fight that hasn't come out into the open yet, of who is going to be financing. We understand the economics of generation, and we understand at the end of the day how important it is to meet this load growth. But at the end of the day, who is going to be holding the bag when it comes to connecting all these elements?

Pavan: And we might potentially be talking about that in later episodes of this podcast.

Thomas: Liam and Yogin, thanks so much for joining Right of Way.

Yogin: Thanks for having us, guys.

Liam: Glad to be here.