Yahoo Finance Presents: Jennifer Granholm

United States Secretary of Energy Jennifer Granholm sat down with Yahoo Finance’s Akiko Fujita to discuss the Biden administration’s efforts to tackle climate change, and how the administration plans to address inequities in climate change solutions.

Video transcript

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AKIKO FUJITA: This is "Yahoo Finance Presents." I'm Akiko Fujita. And today, we are joined by Energy Secretary Jennifer Granholm. Secretary, it's great to have you on today.

JENNIFER GRANHOLM: Thanks so much for having me.

AKIKO FUJITA: Let's start big picture here. We are just over five weeks away from the UN's big climate summit, COP26, in Glasgow. And we're coming off of a summer that has been marked by one catastrophic natural disaster after another. We had the floods here in the Northeast, record hurricanes in the South, wildfires in the West, and then you've got the UN report that came out last month saying the warming of temperatures is unequivocally being caused by human action. The disasters are only going to get more frequent and worse. In the face of what we know now, how has that changed the urgency for the administration in the way in which you go about tackling the climate crisis?

JENNIFER GRANHOLM: Well, let me say, I think the-- I know the administration has felt an enormous sense of urgency since day one, which was, day one, the president rejoined the Paris Accord. But there is no doubt that the fact that one-third of the country has experienced an extreme weather event, extreme climate-related event this summer-- whether it is wildfires, or hurricanes, or droughts, or whatever-- that is the exclamation point that we hope that the rest of the country sees the urgency of the moment. That report that you referred to said the time is so urgent-- it is code red for humanity. And that's how the Biden administration is proceeding.

AKIKO FUJITA: We had the president come out earlier this year calling for a 50% emissions reductions compared to 2005 levels by 2030. I know it's only been four months, five months now since that was announced, but in light of what we have seen play out so far this year, do you see the administration reconsidering that target? Some activists or some climate scientists would say it wasn't ambitious enough.

JENNIFER GRANHOLM: Well, it is a big, hairy, audacious goal, let me say. I mean, that, and then combined with the fact that he wants us to get 100% of our electricity from clean sources by 2035 and a net zero economy by 2050. These are big goals and they are bold goals. And this is why the president has asked Congress to do some big and bold things in his infrastructure and Build Back Better agenda pieces that are going through Congress right now.

AKIKO FUJITA: I want to get to what's playing out in Congress. But as it relates to that particular goal of slashing emissions roughly in half, do you think that is still the right target for the US even given the science that's come out?

JENNIFER GRANHOLM: Well, it is-- I mean, it is a really hard goal. And it's going to require a full effort-- not just all of government, but all of the economy effort. And so it is extremely bullish to say that we are going to get to this-- actually, it's a 52% or so reduction-- and that's our goal. That's what we're announcing at the Glasgow summit that we will be doing that as well as the other goal of getting to 100% clean emissions by 2050.

It is-- you know, the hard to decarbonize areas of the economy, it is going to take both research and development, because some of those tools are not fully available yet, although we can see them on the horizon. But the costs are high. So it is a very aggressive but it is doable if we have the right policy inputs and the right leadership.

AKIKO FUJITA: You've got two bills in Congress right now that amount to the largest investment in green energy we've seen-- obviously, the infrastructure bill as well as the reconciliation bill. When you look at this the severity of what we're dealing with right now, what do you see as the most critical tool that's needed to tackle the climate crisis? And on the flip side, what are you willing to part with in order to get the bill across the line?

JENNIFER GRANHOLM: Well, let me just say that I think there are two long poles in the tent, if you will, in the president's Build Back Better agenda. One is the clean electricity performance program, or CEPP. That incentivizes utilities to be able to do the buildout of the clean electricity that we need, adding renewables, adding clean energy to the grid. The second is-- and so that's really on the demand side.

And on the supply side, it is really the tax credits associated with rewarding the private sector for doing that buildout. So both sides are necessary to be able to get to these really aggressive goals of 100% clean electricity by 2035. You know, with respect to what we're willing to give up, I'm not going to say at this point, because I think the president really wants it all to happen.

Obviously, this is nested in the context of other pieces of his agenda, which are really good for the economy, but particularly the economy of middle class and working class folks. So he's still pushing for it all to happen and we'll see how it shakes out in negotiations.

AKIKO FUJITA: On the issue of clean energy, you recently laid out a blueprint that points to 40% of the country's electricity being powered by solar by 2035. If I have my numbers correct, it's at 4% right now in terms of solar and what it amounts to in the electricity grid. How do you get to 40%? And are the investments that are set aside through these two bills enough to get you there?

JENNIFER GRANHOLM: Yes, the investments would get us there. We have to be aggressive. There is no doubt about it. We have to add 17 gigawatts of solar -- if we are to get-- remember, this study talked about what the capacity was if the right policy instruments are in place.

We can do this, and we would get to the number of 100% clean electricity by 2035 if we have the right policy pieces in place. So this is called the Solar Futures Study. It was done by the National Renewable Energy Lab. But the policy pieces that Congress is considering are clearly necessary to make this happen, because we are just not at the level we need to be. We are just not-- especially given the urgency of the moment that we just started this conversation with.

AKIKO FUJITA: Specifically on the issue of solar, can you get to that 40% without bringing much of the manufacturing back home to the US? The big question, of course, is this reliance on Chinese suppliers when you consider how much of the solar supply chain that they control.

JENNIFER GRANHOLM: This is such a good question. The president wants to establish a full supply chain for solar, for wind, for all of these clean energy technologies in the United States. By 2030, there is going to be a $23 trillion market, at a minimum, for the products that reduce carbon pollution-- and that means solar, that means wind, et cetera. We could stand by and say, you know, we're going to allow other countries to develop those supply chains and we'll just buy from them, or we can get in the game and create the right policy incentives for those supply chains to be located here.

We are up against other countries who are competing tooth and nail for this market. And we've got to get in there and compete too. We do it differently. Other countries may have state-owned enterprises that they are subsidizing to be able to do this. We, on our end, may have tax credits that help to be public-private partnership type of a framework that would allow for the supply chains to be here.

The president is committed to creating full supply chains in this country to put our people to work. He's completely obsessed with creating jobs in this clean energy economy-- good-paying jobs, family-sustaining wages. And he wants to use this clean energy sector and the opportunity it presents to be able to do that in the United States.

AKIKO FUJITA: There is the question about how you incentivize change for the biggest polluters which, of course, are the oil and gas companies. There was a new study that came out from the Carbon Tracker Initiative that pointed to the fact that the world's largest energy producers are still investing in a way that is inconsistent with the goals of the Paris Climate Agreement. How are you thinking about that piece? Is a carbon tax the most effective tool in getting the oil and gas majors on board with the larger climate goals the Biden administration has put forward?

JENNIFER GRANHOLM: We think the most effective tool is the one that we have laid out which is to incentivize the utilities to purchase the right ingredients to be able to get to that clean electricity goal. But I understand, certainly, that a carbon tax is something people have been talking about for a long time. It's just not this administration's preferred way of moving.

However, I will say this-- you know, as Secretary of Energy, the Department of Energy oversees 17 national laboratories. These laboratories are working on the solutions to remove carbon pollution from fossil fuels. And so those solutions, whether it's carbon capture and sequestration, whether it's using clean hydrogen to decarbonize the hard to decarbonize sectors, we know that we have technologies that will be able to do this. This is why the bipartisan infrastructure bill, which funds a lot of demonstration projects in those technology areas, is so critical.

It's not just the US that wants to decarbonize the fossil fuel industry. It's the entire world. And that industry has actually-- I mean, they are seeing where the puck is going, as we say in Michigan-- they should skate to where the puck is going-- and that's why they have often-- many of them have set, you know, zero carbon goals by 2050 as well. But we have to make sure that their feet is held to the fire, that their products will be much more in demand if they're able to decarbonize, maybe attaching net carbon negative technologies to their extraction.

But the bottom line is technology is there. We want to make sure it's used. And we want to make sure we've got reliable, clean baseload power as well as reliable renewables, which means we've got to invest more in batteries as well.

AKIKO FUJITA: But can you hold their feet to the fire without specific fines in place? If they haven't acted until now, what's to say that these investments that you're talking about are going to change the behavior of these major oil companies?

JENNIFER GRANHOLM: Every country has signed on to-- every-- you know, they've all signed on to the Paris Agreement. They want-- they're demanding-- they will be purchasing products that will get them to their net zero carbon emissions. So the whole world is watching what is happening in the fossil fuel industry.

And everyone-- it's a market play as well as an enforcement or regulatory play. But on the enforcement side, to your point, I mean, our EPA is going to be issuing methane rules, for example. And those rules are going to be attached to penalties. So there's both a regulatory side and there is a market side. And sometimes the market side is even more powerful because all of these countries, as well as other companies, have goals to be able to reduce their own CO2 footprints.

AKIKO FUJITA: We've seen the recent disasters really show the inequities that come with climate change-- low income communities disproportionately affected by the floods here in the Northeast, obviously, the same played out over in the South as well with the hurricanes. And yet there are fears that those same communities are going to be left behind in this green transition. You know, some would argue not everybody can afford an EV. The charging stations aren't necessarily in those communities right now. How do you ensure that this transition is more equitable?

JENNIFER GRANHOLM: It's a great question too, because the president has set forth a Justice 40 Initiative, which is in this climate space-- meaning 40% of the benefits of these investments have to go to communities that are either in transition-- perhaps they're fossil communities, coal communities, power plant communities that are seeing their jobs leave-- or they're front-line communities who get hit first, and worst, and who are in the shadows of smokestacks, and whose kids have asthma, for example.

So this is why the president's goal, for example, on electric vehicles-- he wants to allow-- and this is the infrastructure bill-- funding for 250,000 charging stations. We know how to put those charging stations in places that already have them in communities that can already afford them. We want to put them in places where they don't already exist so that those communities can then feel more comfortable in being able to buy electric vehicles.

And on the electric vehicle side, we want to bring down the cost of electric vehicles to be comparable with that of gas-powered engines. And so in that reconciliation bill what's being discussed right now is the president's goal of an upfront tax credit where you can get it right at the dealer-- so you can compare right there and have that cost lowered right away so that we can see more spread and uptake in electric vehicles in communities that up to this point have not felt comfortable doing so.

AKIKO FUJITA: Another big concern that's been raised is the rising cost of gas prices. And I know the president addressed that yesterday. But we've had plenty of analysts on our shows who've said that the price of oil is only going to go up if we're talking about pulling back on supply, less being produced, the demand still being there. We had somebody on today who said that he thinks that oil could go to anywhere from $90 to $100 a barrel during this transition. Number one, do you buy into that premise? And number two, is that inevitable in this transition phase?

JENNIFER GRANHOLM: I don't think it is. In fact, our Energy Information Agency, which does the analysis on projections for the price of gasoline, for example, has said that right now, there is a constriction because of what happened with Hurricane Ida and a number of refineries being offline. But once that gets back up and that supply is opened up-- but we haven't seen a diminution in supply, and so we don't see that that is going to cause a significant increase.

In fact, they see the prices moderating down to what they were before the pandemic. Obviously, last year, we had a very low cost of gas because of the demand being so low. So we don't see that coming up into the future. And we are bullish about the fact that we will be seeing more electric vehicles on the road. That's a different type of fossil fuel that potentially would be used if people are being powered-- by if their electric vehicle is being powered by coal-fired power plants and we want to reduce that as well.

But there is just an increased demand for transit options, and we want to supply both. But the president has been adamant that he doesn't want to, for example, see a gas tax, because he doesn't want this to hit everyday people's pocketbooks.

AKIKO FUJITA: Secretary Granholm, it's great to have you on today. Really appreciate the time.

JENNIFER GRANHOLM: You bet. Thanks so much.