The Only Way Out is Through
Many businesses exist with a comfortable distance from politics. Sure, every business owner is concerned with income tax rates, depreciation rules, and similar issues that affect everyone, and every business is subject to some regulation, but most of the time these differences operate at the margin, and not at the heart of a business. In the energy business, we are not so lucky. In the energy storage industry, where @PhotonVault is active, we have been feeling like we are on a roller coaster in the past year, and especially the last three weeks!
After a dance that has drawn rapt attention for over a year, Sen Joe Manchin (D-WV) announced that he would not support President Biden’s #BuildBackBetter legislation (BBB). BBB was a massive bill containing items relevant to healthcare, environment, climate change, social policy, and energy policy. Climate activists were crushed. Again. Sen. Manchin had previously declared the legislation dead only to say he was still interested in discussing possibilities for compromise.
If at first you don’t succeed… Just as climate activists and policy makers were ready to concede that there was no realistic chance of meaningful federal climate legislation for the foreseeable future, Sen. Manchin announced that he had reached agreement with Sen. Chuck Schumer, Senate Majority leader, to support many of the climate, energy, and healthcare provisions of BBB in a new piece of legislation dubbed the #InflationReductionActof2022 (IRA). The bill is $739Bn, still historically significant despite being only about 20% of the original BBB. The drama of this announcement was heightened by the fact that it came mere hours after the Senate passed another piece of massive legislation, on a filibuster-proof bipartisan vote, to support #NewEconomy manufacturing in the United States.
Assuming this sticks and the legislation is enacted, what made the difference? In a short answer – politics. While “politics” may be a dirty word in our current divided culture, it is the greatness of our system. While one can debate the wisdom of a system that gives disproportionate power to small states via the Senate and Electoral College, we should all agree that we favor a system in which officials must be persuaded to get their votes. We knew who Joe Manchin was in 2020 after the election, and he didn’t change between now and then. He couldn’t be ignored, any more than any other Senator. He had to be negotiated with. The IRA is messy. It gives some breaks to fossil energy companies that enrage those for whom #climatechange is the most pressing issue of our time. It gives many incentives to renewable energy (including energy storage) that the traditional energy companies have opposed as a threat to their business models. But while advocates were advocating, a few dedicated people continued to keep coming back to the negotiating table. And ultimately, it worked. “He never told me he was done, and I said as long as Joe Manchin is at the table, I’m at the table,” Sen. John Hickenlooper (D-CO) is quoted saying by the New York Times.
Sen. Hickenlooper reminds me of the song by @AlanisMorissette, “The Only Way Out is Through”. Many of us wanted to forget that the Senate is split 50:50. That necessarily gives individual Senators immense power, especially when one party controls the House and White House. You can wish that weren’t the case, but Rome was not built on wishes, and neither will be the #EnergyTransformation. While everyone must advocate for the history she wishes to see for herself and her family, we must also resolve to work with anyone of goodwill along the way.
At Photon Vault, this sort of cooperation is in our DNA. Our energy storage is designed specifically to help balance electricity grids when the variability of wind and solar power make wholesale electricity prices volatile. So we definitely are assisting the rollout of renewable energy. But our initial focus is on the midstream oil and gas business in Texas, where we can offer pipeline operators a profitable lease on their land while offsetting 100% of their emissions in exchange for harvesting the waste heat produced naturally by their operations. It is a way for old energy to cooperate with new energy, and it is definitely a win-win.
So, three cheers for politics – at least this week!