Energy and Climate in the 118th Congress with Sen. Kevin Cramer
Sen. Kevin Cramer: The opportunity for American leadership exists, and we're not quite meeting the opportunity. And I think that, that opportunity exists to not only meet that global demand for things that we produce, and I'm talking about fossil fuels that we produce rather cleanly compared to other countries. But, you know, the opportunity to actually reduce further greenhouse gas emissions around the world.
Lisa Hyland: Hello and welcome to Energy360, the podcast from the Energy Security and Climate Change Program at CSIS. I'm your host, Lisa Hyland. This week I'm very pleased to welcome Senator Kevin Cramer of North Dakota to the show to discuss energy and climate issues in the 118th Congress. Senator Cramer was elected to the U.S. Senate in 2018 after serving three terms in the U.S. House of Representatives. He serves on several key committees, including Environment and Public Works, Armed Services, Veterans Affairs, and Banking, Housing and Urban Affairs. He's joined today by my colleague and energy program director Joseph Majkut. They talk about priorities for this Congress, the potential for bipartisan policymaking on climate or energy legislation. They talk about the role of the U.S. as an energy exporter and its leadership in global energy security.
I'll turn it over to Joseph now for this outlook on energy and climate issues in this year ahead.
Dr. Joseph Majkut: Senator, I'm really happy that you're joining us today. Welcome to Energy 360.
Sen. Cramer: Oh, it's good to be with you. Thank you. It's one of my favorite topics, as you know.
Dr. Majkut: Yeah. And I'm actually very grateful that you're joining us today because for many people in our audience, they're trying to figure out, you know, what's the direction that the U.S. is going to take on energy and climate change over the next few years. If you look back two, three years ago, we were in a very different situation than we are today.
The U.S. has had major legislative developments, the Bipartisan Infrastructure Law, Inflation Reduction Act. We have a Biden administration that's very, very active on climate issues and we have this energy crisis that followed the Russian invasion of Ukraine that the world is still grappling with. So, I'd love to talk to you today about your outlook on the energy system generally, the U.S.'s role, sort of a newly acquired role as a guarantor of energy security around the world and kind of a vision for what, what we might look forward to in this Congress.
Sen. Cramer: Yeah, well, I love the way you sort of set it up there, because when you talk about the U.S.'s new role, it's an opportunity. I hope we're willing to play the role. That's what I worry about a little bit because again, you set it up so nicely identifying the change in the last couple of years, the administration's priorities, particularly with climate.
It's interesting because you know, I've, I've been in the Congress now that six years with the House, four years in the Senate all that time. Joe Biden's sort of been around, of course, he was vice president for, for most of my house time. And then, you know, now president. And I've only had one conversation with them. And that one conversation, to your point, was about a year ago, might even be a year ago exactly probably this week, a year ago, when I came back with, you know, from a cordell, small Cordell, bipartisan cordell to Ukraine. And we came back and and I said to him, “Mr. President,” he wanted a debrief right away, understandably. And we were fresh off the plane, and it was the last Cordell to go there before the shooting started, of course.
Our role was to encourage the Ukrainians to know that America is here for them and then to talk about what they might need. And I said, “Ukrainian leadership, starting with President Zelensky and right on down to the energy minister, the defense minister, the interior minister unanimously feel like you have weaponized natural gas.” And natural gas is such a fascinating fuel because remember, it was the, that was to be the bridge fuel.
But natural gas quickly went from being a bridge fuel to being the evil, the other evil fossil fuel. And of course, he pushed back on that. And all of it was centered around the fact that, remember, he greenlighted the Nord Stream two pipeline and the Ukrainians were saying, please don't do that. You're handing him, you're handing Vladimir Putin leverage.
Okay. All of that said, because you talked about the point of, okay, now you've got Europe, you know, in high demand of stuff that we, we provide. And I submit to you that the opportunity for American leadership exists and we're not quite meeting the opportunity. And I think that's, that opportunity exists to not only meet that global demand for things that we produce.
And I'm talking about fossil fuels that we produce rather cleanly compared to other countries. But, you know, the opportunity to actually reduce further greenhouse gas emissions around the world. And I think when I talk about climate or I talk about, you know, greenhouse gas emissions or I talk about energy, I like to think of it in global terms.
I think we oftentimes talk about it in global terms, but we really sort of, you know, govern based on sort of local terms, if that makes any sense to you. And I'm happy to flesh all of that out. But I really do think, to your point, we are at a moment when the world needs what the United States of America produces in a good way, and we ought to find ways to work with our friends and allies to be that that global leader.
Dr. Majkut: Well, so I think it's really interesting. And you define this opportunity. Right? So, for the US to provide what the world needs. Now, what do you think stands in the way? I can think of a couple of issues you might want to address, one or more. The first is, you know, the world is targeting energy transition, right? A path to net zero, let's say, by mid-century for much of the world.
And while it's true, you can think about replacing coal plants today with LNG exports from the US and you get an emissions benefit, I think people have a sense that this, this is a benefit that doesn't last forever. So, I'd be really interested in your thoughts on, you know, what are we, what do you say to, to that critique?
And then the other thing, we've done a lot of work on this at CSIS is that the upstream methane emissions, the regulatory and IRA incentives for reducing methane emissions. We want to say that the U.S. is producing gas, or I would say even energy, right, oil could fit into this bucket as well as lower emissions intensity.
We've got to be able to prove it and we have to be able to demonstrate it. So where are there alignments and misalignments in these, I don’t want to say two agendas, but how do we guarantee, how do we improve energy security without sacrificing climate outcomes?
Sen. Cramer: Yeah, So the great point, because you said prove it and there maybe lies the rub a little bit. I have a pretty strong sense and look at some of the data that comes out of out of the labs, the DOE labs and whatnot and studies, you know, that that the United States produces natural gas is much, much cleaner considering both upstream and downstream emissions in addition to the actual product, production of the product and the use of the product.
I think at the end of the day, the product is largely the same. But, but it isn't produced equally. It isn't. It isn't shipped equally. You know, there's one study, you know, that I say too often that shows that Vladimir Putin's natural gas shipped via Nord Stream two or any other pipeline to European customers through the life cycle and this is probably the issue.
I think oftentimes we don't look at life cycle of fuels and of energy or frankly, life cycle of anything else that’s produced with a carbon intensity in the energy and other things. So actually, our, our natural gas produced in the United States with our methods and liquefied and shipped is actually like, you know, 50% lower emissions than Vladimir Putin.
So, if we didn't do anything other than replace by Putin's natural gas, we'd be making a pretty significant contribution, at least in the short term, while other technologies are discovered and those other technologies aren't going to be discovered in Russia or China, they're going to be discovered by innovators that we are putting out of business if we're not careful.
And so, when I talk about it, when I look at, I try to look at both globally and then try to look at the opportunities that we are going to give up if we kill the innovator with the industry.
Dr. Majkut: So, I mean, I think our audience would love to hear, you know, how you think about the politics of this issue, because we published a report recently and one of the challenges that we face with the kind of growing export capacity here from the United States, particularly on gas, is that this could start affecting domestic prices, right? So, you might see price increases here.
I think that situation is more complicated because our energy system is undergoing its own process. The effects of the IRA could quite, could reduce domestic gas consumption. But I'd be interested in your thoughts on sort of the domestic versus the international and how you and your colleagues have to weigh those challenges.
Sen. Cramer: Yeah, really great point, because remember a number of years ago. So one of the things I was able to be part of when Paul Ryan was speaker and I was in the House, I was on the Energy and Commerce Committee, of course, was the lifting of the oil export ban. And I went back and did this. It's funny because I just recently was watching some of this stuff, trying to wrap my mind around the history of global, particularly in that time, because oil supplies and, and the role of American ingenuity.
And then now, of course, with fracking and all of a sudden, we went from scarcity to this incredible excess. And so, you know, I was remembering all of that and thinking about all that and thinking about how we know now when we lift the oil export ban and become a price setter instead of a price taker and of these things.
Now, to your point, though, our domestic politics and our domestic demand has changed as well as the global opportunities. But when that export ban was lifted and it unleashed the difference, that time was it unleashed production in the United States. And we knew we suddenly had all of this, you know, we were rich in oil and gas, something we didn't know before.
And because of our ingenuity and innovation and our free market system, opening the market, the global market increased production to the point where it even with the growing demand, it reduced price. Same with natural gas. And I think that same situation plays out today, albeit a little more complicated to your point, because this bridge that people, you know, want us to build is probably looking shorter than, you know, than longer.
But again, what I submit to you, though, is in this process, the process gets cleaner. We haven’t talked about coal generation. I mean, you know, we're at a point where we can almost generate electricity with coal, almost greenhouse gas emission free if we have, if we let the innovators innovate and the technologies become commercialized and all of that stuff.
But some things are, remain to be seen, but they are trending in the right direction.
Dr. Majkut: You mean here are the use of carbon capture and storage or Allam cycles or alternative generation technology?
Sen. Cramer: Exactly right. Yeah, you're right. So, and again, those technologies become transferable, not just, not just the use of the coal and the coal itself, but the technology. In North Dakota, we produce a lot of coal. Most of our electricity is generated by coal. We have a lot of wind, but even as much wind as we have in as many wind turbines, as I've cited as a as a utility commissioner in my previous life and the previous more recent commissioners, it's still only about 15% in terms of its reliability rating.
So, but our coal you couldn't possibly export in any way other than a transmission line. But the technology, the technology can be and therein lies the opportunity to help the world, because I'm pretty sure that carbon capture, utilization and storage and, you know, technologies aren't going to be developed in China because I don't think they feel the same need to develop it.
Dr. Majkut: Yeah. I mean, so the counterargument is that China has actually done a lot to produce solar panels and technology EV batteries. And this is actually kind of the last place I'd like to talk about the global picture. Now that we have the Bipartisan Infrastructure Law, which makes massive investments in hydrogen, carbon capture, battery and minerals supply chains, a bunch of other technologies.
And then, and we can talk maybe about the IRA, but that will that is meant to sort of supercharge the investment here in the United States for clean energy technology. What challenges do you see to the U.S. being an energy security supplier on these clean technologies, too? When I talk to my European colleagues, you know, they're grateful that they have U.S. LNG.
But the story is still we're trying to get to renewables as quickly as possible because we want off all of these dependencies.
Sen. Cramer: I understand that. But I also think there's a reality in terms of the reliability issue that is becoming more apparent to more people as we shift too quickly. So, there's a, I’ll be leaving that aside for a minute because I have a feeling, not having discussed this interview with you prior to doing this, I have a feeling you know the answer to the question you just asked me, and that is on the regulatory side.
So, on the one hand, you have the political will to find the minerals and extract them, to process them, to help the supply chain, to create a supply chain for more solar panels here, make sure those EV credits can be applied to American made products and not China made products, as well as carbon capture, utilization and storage, all these other things, as well as cleaner drilling.
I mean, I'd submit in the Bakken where I come from, of course with hydraulic fracturing and horizontal drilling, we have so minimized the footprint of the actual extraction process and then now use carbon rather than as a waste product, but now as a commodity that you put down into it to store in those wells and suddenly you get more oil out of the same hole again, making each.
In fact, right now we have net negative oil being produced in North Dakota from CO2 that has been captured at a gas plant in Wyoming, and, and piped to southwestern North Dakota and extracted into these oil wells. And we have net negative oil. So, all of that. So again, it all, it all comes down to, to the technologies.
But pipelines don't get built by themselves. There's a lot of opposition to every type of pipeline, whether it's a CO2 pipeline, oil pipeline, gas pipeline. You know, plants don't get built easily anymore because the regulatory regime is just too punitive and on purpose, I'm afraid it's punitive. So, the optimist in me keeps saying we're going to do permitting reform.
Just we're going to do permitting reform, you know, maybe there's an opportunity.
Dr. Majkut: You know, my uncle taught me that you never ask a question you don't already know the answer to.
Sen. Cramer: Yeah, he must have been a litigator.
Dr. Majkut: But it's not a quiz, Senator. You know, we do want your perspective. I'm very interested to talk to you about permitting reform. Right. So, when I read, you know, coverage of energy issues in the last Congress, I know you are talking to your colleagues about permitting reform and other bipartisan or like places where we think real bipartisan progress could happen.
And when I think about permitting reform, it has the ingredients for like real policy change, right? Real policy change happens when everybody sort of agrees, just the way in which they agree is perhaps slightly different. Right. That's when you all can work it out amongst yourselves. What is your outlook for permitting reform? You know, it seems like the politics of it were challenging last fall.
Senator Manchin tried a couple of times with his proposal. So not to put you on the spot, but is that where we start going into this Congress or do we need to sort of reboot the conversation?
Sen. Cramer: Yeah, so it's an interesting question, but I do think the conversation could be rebooted without necessarily having to start over because a lot of good work has been done. What's challenging is remember that in this place, particularly in the Senate, whether it's a 50-50 Senate or a 51-49 or 52-48, or, you know, the Senate with its 60-vote margin, creates, you know, bipartisanship as a necessity for getting big things done.
But if we need 60 votes and there's, there's 49 or 51 locked in and by the way, they're not, but then, then what we're always trying to do is find the nine or ten Republicans willing to go along with the 51. And I've often said you made the point earlier, and one of my convictions is that political transactions do not have to require a loser.
So what if, instead of trying to get 50 and ten or 51 and nine, what if we try to get 30 and 30 or 35 and 35? And I think that's where we oftentimes miss the point. We always want to start at the 20-yard line. Let's start with the coin toss and let's find the things we can do.
And I'm not saying do little things just to say we did something, but I do think momentum matters in politics and in policy. So, in the last go around, and I was a pretty significant part of those discussions with Joe and others, my main objection and a lot of people looked it to me as a, as a former utility regulator and energy regulator and environmental regulator, can this work?
I think we were close to a deal, even though it didn't look like we were close to 60. The challenge became, you know, on the states’ rights side as it relates to electric transmission and realizing that for, for people who want the cleaner electric generation, whether it's solar, wind, whatever, they want, a different regime than state utility commissioners having jurisdiction over the siting of transmission lines, particularly, you know, green transmission lines. That's a bigger problem than just permitting reform.
That's a state versus federal challenge. Even at that, though, Joseph, I'm not convinced that there's not some room there. You know, even my friend Tony Clark, who was, he and I were on the North Dakota Public Service Commission together. We went to the commission together. He went to work as a Republican Obama appointee, you know, and I went shortly after that to the Congress.
We always said there needs to be some sort of a federal backstop. And we did have that in the bipartisan infrastructure bill. The problem was there wasn't, maybe there wasn't enough specificity. I think, I think FERC wanted a little clearer direction. And I'm not against more prescriptive things coming from Congress. I think we should be more prescriptive. What Joe tried to do or what he, you know, at least his side of the aisle tried to do with infrastructure relating to transmission was just a bridge too far, I think, for rural electric cooperatives in particular, and for states.
Because remember, the states and the co-ops, they have to answer to the ratepayer. And that was just too clumsy. I'm not sure there's not a fix in there somewhere. Really. Again, maybe it's the optimist in me. On the other side of things. Look, we're not we're not going to make it. It's not going to be easy to say pipelines, oil pipelines in America.
But if you can at least reduce the time frame for an EIS, if you can reduce the time frame for legal challenges, if you can provide some, some direction or some definition for the courts that satisfies time constraints, you can perhaps create enough certainty that there'd be something there for, you know, to incentivize investment, and Republicans would be happy, and for that we'd give something else.
So, I don't want to give away too much of the story, but it's, it's not overly complicated either.
Dr. Majkut: I mean, you can give away the whole story if you want, Senator, but.
Sen. Cramer: Well, I'm pretty optimistic, as you can tell. I do think there's an opportunity.
Dr. Majkut: For those of us on the outside, is it right to think that the principal balance, right, I won't say trade, but the principal balance that you're looking at is let's make it easier to build interstate transmission, which is prospectively very good for renewables development. I think there's a system, there's an electricity reliability and resilience argument to be made that, you know, inter-regional transmission, just if you have a weather issue in one area or a down generating facility, you can, you can move things across the country.
And there is a perspective. It exists in models. I don't know if it's demonstrated in real life, sort of lower overall systems cost to the power system, if you have a lot of transmission, right. Like that is something I can see like Democrats being very excited about energy transition, people being excited about grid nerds like myself, maybe you, sir, being excited about.
And then you have on the other side, you've got well, you know, it's, it's impossible to take natural resources to the shores. Pipelines have become like there's a pitched battle over every pipeline that wants to get built and those may even extend to pipelines critical for energy transition that carry CO2, hydrogen, and other things. And so, is that right to think of as the principle balance that you think your colleagues in you will try to achieve?
Sen. Cramer: I think it is. I think you articulated very well. Remembering, even as big a nerd as I am, I still rely on smarter people than me, and they're not hard to find in this space to help me understand that the investment’s worth it because when you talk about transmission lines, you're not talking about a small investment, no matter, you know, in particularly interstate.
You made an interesting observation, an interesting point that I think does get overlooked for those people who want to see a more resilient, reliable grid, whether it's carrying coal-generated electricity, nuclear electricity, solar or wind or whatever, that geographical redundancy is what protects you against big weather events in certain geographic locations. You know, we often talk about loops around cities with, with gas, you know, you need to have redundancy.
Redundancy in and of itself creates reliability, but there also needs to be a reasonable return on that so that it keeps costs down and doesn't bring them up to unnecessary levels. All of that is exactly the balance that you've articulated that we need to come to. But we really do need our stakeholders and shareholders, if you will, to come to the same conclusion.
Dr. Majkut: I'm happy to talk about, you know, like I'll speak coarsely, right. So, the Democratic side might be worried about this, you know, making it easier to build fossil fuel infrastructure. I get that. I feel like, you know, the analyst community can try and figure out, well, what's the perspective greenhouse gas implications of doing that. We can talk about life cycle analysis and like we were speaking about before, really matters like where things are going and how they're used.
That's a concern I think we can address through analysis, right? We can at least understand the implications of the choices that Congress will try to make. On the transmission side, you mentioned the states’ rights issue, right? So, for listeners who are maybe less familiar at the moment, if you want to build an interstate transmission line in the United States, that's going to cross several states, let's say, just broadly speaking, bringing wind power from North Dakota to Indiana or beyond, you need to get permission to do that from the utility boards or the utility commission of every state that you're planning on crossing.
And this just becomes a challenging political economy issue. Right?
Sen. Cramer: Right. Not to mention every township, every county has something to say about it, you know?
Dr. Majkut: Yeah, yeah, yeah. And so, the current law is that if you have enough trouble doing that, you can go to FERC and the Department of Energy and, and have this thing declared as in the national interest. And there's a federal backstop for that kind of authority, similar to what we have for natural gas pipelines right now. I understand how this perturbs a sense of states’ rights, but the federal government exists to enable interstate commerce to one degree or another.
And so how do we get around that challenge, right? How do we build champions for transmission?
Sen. Cramer: Defending the shores and interstate commerce are a couple of things that actually enumerated their constitution as authorities that the federal government has. That said, transmission siting is one of those things that has, at least to this point, been largely states’ authority. And it's hard and understandably hard to take that authority away from states. There's some ideas floating around out there that that could become the hybrid, and one of them being a shortened timeframe for states to collaboratively work.
See, I'd like to see FERC be more of an arbiter or a collaborator or a facilitator in this process, because multi-state transmission is not a simple thing. I mean, I cited, in fact I voted against the siting of the CapEx 2020 transmission line from the Twin Cities area up to Fargo, because Minnesota's PUC and to their credit, they largely followed the Interstate 94 corridor.
So, they were literally using an existing highway transportation quarter, which is good on them. That's, those are exactly the things we ought to be doing now. You know, it's exacted all over the place, but largely followed that quarter. But where it was to cross the Red River into North Dakota is where they ended it, where it's, it's hard for me as a North Dakota regulator to say I'd rather have it cross 20 miles south, please.
Or, you know, ten miles north, please. Except because that's not where they ended it. So, I do think there can be a collaborative role that might be acceptable to states that would kick in maybe right at the onset. I'd like to see every application come either from a multi-state utility or multiple utilities, collaborative utilities and/or a state.
It's the states themselves so that everyone's on the same clock. I know it sounds complicated, but I think it's easy to, think it'd be easier to do that than to have these this piecemeal. And so, I think this is what cooperative federalism would look like as opposed to just, you know, heavy handed federalism.
Dr. Majkut: Well, in that context, you think there's a there's a role for the federal government, be it at FERC maybe, or be it in the DOE to kind of help states or utilities, different service areas adjudicate how do we share the benefits of this infrastructure. Right. Right. So, like the investor class sees price arbitrage and they get excited. But you really do have to build this through communities.
You have to have, sometimes you have to exercise eminent domain. And maybe we've under emphasized at the development level how to sort of broadly share the benefits that this kind of infrastructure can provide.
Sen. Cramer: Perhaps. But at the same time, when you start talking about benefits and this is an area that, you know, becomes pretty, again, pretty intense in the discussion. Sometimes we broadly apply the benefits in a way that's suspicious. I'll give you an example. One, one time we were doing a, I don't remember if it was a cost, I, I guess maybe it was a rate case, maybe even.
I think it was it was actually a rate case for a multistate utility headquartered actually in North Dakota. It won't take anybody long from North Dakota to figure out what we’re talking about. But they built a wind farm in Montana, not in the best place they could build it, but there was an incentive, a localized or state incentive to build this wind farm in Montana.
And then they want to apply the cost of that to the rate base across their footprint, which included my North Dakota constituents. I voted against it because the benefit that they cited was the economic benefit, economic development benefit of the local community. And I think that's going too far. For one thing, the local community wasn't, it didn't benefit my constituents and my ratepayers.
I think you have to keep those benefits specific to the product that you're producing and developing. Those are details that can get worked out. So, I do think you can over, over broadly apply and you can maybe under appreciate some of the benefits as well.
Dr. Majkut: But if we ever return to sort of the legislative contribution, to the legislative conversation, I'm hearing from you that it the will is there and maybe we're not as far from agreement as we would like to see. Is there anything that, you know, analysts like us or our people who listen to this podcast should add to, you know, think would helpfully add to the conversation.
And then that I mean, you know, it's like to get to yes, sometimes you need a few more parameters. Is there anything that's in the Kevin Cramer toolbox, I think, okay, here's how we help unlock some more support?
Sen. Cramer: Yeah, I don't I don't know. I guess I've already sort of tipped my hand so much that I feel like, you know, I'm not thinking maybe I'm forgetting something in this, but a very localized project that has very localized benefits is going to be a hard sell I think for those of us that look at the big the wider grid, the bigger grid and say, hmm, I don't know about that.
And again, it might be a local generation facility attached to a short intra county or intrastate line. I think it's hard to pitch that to the greater good. As you know, DOE does these, this constraint modeling and they can make some determination, some national interest designations. But if they get too creative with those, then that's when guys like me get a little upset.
Dr. Majkut: That seems to me to be a longer-term challenge that like, you know, you can, I can imagine that instantly becoming political. Whoever holds the White House and whoever is the Secretary of Energy I can think of, you know, there's going to be 40 senators from the other side going where property rights are like the cost of this.
Right. And so, I mean, it seems like part of what is helpful to develop and I know that you do this and maybe we were doing a little bit at the beginning is a really positive view of the energy system as it is developing from where it is now to where it's going and the benefit and like the sort of overall improvements that we can see to the services it provides, the costs it asks of people and our sort of global competitiveness.
Sen. Cramer: And the global competitiveness thing is not an insignificant issue either. I mean, the opportunities that exist with low-cost energy, particularly at a time when we're trying to bring more other supply chains closer to home, you know, at least closer to friends, you know, there's opportunity that exists beyond just the energy sector, realizing that the energy sector, it's sort of like energy and food are like the two things we can never be without, and we should produce as much of it ourselves as we can and not be reliant on anybody else.
Maybe we can throw pharmaceuticals in there as well. And so, yeah, there's a lot there's a lot there to unpack, and it's why it's so darn important, why we ought to be about the business of finding a solution.
Dr. Majkut: Well, and I would be completely remiss if I didn't ask you to speak a little bit on global competitiveness and in particular on the issue of carbon border adjustments, where I think you've taken a real leadership stance trying to think through, you know, how do we, how do we make sure that every effort that the U.S. makes to reduce emissions is matched or exceeded by, by countries abroad, right? Be it China, India, developing countries in other places.
I'm interested to see how that conversation has progressed. I first learned of your support when you wrote a piece with H.R. McMaster, I think in December of last year, if I, if I have it right. I was reading it on my phone while I was Christmas shopping, which is why I remember.
Sen. Cramer: Oh, my God, you are a nerd.
Dr. Majkut: But I'm interested in what you think the outlook for that is. I mean, I hear a lot of people saying this could be a bipartisan idea as well.
Sen. Cramer: I agree. I think it can be. And when I did that, I mean, you say I took a real leadership role. Some people say you took a real reckless role. But I like the edge, actually. And I do think that finding political common ground because, again, you brought that up earlier. Let's face it, I'm from, I live in Bismarck.
It's named after Otto von Bismarck, the iron chancellor who coined the phrase, “politics is the art of the possible”. So a CBAM to me, a CBAM that is joined by multiple friends that have similar or the same values that build something out, that particularly in in my case, my example of course, being the Europe and the United States, which are two very large economies and very friendly for all the right reasons, although they are, you know, much more advanced than us in this idea could do something like that that recognizes, first of all, how far we've come and how good we are at this, this being finding reductions in greenhouse gas emissions and through technologies and innovation and free markets, actually meeting the market demand for cleaner energy if we just do it together. So, in other words, it doesn't it's not a domestic, it's not a domestic carbon price that punishes domestic producers. But it does, it does, of course, recognize that there are polluters that need to be held in check and should be paying, you know, the price.
And that's not overly comfortable to most of my free market friends. I mean, I could pretty much unite right now, wouldn't be hard to name the three or four entities that are going to just you know, they'll, they'll behead me and say it's not one of us. But but that said, I think when people when they look at it more closely, they go this kind of is the low hanging fruit.
This is an area where, where we can forward our values, forward our again, our innovations. Remember, our technology is transferable, too, and becomes valuable in the marketplace. I think you know this that part of my frustration in a more recent op-ed that ran in The Wall Street Journal was that the European Union had gone on ahead of us. And, and I'm not surprised.
Again, they've been ahead of us in this thinking for quite some time. But I also thought that given what went on, what's happening in Ukraine and with Russia, you know, sort of hold holding them hostage, prices going up so much that there might be an opportunity in that environment for us to, you know, even ask some of their leaders who had come to see me and are intrigued by this, that I'm saying this out loud, given where I'm from and what I you know, what I stand for, that there'd be an opportunity.
But they clearly didn't want to wait for us, if you will. And I can't say I completely, you know, don't understand. I do I don't blame them necessarily for it. But I do think that we could be more successful together. And maybe what I mean is we could be more successful together with our European friends and they would benefit tremendously as well if we can come up with something joint.
Again, remembering that we're already, our producers, whether it's our oil and gas producers or, or electric generators or our, you know, steel, aluminum, chemicals, all the all the industries that use a lot of energy that have an intensity, a carbon intensity, they'd all benefit from some sort of a CBAM that punishes the polluter and more importantly, changes the behavior of the polluter.
Dr. Majkut: Yeah, I think that I mean, I find very compelling the idea that the size of the U.S. market combined with the EU would be an incredibly important signal for, for global production, right? You know, it's like, it's very easy to talk about, you know, using less fossil fuels or whatever. But until you're working on the demand side, until you have this demand signal for cleaner goods, it's hard to tackle the whole problem.
And as much as we do here in the United States, we can't solve global climate change without tools to address global emissions. Just, you know, I read your piece. I wrote something for our website which says, you know, we should probably figure out a way to live with the EU moving forward, mostly because I think like, one, as you said, the U.S. has potential commercial advantage.
When we talk to industry folks, I don't think they quite realize how large it might be. And then the other thing is I think we want to see these mechanisms work, right? So, we're already seeing challenges to the European CBAM from China, India, even values friends. Countries like Japan are protesting this. It'll be challenged at the WTO. I think it's important that, you know, there's only so many things we have in the toolbox for addressing global emissions and border adjustments, one of them.
Sen. Cramer: Yeah, so great point, because all of those are important points, because, the WTO being a pretty significant one. I personally, I've been convinced that I don't think the model that the European Union took or that we would take would be overturned by WTO. You know, I don't know. I'm not a WTO expert, but those who have talked, including Bob Lighthizer, who knows the WTO pretty well, thinks that it’d be upheld.
The second thing, though, to your point with regard to Europe, I think it's more than just one plus one equals two. I think it is synergistic. I think it could be contagious. But I also know, getting back to Otto von Bismarck and the politics being the art of the possible, this is such a big challenge here in the United States that the lowest hanging fruit is kind of where I'm, I'm looking for, I don't always say, let's gravitate to the lowest common denominator, but at the same time, this common denominator is not insignificant.
And if we can politically and I've you know, I've been winning them over sort of one at a time and, you know, there are various people who have more aggressive plans, you know, some that want a carbon price, domestic carbon price. You've got some that want more of an auction. You got people that want more of a, you know, you name it.
Dr. Majkut: Emission standards, yeah. There's a lot of, there's a lot of ideas floating around right now.
Sen. Cramer: There's lots of ideas. I think the CBAM because it doesn't immediately punish American industry, in fact gives them a leg up on the import side of things could actually be one that that I can sell to my friends and the people who think like me. And that that's, that's why I favor, I would have favored Europe you know, waiting for us or working with us.
But that said, maybe we catch them, you know, maybe, maybe we can catch them. And maybe that's not the worst outcome. The bad outcome would be if, if the first couple of analysis show the United States can get hit hard by this or even a little bit by this, by our European allies. The other thing, though,Europe's not been easy to do trade with.
Here I talk about how friendly they are, how close we are. I mean, we are the, you know three of my ancestors came over on the Mayflower. But that said, they're not an easy trading partner. And so, I think there's another synergy here that if this is the thing that brings Europe to a trading table with the United States, maybe we can sell them other stuff.
Maybe they will take some of our food, maybe they will eat our beef. You know, I just think you got to start somewhere. And here's a good place to start.
Dr. Majkut: Just buy the fish.
Sen. Cramer: Just buy the fish.
Dr. Majkut: So, I was reading the text of the EU agreement, which hasn't made it into law yet. You know, their process is quite different from our own. But, but, but it seems relatively fixed at this time. And there is a mention in there of so-called kind of climate clubs, right. Which I think is kind of approaching what you're thinking about as well.
This kind of like countries working together. And if I can ask you to step just a little bit outside current thought. One thing that's been in the back of my mind as we sort of think about these clubs developing along the lines of...
Sen. Cramer: Which is what you're describing...
Dr. Majkut: Political affiliation. So, these are liberal, democratic countries. We're also deeply entangled on energy at the moment. So, you know, what, you know, if you think about these kinds of clubs developing, I wonder how much energy security plays a role in their development as much as decarbonization. Right. That as you're kind of, you're starting to set up preferential trade regimes as the globe is kind of getting more geopolitical than it was even ten years ago.
You know, I'd be interested in your thoughts on, your musings even, on, on how the climate and energy agenda, which we've been talking about from the very start, could work into this international space.
Sen. Cramer: I just, I think you’re right on point I guess me that's best way to put it. I think you're right on point because I do believe that first of all, energy policy has, as we say, maybe we overstate is, in fact, you know, security and its national security. When we say that we sort of appeal to, okay, you know, Vladimir Putin holding, you know, other European nations hostage, that's, that's the easy example. Or, or even the cost of defending the Straits of Hormuz, you know, from attacks on oil ships. I mean, those are some of the easier things to talk about. But to your point, the larger geopolitical context, when you talk about China and its Belt and Road initiative as it relates to African nations, for example, you know, we think of transportation infrastructure, things like that.
But can you imagine if we could help African nations have their own energy grid and their own energy production, their own energy development, and clean it up because, because China doesn't care about a lot of those things. They don't put conditions on any of their generosity. I do think it's part of the larger geopolitical opportunity and the global leadership role that the United States can play.
And I know this, believe me, this just general topic is unpopular with a lot of people in their base. It's unpopular partly because there aren't enough conversations like you and I are having right now, because too many people sort of have been gravitating towards the lowest common denominator. That's where they gravitate in their politics and they aren’t explaining often enough back home, they being my colleagues or House members or whatever the case may be, or other, any number of people, you know, business leaders included. The opportunities that are created by this sort of a geopolitical move and this sort of geopolitical leadership that's not just simply, you know, saving small third world countries, but saving ourselves and building economies and having alliances that prevent corrupt countries from flourishing rather than creating corrupt countries. I think there's lots of opportunity here too.
Dr. Majkut: I think we should close it there. I agree. I think we, you know, developing a positive view for the U.S. in a world that is undergoing energy transition and requires energy security is like, that's what we're here to do. And we appreciate your efforts on the Hill. You know, if you have anything else or any final word, we welcome it otherwise thank you, Senator Cramer.
Sen. Cramer: No, I think we've covered it very well. I appreciate your interest. Obviously, your interest is intellectual and as well as, you know, noble as a as a citizen that cares about the country and about our standing in the world. And I share that concern. And while a whole bunch of us around here have different avenues to it to the solution, I do think we're getting closer.
I really do. And I want people to be encouraged by that. I think I think a lot of people see what happened, sort of at the end of this last year, in the last Congress, well, we missed that opportunity. I don't think we did. I think we just extended it a little bit and we're closer than people might give us credit for.
Dr. Majkut: Well, thank you so much, Senator. Best of luck this Congress. And we look forward to hopefully a productive few years on the permitting reform issue, if nothing else.
Sen. Cramer: Let's do it. All right. Thank you, Joseph.
Ms. Hyland: Many thanks to Senator Cramer for making time to join CSIS this week. We look forward to following the progress on energy and climate legislation over the course of the year. You can find more episodes of Energy three sexy wherever you listen to podcasts and at CSIS talk. As always for updates, follow us on Twitter @CSISEnergy.
And thanks for listening.