This transcript is from a CSIS podcast published on January 16, 2025. Listen to the podcast here.
Quill Robinson: Welcome to Energy 360: The Transition, a CSIS miniseries, exploring the energy implications of the 2024 election. I'm your host, Quill Robinson. This week, Joseph and I discuss why conservatives believe a market-based approach to climate and environmental policy will deliver better, more sustainable outcomes with two top experts. Hannah Downey is the Policy Director at PERC the Property and Environment Research Center based in Bozeman, Montana. PERC is a leading think tank dedicated to advancing free market solutions to environmental challenges. Jim Connaughton is a technology and policy entrepreneur fostering market driven environmental solutions at a global scale. He previously served as the chair of the White House Council on Environmental Quality and director of the White House Office of Environmental Policy under President George W. Bush. Let's dive in.
"Alarms go off on climate change as Trump retakes the reins", "Climate Change Deniers under Trump dead wrong, Biden warns", "Trump's administration picks are hot to destroy climate science." Jim, so I googled Donald Trump and climate change last night, and these were the top three headlines that came up. It's a pretty stark picture that the media has been painting when it comes to the incoming Trump administration and the state of the environment. As a Republican, you've served in senior roles in past administrations. Can you give us your response to this? Is the climate really in such dire straits with President Trump coming in?
Jim Connaughton: Well, thanks for having me on the program and I'll dive right in with the answer, which is the U.S. is going to sustained progress on reducing greenhouse gas emissions just as we've sustained progress on reducing air pollution, water pollution, improving the health of our fisheries and actually reducing hazardous waste and other waste management techniques. We are collectively committed to that and there are differences really at the margin of policy and economic strategies for making continued progress, and that's where we seem to see the biggest battles over marginal differences. The rhetoric is wildly disparate, but the reality is in the rate of reduction of greenhouse gases in America from one administration to the next to the next.
Quill Robinson: So, the trajectory maybe is not quite as dire as the headlines may indicate. Jim, you are on the right side of the aisle. You are also, dare I say, an environmentalist, someone who cares about the environment. Where do Republicans, where do conservatives differ when it comes to the approach to protecting the environment from the environmentalists most of us think of when we hear that word environmentalism.
Jim Connaughton: Yeah, I think the difference really is one of policy choice, preference. Where I come from and a lot of people that I associate with come from, I express it in the phrase markets before mandates. And if you have to have a mandate, make it market-based. And I just want to underline, conservatives are not against mandates, they're just against stupid mandates. And so if you have a well-designed mandate because there's social and environmental need that's not expressed, there's this thing called in economics called the externality. It doesn't show up in regular market economics. Government is supposed to do something about it. No different than putting up stop signs at intersections. I think we can all agree that was probably a good idea. And so the philosophical difference is over the approach. My general philosophy is if there's a market driven solution, so if we can align policies, whether it's research and development, removing barriers to investment where you can deliver an environmental outcome at a profit, the likelihood of its ubiquitous appointment and the economic benefits to everybody goes way up. Okay, so efficiency is a good example of that.
Joseph Majkut: Jim, how do you take that insight and apply it to the headlines that we should expect to see over the next three to six months as the Trump administration takes the reins and activates that agenda? Here I'm thinking there's going to be a big deregulatory push and the headlines are going to be scrapping the EPA rules for greenhouse gas emissions and pulling out of the Paris Climate Agreement. I think we're familiar with what the stakes are, but how do you take that your assertion that this is really a difference in means and approach when we're sort of thinking about those headlines?
Jim Connaughton: I'm going to give you my favorite example and it's fracking. In 2007, natural gas was over 15 bucks, really expensive, and we didn't know what was going to happen. We're going to need to import a whole bunch of natural gas. That's where we were. And what happened? In 2005, there was a little provision in the energy bill of 2005 that gave a permit waiver for natural gas exploration and production. It did not excuse compliance. I want to be very clear. The natural gas explorers and producers had to comply with all of the environmental laws. They just didn't have to go through permitting around a section of permits that would ordinarily take 8 to 10 years to get the permit. What was the result? It enabled thousands, then hundreds of thousands of frack wells to be produced, accomplished with a hundreds of billions of dollars of savings of energy cost to consumers with the displacement of coal by natural gas at a lower price and with nearly completely perfect environmental compliance.
What was the other result? From a greenhouse gas perspective, it slashed America's greenhouse gases at a profit to GDP and to consumers, and it also dramatically accelerated innovation in the environmentally responsible reduction and delivery of natural gas and now made us a net exporter, the ability to export natural gas. That's how much we're able to create and help displace the use of coal elsewhere in the world. By the way, natural gas also has lower emissions profile than coal air pollution, the stuff that actually sickens harms and prematurely hospitalizes and kills people. So this is the example of a market driven outcome with government removing barrier to market investment and innovation.
Quill Robinson: Hannah, I want to bring you in here now. A lot of the headlines we're seeing are about climate change. Tragically, forest management is also in the headlines right now with the fires that are happening in the Los Angeles area right now. At PERC you're not so much focused on climate change and air pollution that Jim was talking about, but you all work a lot on lands issues and you also are a free market environmental organization. Can you talk about this approach that's a little bit different from traditional environmentalists in the context of the work that you guys do at PERC?
Hannah Downey: Yeah, thank you. And I think Jim teed this up really nicely of emphasizing we can want really the same outcomes. I think we all would say we want fresh air, we want clean water, we want healthy wildlife populations. We want to be able to go outside and enjoy it. In that sense, that is truly, we're all kind of unified in this sort of environmental pursuit. As Jim also laid out, some of the tactics are different here and how do we go about it rather than maybe some climate alarmism. How do we evaluate really sound policies? How do we get the incentives right? How do we proactively promote doing good things rather than just trying to stop bad things?
So Quill, you mentioned some of the wildfires and problems we're facing there. I think that's a really interesting intersection between some of the land management discussions and also these kind of climate and broader air pollution concerns as well, right? What's happening in our forests and the healthy state of our forest ecosystems or lack thereof, drives these wildfires, which also contribute huge amount of carbon emissions, huge amounts of air pollution. It's this really unique intersection of issues. And there a lot of it also comes back to the what are the mechanisms we want to use to achieve positive outcomes on the ground? Jim again mentioned some deregulatory approaches. How do we get out of our own way? We know that the major factor driving the wildfire crisis in the United States is an overabundance of fuels, trees, dead dying brush, those sorts of things in the United States. So what we know we can do is get in there and remove some of those fuels to restore those forest ecosystems. So with all of that, we need to remove some of the barriers, some of the permitting, the environmental review process, the litigation that holds up doing that good work.
I think a really prominent example there was in the Klamath National Forest, there was a proposed fuels reduction and forest restoration project there. A small group opposed it claiming if we go in and touch any of the trees, if we cut down any of the trees, we're going to destroy spotted owl habitat, which is a protected bird species here. With all of that, it led to all these delays, everything getting tangled up and in all of that tangle a fire came through and destroyed the exact habitat that some of these advocates were claiming they wanted to protect. And so it just goes to this crazy nod of how do we promote doing good things? How do we get out of our own way? How do we reduce the costs so that we can do these good things? And that's where I think some of this intersection comes together.
Jim Connaughton: Could I pick up just on this point, so the other feature of these overstocked unnaturally dense forests is that they take down transmission lines too, so the utilities get blamed for it, but it's the overstocked forest that's the problem. And I really liked Hannah's mentioning of the point is outcomes. These forests are naturally healthy at 30 to 50 trees per acre, and today there are 200 to 500 to trees per acre. So it's really simple. We scientifically know the numbers should be tens of trees per acre of mixed size, but I'm okay with a mandate or at least a program that says we shall restore our state and federal and other forests to their natural balance and then put a series of programs behind that. And I wouldn't mind if it was mandatory programs, we put a series of programs behind it, we would know also that we had that much fuel we could remove and profitably could put to good use for biofuels, for biochemistry, for actually fertilization and other things.
There's all kinds of products and businesses that could grow up around the removal of that material over the next 40 years. The whole businesses could be created and we'd end up with a net better ecological outcome all at a profit, not at a cost including funding rural schools, but the key is to go after all of it. Instead, what did the government do? In 2003, they passed the Healthy Forest Restoration Act that I was a part of and said, let's try this out on 19 million acres of a 600 million acre problem. And by the way it worked. And did Congress ever return to authorize more acres? No. Okay. And so we know we can do this. We know we can do it at scale. We know we can do it profitably and we know we can do it with a huge benefit to the environment and to habitat, and yet we don't. That's the kind of stuff as a sort of a cooperative conservationist that I am, that's the kind of stuff I love to go after.
Joseph Majkut: I'd love to jump in here, and Jim, you recognize the resource that exists on federal lands, public lands in general in the United States with respect to lumber and we're an energy program and so we're thinking a lot about, and we've had previous episodes on the energy dominance agenda. Now a lot of energy production in the U.S. takes place on private land, but a lot also takes place on public land and it's on public land where a new administration has a lot of authority to encourage development or to stop development. Now obviously the Trump administration seems like they're going to want to encourage development, but I'd love to hear Hannah, PERC is focused on land management and western land policy. I'd love to hear your views and to share them with our audience of just what are you expecting to see over the next couple years in terms of how the federal government manages public land?
Hannah Downey: That's a really great question, and I think you're right that there's going to be a renewed emphasis on how do we maximize the use and availability of resources on our public lands and with it, I think energy–
Joseph Majkut: Such as oil and gas, right?
Hannah Downey:
Exactly.
Joseph Majkut: It's minerals, its mining, it's all sorts of natural resources.
Hannah Downey: Exactly. And even beyond that, we're talking about lumber and timber, grazing, especially when you look at a lot of rural western economies and our ranching communities highly dependent on federal grazing allotments and being able to use the federal lands to raise cattle and other livestock. You look at emerging outdoor recreation industries, that is a massive emerging kind of part of this new western economy that we're looking at. So there's going to be some really great conversations on that and thinking a little bit about some of President Trump's nominees for these positions, particularly Doug Burgum for Department of the Interior and Chris Wright at Department of Energy, both of whom have a strong background in energy, but both of them also bring this strong kind personal conservation ethic with them. Chris Wright is an incredible mountaineer and outdoorsman. Doug Burgum, it was great. He was talking with Senator Heinrich who's the lead democrat on the Senate Energy and Natural Resources Committee in advance of his hearing this week, and when asked where did they find common ground, he said deer hunting. And so just these very interesting examples where I think we've been talking about it this whole time of there's sort of this energy side of things, and then there's also kind of a personal conservation ethic, and those things can go together, but it is going to require some of that careful policymaking.
Jim Connaughton: The irony being that the Rocky Mountain West is where the future of our clean energy progress is going to occur across the board, and it's not going to happen on the coasts and it's certainly not happening up the Appalachian East, the center of gravity for energy innovation across every category is going to take place in the Rocky Mountain West.
Joseph Majkut: And here you're thinking deployment of solar, you're thinking nuclear, you're thinking geothermal?
Jim Connaughton: Solar, wind, nuclear, geothermal, more hydro, biofuels in all categories, fuels and for power, minerals development, if we don't develop the critical minerals, there is no clean energy technology. So it goes on and on transmission corridors, connecting base load of power with intermittent power, all of that is going to unfold west of the Mississippi River and east of California. That's where I'd be spending all of my attention these days because again, the future, not just for America, because we'll do it in America and then export that know-how and innovation to rest of world. And again, it's not just climate change, it's cleaner air, it's better water management. There's a whole host of direct human health benefits and livelihood benefits beyond just the long-term issue of climate change.
Hannah Downey: I think Jim brings up some interesting points as well on just innovation and how can the United States be an emerging force in all of that through private industries, through technology, through all of those pieces. I think it's really great that this conversation, we've talked about oil and gas, we've talked about fracking, but Jim's also here mentioning biochar and nuclear and all of these other new emerging opportunities where as I think we'd all agree, there's still a lot of room for advancement and a need for innovation there, but to a point where we can help really be a leader in that. And the fact that we're talking about all of these different angles on similar or the same landscapes is just kind of fascinating that we're even able to have that conversation right now.
Quill Robinson: Hannah, one of the things that I think is maybe an issue here is I feel like the language that many Republicans use when talking about energy and environmental issues often rings as anti-environment, particularly the way that it gets reported upon. 80% of Americans live the east of the Mississippi. There was a very different experience of land issues and conservation issues west of the Mississippi. I imagine from what you've described that for Governor Burgum and for Chris Wright that western experiences really shaped their views of these issues. When folks who are not as plugged into western issues or kind of are in the traditional environmental community are listening to the words of these types of figures, how do you think that they should interpret the language that they're using and understand what has sort of shaped the conservative and western ethos around land and energy issues?
Hannah Downey: Yeah, this is where it gets a little bit hard, I think, in that we need to again focus on what are the outcomes and the results rather than the rhetoric surrounding it. You shared right at the beginning some of the climate alarmism or concerns over climate with an incoming Trump administration. I mean, I think of for a lot of my work on the Endangered Species Act, one of my greatest peeves, I guess is when it will be reported that species are losing protections, losing federal protections of the endangered species act. When in reality what has happened is they have recovered so well. We have done our job states, private individuals, feds, like everyone has come together to a point where in very rare cases where species are able to actually be recovered and successfully delisted, and what we should be doing is celebrating that success. What we should be doing is focusing on the outcome. We shouldn't be saying, oh no, we've lost all of this process. We should be saying we've achieved the outcome that we set out to achieve, and that is worth celebrating. So I would encourage us to just focus on results over rhetoric in all of this while recognizing that that can be a hard thing to do.
Jim Connaughton: And the point I would underline there, outcome is the word that matters. So for example, California still has the most stringent air quality standards of any place in the world, but they are still hopelessly out of compliance with the less stringent federal air quality standards. It's one thing to say, I'm green because I want to be a certain amount of green, but where are you actually? The irony from air pollution for example, is California and the I 95 transportation corridor are still out of attainment with air quality standards 50 years later. So we should be focusing on the outcome there. And by the way, the communities that are still suffering in areas that don't meet air quality standards are largely black and brown communities. So it's doubly bad when we should be focused on the outcome in those locations, not the intention. The other thing I would underline is from our perspective, Hannah and my perspective, I would rather achieve a lot more profitably and a lower cost than a lot less expensively in a very, very high cost. So if you think about the climate policies that we have on the books right now, the subsidy programs that are being implemented right now are going after the smallest amount of the most expensive tons of reduction rather than the largest amount of the least expensive tons of reduction. That's just wrong.
Quill Robinson: What's an example of this? What are some of the policies that are currently in place?
Jim Connaughton: Yeah, I'll give you an example. There's a farm bill subsidy that the last presentation I saw from USDA was going to give farmers $590 per ton of abatement when we know that you can actually achieve abatement of greenhouse gases on farmland, which is a great thing to do, at 50 cents are at a profit. And so instead of doing 50 cent tons and spending $500 on 50 cent tons, therefore you get a thousand tons. We're spending $500 to get one ton, $590 to get one ton. That's just backwards. And the other thing is the easy tons are the ones we should go for first and then innovate and go after the hardest tons later. Again, it's just looking at the outcome opportunity through a different lens, greatest success at lowest costs. Now, that often comes with letting private sector innovators innovate, not second guessing or trying to direct what they're going to do, but simply give them a performance objective to work against.
The example I'll give there is lighting efficiency. Congress passed a lighting efficiency mandate that they did not direct the compliance how to get there. They said, you go figure it out, lighting sector, lighting sector is pretty small. They had a mandate of 10 years to get 70% more efficient. Everyone complained about it, by the way, but because it was a market-based mandate in under 10 years, the lighting producers were able to create a whole new platform with LEDs. Consumers love them, and instead a savings of 2.75 trillion dollars that consumers can spend on other things. It cut the nation's energy bill by a 7%.
Joseph Majkut: I have anecdata on that because I was recently talking to my folks and I was like, your guys' power bill's insane, and it's because they never switched.
Jim Connaughton: Isn't that funny? By the way, and there was $0 spent on implementation because the tea party Congress zeroed out the administrative program funds. But guess what? The private sector still complied because there was a profitable outcome here now that the standard had been set.
Joseph Majkut: And nosy middle-aged sons.
Jim Connaughton: That's right. That's right. And so I just want to give you these examples, and that's my favorite one of a market-based mandate because it ended up starting at a cost and ending up at a massive savings in 10 years.
Hannah Downey: On that kind of to Quill's point a little bit earlier about how is the West going to factor into all of these decisions. I think the point that Jim, you're also helping make here is on how people want to have choices and be able to choose what is best for them and their unique situation. It reminds me of a lot of work we're doing at PERC on water conservation and how do we, with the Colorado River and Great Salt Lake and all these other concerns over drought in the west, how do we allocate and keep it in a very much right spaced approach? What we've found is there's all of this money and this interest in how can we lease water from people and help shepherd it to where it needs to go. With all of that, the much better approach, as Jim is saying, is focused on the outcomes. Say, how do you want to save water and we'll help you make that happen. Is it improved efficiency? Is it different types of crops? What works for you and your family and your location uniquely well, rather than a prescriptive, here's the approach you're going to take. Having that choice, having those options, it promotes innovation, it promotes buy-in. It helps us get to, again, this common term of outcomes in all of this, and that's what we need to go after.
Quill Robinson: I think both of you have really illustrated this point about sort of the ineffectiveness and the inefficiencies of process-based and sort of aesthetic environmentalism and the importance that market-based approach, the benefits that market-based approaches can bring when it comes to delivering outcomes efficiently. Let's talk about climate change, though. I think that it seems like there is disagreement between the current administration and soon to be Trump administration about the prioritization of climate as a national and international issue. So Jim, my question is, is there a similar outcome in mind? It's sort of distinct from clean air and clean water. President Trump has said that those are priorities and you will continue to deliver upon them, but when it comes to reducing emissions, do you think that innovation efficiencies will just continue to drive down the U.S.'s emissions? Or if there is not a similar outcome in mind when it comes to reducing domestic emissions of being an international leader, will that not follow along with this new administration?
Jim Connaughton: So the way I look at it is I am an outcomes person, and if I imagine 3% economic growth to support 2% population growth at 1% additional cost of infrastructure, which has been the case for the last 70 years since World War II. If I imagine that going forward between now and 2050, we have to double our electricity footprint, including replacing 70% of what we've got. That doesn't assume a demand bump from things like really taking off with EVs or taking off with data centers. If you add those two in is probably a tripling of our footprint that is going to drive a ton of new investment in new infrastructure that by definition is a heck of a lot cleaner and more efficient than what it's replacing. And so the greenhouse gas intensity of that and the air pollution intensity of that, which is how much emissions are there per unit of new stuff is going to continue to go down because we're a market driven economy.
We don't like doing wasteful things if we can avoid it. And so this idea of energy abundance is actually a necessary outcome. It's not an optional one for President Trump. It's actually a necessary one for President Trump and for all of us if we want to meet the electricity and fuel demands of our citizens at an affordable, safe, and secure price and availability. And so I'd liken it back to the 2007 energy bill that gave us the lighting efficiency mandate by the way, when Barbara Boxer voted for it, and Jim Inhofe, Senator Inhofe voted for it, Senator Boxer said, this is the most important piece of climate legislation in history. And she was right by the way. And Jim Inhofe said, climate change is a hoax, but this is the most important piece of energy security legislation we could ever have passed. Same outcome, different rationales. I can live with that.
Joseph Majkut: Yeah, I mean, we've heard from Jim what outcome he hopes to see. Hannah, I'd love to hear the same from you.
Hannah Downey: For outcomes from this administration and this Congress. I'd love to see a lot of proactive work on natural resources conservation and how do we remove some of the barriers to be able to do good work. At PERC, we often say, how do we get out of our own way? How can we speed up doing good things when for so long we just focused on slowing down bad things? So that's going to include work like how do we improve the permitting process and environmental review process so that we can do more forest restoration? How do we better align incentives and respect property rights in a way to truly recover more endangered species? How can we remove some of this rhetoric just in a broader sense, to be able to bring people to together and recognize we don't necessarily need alarmism? Let's start talking about what are those, the example Jim just shared of two very different policymakers coming together and saying, we might have different rationales for this, but we can agree there's benefit here. Let's move the needle on some of these pieces. So that's where I'd like to see us just get out of our own way and be able to unleash that innovation and creativity to get good work done.
Jim Connaughton: If I could just in closing, pick up on the piece Hannah just mentioned on permitting. So the necessary but not sufficient condition for everything we've been talking about is the ability of trusting local actors to make decisions about citing of infrastructure, with the exception of the linear stuff that requires a national solution, localities know what they can support and what they can't support, and we should trust them to do it through the processes they've enacted to do it, whether it's zoning or land management planning or what have you. So citing is necessary but not sufficient to building out all this infrastructure. We have to trust our localities.
Two, we must dramatically improve our federal permitting laws and then require the states to do the same because we can fix permitting at the federal level, and the states don't do it too, where 80% of permitting occurs, then we've solved nothing. And let me make clear, every year a project is delayed, it costs 20% more to build, and so if you delay a project by five to seven years, it means we're paying three times more for the same outcome, for the same water plant, for the same electricity plant, for the same transmission line. Why are we doing that? We know it's going to get built, and the beauty is we know it's going to comply with all of our laws. Nobody's saying change the performance requirements of our laws. They're saying change the procedures that get in the way of meeting those requirements.
Then third, once you've done those first two, if we can't build a grid and then get fast interconnection to the grid, if I actually can't plug my new factory into the grid or I can't attach a new power plant to the grid, then permitting and citing wasn't worth it. Those are the three priorities that should be moving day one across the nation, covering all energy, not day 385, dealing with favorite targets. And if we don't do it, by the way, we may as well give up on the rest. We may as well and give up on climate change. By the way, if we don't do it, just give up because we're just going to be overpaying and underperforming for the next four decades.
Joseph Majkut: Well, as you know, Jim, we've been doing a lot of work here at CSIS trying to articulate the connections of those problems that you just well articulated to our broader strategic aims, whether that's in technology innovation, artificial intelligence, manufacturing. I share a lot of your views on the urgency of that, and that if we can't fix that, we have a bigger problem for the United States.
Quill Robinson: Jim, Hannah, thanks so much for joining the transition.
Hannah Downey:
Thank you for having us.
Quill Robinson: Thanks so much for joining us on The Transition. We'll see you next episode.
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