This transcript is from a CSIS podcast published on February 5, 2025. Listen to the podcast here.
Robinson: Welcome to Energy 360: The Transition a CSIS miniseries, exploring the energy implications of the 2024 election. I'm your host, Quill Robinson. In his first few weeks in office, President Trump has signed nearly 50 executive orders, including roughly a dozen concerning U.S. energy policy. These orders focused on boosting domestic energy production and advancing the goal of U.S. energy dominance marking a significant shift in the nation's approach to energy and climate. This week, Joseph and I discussed the potential impacts of these energy orders and how they will shape U.S. energy policy with Paul Dabbar, Co-founder and CEO of Bohr Quantum Technologies and former Department of Energy under Secretary for science under the first Trump Administration. Let's dive in. Paul, welcome to the transition. It's good to have you.
Paul Dabbar: Oh, it's great. Exciting times right now in the energy sector.
Quill Robinson: It's been a busy last few weeks, we've seen nearly 50 executive orders issued by President Trump, many of them concerning energy and climate change. And I want to focus on one group of these executive orders, Paul, and in the preamble of the title called "Unleashing American Energy", it says the following, it is thus in the national interest to unleash America's affordable and reliable energy and natural resources. This will restore American prosperity, including for those men and women who have been forgotten by our economy in recent years. It will also rebuild our nation's economic and military security which will deliver peace through strength. So Paul, this is a broad vision for American energy laid out by President Trump. You've been in the nuts and bolts of the energy sector though for decades in the military on Wall Street at the Department of Energy formerly. So that's the vision. What does this mean in practice?
Paul Dabbar: The way I like to describe this in a kind of very positive way based on just going forward, but also looking back, what happened during Trump 1.0 is that there was a balanced set of what I call the four big energy policy areas. And so the four areas are energy production or availability, energy prices, environmental impact, and national security. The energy sector is incredibly fragile. Events happen around the world over the course of very long periods of time, like 1973 or COVID or whatever. And of course, more recently the war in Europe that the system is very fragile and if you overly focus in one of the others, you really set yourself up for a potential crisis, which does seem to happen somewhat regularly, but hard to exactly predict. So having a balance across all the four, caring about all the four at all points in time is a greater degree of resiliency as well as the politics as you were kind of referring to with the executive order.
The second thing I would like to point out is that under Trump 1.0, every one of those four things was actually heading in the right direction. They were all heading positively. President Trump remembers when he was president previously that this was all very positive. And so during his previous administration, U.S. energy production went through the roof and lots of data on that. We had energy price, deflation, not disinflation de inflation. Prices were dropping. The U.S. led the world in emissions reductions and then national security as a result of a number of those points, the U.S. National Security posture as a result of energy was incredibly strong. I think when he talks about that, he remembers it was accomplished previously. And that's kind of the vision of the goal.
Joseph Majkut: Paul, it's really great to hear that, and it reminds me of that Saturday Night Live skit where they're recording a blue Oyster cult song and Will Farrell's playing the cowbell, and it's like, well, we need more cowbell. And I can totally see how energy was a cowbell in the rocking Trump one economy. Is this a case of more cowbell or what do you think is different right now? Because not only do we see this sort of focus on re-unleashing American energy, but we've also seen the declaration of an energy emergency. So how do you think about what might be different this time around as Trump is reelected and takes office again?
Paul Dabbar: Yeah, because things are obviously quite different. Some of them are more positive than when he took over in 2017. Some are more challenged than back then on the positive front, the U.S. was not an exporter of crude oil in 2017. You had to come back and remember, it wasn't that long ago that we were sitting in the Forestall building and Secretary of Perry's office and EIA came in and said, well, in the last quarter we were on average exporting a million barrels of crude oil a day. Frankly, we were still amazed that things were working so well. I mean, we know that was generally the plan, but the fact that we jumped from zero for generations to a million barrels a day was quite amazing. And then we kept going up right after that kind of first announcement. A lot of the BOE equivalent, the barrel of oil equivalent, was LNG. So the amount of LNG exports production in the U.S. went through the roof also, since 2017.
American innovation in new energy technologies in the tech space and venture capital in the energy space went through the roof since 2017. And American leadership in capital markets, whether it's the public equity markets debt, but also venture and infrastructure funds and growth equity has also gone through the roof. The U.S. has really come to dominate capital raising around the world. So there's a number of positive things that have happened that you have to kind of like – America's position in the world and America's position domestically is in a much better place than in 2017 on many of those aspects. On the downside, inflation on production of energy has gone up significantly. There's lots of data. I've written about this in editorials, but if you look at the uptick in power markets, the power prices are going up significantly. The wholesale power prices, the cost of generation delivered to a customer, in many regions of the countries up a hundred percent. And you as a customer, that's only a third of your bill, you've got wires charges also, but the energy prices on the power side are heading in a very bad direction. And then on the oil and gas side, the production costs associated with oil and gas production has also gone up a lot because of inflation for equipment and construction, but also the cost of capital. So the risk-free rate, i.e. the interest rates have gone up a lot, which means everyone trying to build anything in the energy sector is more expensive just to raise the money. So there's pros and cons that's happened since eight years ago.
Joseph Majkut:
And if you talk to anybody in the industry, I don't think they expect to see the sort of incredible growth that we saw post 2016 or we're seeing at that time. But I would love, I know you tracked carefully, and we're just sort of coming, this administration's newly arrived. I'd love your views and thoughts on the broader agenda here. What is it that President Trump, in your view, really is trying to accomplish? Because sometimes from the industry side or the intellectual side, you see goals that work against each other: Strong U.S. production, falling global prices, right? A very, very robust power sector that is serving customers cheaply, but reluctance about certain kinds of electricity generation. How should we think about the macro goals before we get back into the details?
Paul Dabbar: If you go through the approximate 12 or 13 points, depending on how you count them, of President Trump's energy policies that he laid out over many, many speeches over and over again, you have to kind of scrape through all the speech points, but it's quite visible. The top two out of all those points is, as you mentioned, unleashing American energy and energy inflation. Those he's repeated more often than any of the other points. And so there is a bit of a potential conflict you could have theoretically from an economic point of view of we want to produce more energy, but we want to reduce the prices which would reduce the profitability for those entities. I think President Trump remembers what it was like in 2017, 18 and 19 when he was able to accomplish all that, where actually American energy production went up massively and there was deflation. So you have to take a step back. How did that happen? How did that happen? And there's kind of three drivers of how he accomplished that. And I think it's going to be somewhat of the three drivers that you hear in themes from Secretary Wright and the president and so on.
The first one is innovation, right? The stuff we're deploying today was not invented in a commercial form 20 years ago. Pretty much anything. Wind was quite poor, went through a bankruptcy cycle. PV solar. The lithium ion battery was still a science experiment funded by DOE and NSF. There was no EV sector. Directional drilling, hydraulic fracturing, 3D seismic, all this stuff really didn't exist in any material form. It was invented and commercialized within the last 20 years. And so that allowed production to go up and costs to drop at the same time. So that was the primary trigger of that, and I see a big wall of additional opportunities going forward, which is a longer topic.
The second point is good public policy. And good public policy for about 20 years – from the early two thousands and Bush and his report and so on up through the end of Trump – was a pro-supply, bipartisan pro-supply set of policies. And the way I like to joke about the negotiations, how it went up in the hill was “I'll give you your pro supply policy if you give me my pro supply policy.” And everyone was rowing in the same direction, not trying to shoot at each other, actually saying yes to each other on pro supply.
And the last one is capital availability. And the capital availability was not from the government up until the last few years. And there's a lot of problems that have happened with the IRA and the infrastructure route, which is a longer topic, but that 20 years prior to that, the amount of money which flowed from the private sector into oil and gas, into solar, into wind, into EVs, into all that was massive. And so just to pick on the oil and gas sector, the amount of CapEx that increased from that 2005 timeframe to kind of the peak was five times the amount of CapEx. So that was all private and same thing you can say in all these other technologies. So I think it's a very positive place that we all went through up until relatively recently, quite a virtuous circle, and I think the president wants to somewhat return back to that.
Quill Robinson: Paul, back to the point on the executive order as it relates to the national emergency, what are the most indicators here? I mean, you've listed a number of them, but I think it can kind of be sometimes appear nebulous, right? It's kind of a vibe. The vibes were good, then they were bad, and then we're going to make them good again. What are the most important indicators that might result in that virtuous cycle?
Paul Dabbar: So it's very much a supply driven strategy, so how do we increase supply? That's the sub-bullet of "Unleashing American Energy." And a core part of that is making it easier to build for everything. In general, that's the big driver. EPA, I mean, this is one of the most stunning things that I think anyone in the energy sector saw about what was going on at the end of the last administration. They effectively banned gas combined, new gas combined cycle plants, period. Okay? We're the largest natural gas producer in the world. It's been the major driver of emissions reductions. It's super low cost. It drives our economy as compared to what's going on in Europe and whatnot. And EPA decided to ban all new gas combined cycles effectively, which is somewhat stunning to do that. And they did that through some bells and whistles, but effectively they would've banned new gas combined cycles.
So this “we will let them build” is a big theme that will reduce costs, that will increase supply, whether it's gas combined cycle plants or pipelines. He mentioned transmission lines on the power side, obviously oil and gas, obviously LNG facilities. A very core part of this is just making it easier to build. The other big one is inflation, which is much broader than energy. He highlights over and over again about the cost that things have built up because of over government spending. And I think as everyone knows, the annual deficit is about seven to eight percent of the overall economy. That's a stunning level of spending and we haven't hit that level since World War II as a percent of the economy. That overspending helped drive inflation and cost of capital for everybody, including energy. So you're trying to get spending down to also reduce costs to go build stuff is another part of that emergency and unleashing American energy.
Joseph Majkut: I absolutely hear that. One of the things I'm most interested in trying to suss out for the next few years, we have to thread a needle here. You want to build a lot more electricity generation. I think you and I both have talked about that's probably where some of the challenges are going to be. That's where the economic frontier is. When you think about AI reshoring manufacturing, historically we have done two things at once, build a lot more grid infrastructure, add a bunch more generation and reduce prices. The idea that we can do it again, we did it after World War II, the idea we can do it again is not impossible. I wonder what you think the role of strategic capital, which is government spending often or government backed spending for things like infrastructure, transmission, grid upgrades, a lot of the stuff that was in the bipartisan infrastructure law, how that plays a role here and how we should think about both reluctance about large levels of spending, but strategically deploying capital so that we can build build build in particularly if we can accomplish a more permissive permitting environment.
Paul Dabbar: So the core part of both Trump 1.0, which I was a part of, so know this quite well, but also if you listen to Chris Wright's testimony, the focus of capital on earlier stage efforts is a core part of the difference of policy difference. And to use the code words focus on discovery and innovation rather than stuff that's already been invented. And so you can have this great theoretical discussion on where should the government invest and the Republican general bucket of where it happened in 1.0 and Trump 1.0 and you're hearing it again, which is where's the best place for federal government spending? And in general, the Republican position is let's go invent the future and then let's let the private sector go build it, which is what happened for 20 years across all the different technologies. So I think you're going to see a shift in general and specifics you may see a little bit differently, but in general you're going to see a greater degree of focus on the next 30 battery chemistries, not the one old one.
You're going to see fusion being a focus rather than something that's in terms of government spending to your question, there may be some specific areas that they still may focus on. I mean a big discussion amongst the incoming administration has been we have subsidized too much intermittent low-capacity factor assets and we need to have more baseload and dispatch. I'm sounding a bit more power here. So there may be some of the more high TRL level infrastructure spending. I think you're going to see a more balance and towards things that are clearly missing in the power markets and driving power prices.
Quill Robinson: So you mentioned fusion. I'm curious about fission. Obviously Republicans and Democrats have supported that R & D agenda when it comes to fission for a long time. There's a lot of enthusiasm about deploying nuclear on both sides of the aisle right now. It seems like it's very of the moment. Do you see a role for the government, not just in the R & D, but also de-risking and building these technologies like AP 1,000s that we have? We just lack the financial mechanisms to do them.
Paul Dabbar: So nuclear is my home court, right? I'm a nuclear engineer. I ran a reactor when I was younger and did a lot of work in the sector on the business side. I'm very sober about nuclear and what works and doesn't work, and obviously it has tremendous operating characteristics, right? Very, very strong operating characteristics. The big challenge around nuclear is that the scariest sentence you can say to anyone in the nuclear sector is on time and on budget. The construction side of nuclear is probably the biggest hurdle. It's less about technology than it is can you actually build it and not bankrupt a company? Which happened again in this last cycle with SCANA in South Carolina and challenges that we helped address in Georgia. Clearly the operating characteristics are there by the way the waste can be handled. That's just a political topic. That's not a technical topic, which is a longer conversation, but I do think trying to get people's hands around the risks, cost of capital construction of getting it done.
Can the government play a difference? It did when Captain and future Admiral Rickover did that where effectively the Navy was the one who invented the commercial power sector by building reactors for the Navy and those same sort of designs ended up being the basis for the commercial sector. I do think that a potential trigger, so let me give you an example. Bonneville and WAPA are huge utilities owned by the Department of Energy. They're very large generating companies under the control of the U.S. government. They're utilities owned by DOE. They have the authority to enter into contracts. TVA does too, by the way. And so could Bonneville and the Pacific Northwest or WAPA out in the bigger part of the west or could TVA put out a bid for, Hey, I'd like to buy 10,000 megawatts of nuclear and trigger construction. They don't even have to do the construction themselves. They can put it up for bid and say, we'll just take all the power. So there are ways the U.S. government as a first purchaser can help trigger these things.
Joseph Majkut: From your mouth to Congress's ears. But that's a great example, Paul, where for the four priorities that you talked about earlier, availability, cost, environment, and security, there seems to be a pretty broad consensus that increasing our nuclear base load would help on all four of those. It's been hard to do it in the way we finance electricity infrastructure over the last 30 years. And we have a couple counter examples, which have introduced a lot of pain for consumers and the companies that we're trying to build this stuff. One of the things I've been thinking about is, how does reform over the next few years look in Congress as the energy tax credits under the IRA get reviewed under budget reconciliation? There has to be, in my view, a conversation about what are smaller items in terms of the full cost of the intervention that would really make strategic sense for the United States across all four of those things, and would put us in a position where there's 10,000 megawatts under construction in the next five years. That's a conversation that Washington hasn't been thus far willing to have, but I feel is very important.
Paul Dabbar: So one of the things that was debated in the giant wall of executive orders was should there be a nuclear EO? And it needs to be an executive order because it's not just about the NRC, it's not just about DOE. It's not just about EPA. It's really a crosscut to make it go well. It's been quite amazing to watch that nuclear has become quite bipartisan on a somewhat regular basis, say what I would call a small bill has passed. The series of small bills have not been enough, and they're not as well thought through to the point that you just raised on a more holistic basis. There's a lot of bells and whistles on ADVANCE Act and whatnot, which are good. I'm not saying they're not, but they're like little steps which are not complete for the journey. And so I think a well thought through all of government, whether it's administrative action like a DOE or EPA or interior or a broad legislative package in one package, Congress has kind of, they're positive about nuclear, but they're getting a little worn down. Like every six months they get a new nuclear bill. And I think some of 'em have said, how many more of these do you need? Right?
Joseph Majkut: We need to see results, right? They want to be able to point to things that they pass and then projects get in the ground. And that's where I think the administration, hopefully their orientation toward action helps. Paul, thank you very much for joining us, sharing your insights. Thank you for your years of dedicated service to our country, and we look forward to continuing the conversation, but really appreciate you joining us on "The Transition" today.
Quill Robinson: Thank you. Thanks so much for joining us on "The Transition." We'll see you next episode.
(END.)