How the Budget Bill Could Reshape America’s Energy Future
Today on Inevitable, we’re joined by three guests to focus on the clean energy tax provisions currently at risk in the Congressional budget reconciliation process—what’s being called the One Big Beautiful Bill. This is our second episode on this topic this week.
Our guests are Jeremy Harrell, CEO at the right-of-center clean energy policy firm ClearPath; Spencer Nelson, Director of Federal Affairs at Form Energy; and Vikrum Aiyer, Head of Global Public Policy and External Affairs at Heirloom.
The goal of this conversation is to get to the root of the proposed changes in the legislation passed by the House and now under consideration in the Senate. We also explore which amendments are on the table and how those of us working in climate and energy innovation can help influence the outcome.
Episode recorded on June 6, 2025 (Published on June 13, 2025)
In this episode, we cover:
[01:06] Why this bill matters for climate tech
[03:19] Jeremy’s background in conservative energy policy
[04:08] Spencer on Form’s long-duration batteries
[05:40] Vikrum explains Heirloom’s DAC technology
[08:44] What the reconciliation process actually means
[13:42] Why the FEOC rule could block progress
[17:41] Why startups need credit transferability
[25:01] 60-day window threatens new projects
[27:36] What’s at stake for solar and storage
[31:32] Energy cost risks if credits vanish
[35:42] How founders and VCs can take action
[41:56] Tips for contacting your senator directly
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Cody Simms (00:00):
Today on Inevitable, we have three guests, and our focus is on the clean energy tax provisions currently at risk in the Congressional budget reconciliation process around what's known as the One Big Beautiful Bill. This is our second episode on this topic this week. Our guests are Jeremy Harrell, CEO at right of center clean energy policy solutions firm ClearPath, Spencer Nelson, director of federal affairs at Form Energy, and Vikrum Aiyer, head of global public policy and external affairs at Heirloom. My goal in this conversation is to get to the root of the changes afoot in the draft of the legislation that was passed by the House and currently under consideration by the Senate. I'm also hoping to hear what reasonable change proposals are on the table and to hear how those of us working in the innovation community around climate and energy can help influence outcomes. From MCJ, I'm Cody Simms, and this is Inevitable.
(01:06):
Climate change is inevitable. It's already here, but so are the solutions shaping our future. Join us every week to learn from experts and entrepreneurs about the transition of energy and industry.
(01:27):
Jeremy, Spencer, Vikrum, we got a whole party here. Welcome to the show.
Jeremy Harrell (01:31):
Thanks for having us, Cody.
Vikrum Aiyer (01:33):
Yeah, it'll be fun.
Spencer Nelson (01:33):
Thanks.
Cody Simms (01:33):
This is the second episode I've recorded today on this topic, so clearly I feel it's an important one and hopefully folks tuning in also believe it's an important one. I got three of you here, so I believe you all believe it's an important one. Really, what I want to do in this conversation is unpack some of the specifics of the various clean energy manufacturing industrial policy provisions, energy provisions that are at risk in the current draft of legislation that's making its way through Congress. So I wanted to start by having each of you guys introduce yourselves and then we'll start digging into some details. This is going to be a wonky episode just as a warning for everyone at the front end, but we're going to end it hopefully with some calls to action for folks who decide, "Hey, this is something I want to try to make some change around. Here are things I can do." Jeremy, maybe let's start with you.
Jeremy Harrell (02:30):
My name is Jeremy Harrell. I'm the CEO of ClearPath and ClearPath Action, a conservative clean energy organization based in Washington D.C. Our mission is to accelerate technological innovation that reduce global energy emissions. We work on everything from scaling up new technologies like advanced nuclear, long-duration energy storage, geothermal and CDR to how do we make building blocks of the global economy like cement, steel and chemicals in affordable lower carbon way. I've been at ClearPath for a little over eight years, but I've been in D.C. for over 20 or almost 20 working on clean energy policy. Before I came to ClearPath, I worked on Capitol Hill for Republican policy makers crafting tax energy, natural resources and transportation policy.
Cody Simms (03:19):
Jeremy, one of the reasons I thought it was really important to have you on for this particular topic was, A, to show not all Republicans hate clean energy, which would be maybe a misconception that some people might have, and also because we are dealing with how do we influence Republican members of Congress, and thus are probably more likely to want to listen to the points of view of somebody who comes from that side of the aisle themselves. So those are my reasons why you're here and I'm so grateful you've made the time to join us.
Jeremy Harrell (03:51):
Absolutely. There are Republicans who want to drive forward an affordable, reliable, clean energy economy. Fortunately, over the course of this debate, we've seen some champions really emerge. Frankly, bipartisan policy get across the finish line over the last decade, and we've got to leverage that momentum here in this moment and what is a really important tax debate.
Cody Simms (04:08):
Spencer?
Spencer Nelson (04:08):
My name is Spencer Nelson. I lead federal policy for Form Energy based in Washington D.C. We are commercializing a new class of multi-day iron-air batteries for the electric grid. So they're 100 hours in duration. We're manufacturing them in West Virginia, and they're really about taking the reliability of the electric grid to the next level. So I do all of our federal policy, working with stakeholders in the administration and on Capitol Hill. Before this, I also worked with Jeremy at ClearPath for a while, and I also used to work on the Hill on the Senate Energy and Natural Resources Committee.
Cody Simms (04:42):
Vikrum?
Vikrum Aiyer (04:43):
I unfortunately do not have the privilege of saying that I had that chance to work with Jeremy at ClearPath in the past, but maybe one day. A guy can dream. Thanks for having us, Cody. Longtime listener of the pod, first time guest, so excited to be here. I head up public policy for Heirloom. Heirloom is a direct air capture technology that has investments in the Gulf Coast in Northwest Louisiana and a facility up and running in the Central Valley about an hour from where I am today. Our technology is based off of a relatively simple science. Some PhD research based out of Penn and Columbia, as well as the national labs facilitated this understanding that limestone is made up of certain component parts. So when you keep that limestone, it loses a molecule of carbon that thus makes that limestone super thirsty and acts like a sponge wanting to attach itself to as much carbon dioxide in the air as it can possibly glob onto.
(05:40):
We then stack that limestone vertically high on trays, kind of looks like a server rack, and we're able just by exposing that limestone to the ambient air to pull down tons and tons of CO₂. I think the most exciting thing about this conversation today is that oftentimes folks think of direct air capture or carbon management in the context of sequestering that carbon, but what we have found, especially as we've expanded our reach into the Gulf Coast and spent time in Northwest Louisiana, is that there are countless applications for that feedstock of carbon dioxide and that CO₂ can slide for the market where it's today on sequestration. It could also be applied to enhance oil recovery, stronger crop preservation for farmers who want to manage their crops during extreme weather to synthetic aviation fuels that the Department of Defense can use to ensure that they have to refuel their flights for jet engines fewer and fewer times.
(06:33):
So CO₂ as a strategic advantage to America and deepening our supply chain to make sure that that advantage helps advance our energy security is the business that Heirloom is in, starting to treat carbon dioxide not purely as a liability, but frankly as a commodity for America's energy security in the road ahead. Previously, I had the opportunity to work in the White House at the Economic Council. I led public policy for a division of Uber, a company called Postmates that became UberEats. Then I also worked on Capitol Hill where I had the chance to work for Ed Markey when he was on the Energy and Commerce Committee.
Cody Simms (07:08):
Spencer and Vikrum, thanks to both of you. You have a lot of work you're doing right now to get the word out and talk to various members of Congress about how certain provisions may be impacting your own individual businesses. I appreciate you coming here to share with us just a little bit more broadly about ways that other founders or other startup team members or really frankly any concerned citizen can get involved here. I thought it was important to have your two companies in particular to show that the impacts here are broad. Obviously, there's a huge implication on solar and wind and energy generation generally, but there's implications across the broad energy manufacturing and industrial landscape.
(07:51):
Spencer, obviously, what you're doing in long duration energy storage has wide reaching implications for data centers and other things like that. Vikrum, you just outlined multiple ways that Heirloom's captured CO₂ can be used for carbon sequestration but can also be used for various other industrial purposes. So I thought important to share that context and have you both here to do that. Maybe before we dive into all the actions folks can take though, I'd like to spend some real time getting into the weeds of where are we with this legislation today and what particular provisions are facing what particular changes. Jeremy, I'm going to ask you to guide us through the details of I call them the various 45s and 48s, but maybe start with just a high level overview of where we are in the process and what is going on.
Jeremy Harrell (08:44):
We will start at the very bottom and folks probably know this as you all, many of the listeners on this podcast are directly impacted by many of the policies that are advancing through reconciliation process. So this bill, what the House Republicans and the President are calling One Big Beautiful Bill is their reconciliation package. What that means is legislation, because Republicans control the House, the Senate and the White House, that they can move unilaterally without bipartisan support given that political dynamic. But the important component of it is they're limited into crafting provisions that are oriented around funding and revenue.
(09:21):
To oversimplify it, they've got narrow majorities and so they've got to keep their caucuses together as it advances. It's a tool used to move legislation and has been used previously in different political configurations. It's how the Affordable Care Act got done at the beginning of the Obama administration, for example. It's how the Trump tax cuts got across the finish line in 2017. It's how the IRA, the Inflation Reduction Act got across the finish line in the Biden administration. So typical partisan process that runs and policies can move without attracting bipartisan support.
Cody Simms (09:55):
As I understand it, where we are today is the Republican administration broadly has I would call it a primary goal of extending those 2017 tax cuts, which were landmark legislation from the Trump 1 administration. I believe that the math on those says extending those cuts, not adding a bunch of new tax cuts to individuals or corporates, but just extending the current ones would cost north of $3 trillion in terms of deficit spending. So basically, they have to pay for it somehow and that pay for its have ended up mostly coming out of a combination of Medicaid cuts and these various clean energy cuts. Without doing that, we're facing an even greater annual budget deficit. Even with doing it, it looks like we're facing a greater annual budget deficit. So that's the math that I think people are trying to navigate right now. Is that the broad picture?
Jeremy Harrell (10:50):
Exactly right. In the end, they are trying to extend the individual tax cuts that were act in '17 and provide some new incentives that are in place. The President talked a lot about no tax on tips, reducing tax burden on certain types of payments like social security payments along those lines. So this bill is trying to drive those tax policy forward and you're exactly right, and that the clean energy tax incentives come into play because they're trying to find ways to offset the cost of those tax credits and that is what the big debate across Congress is.
Cody Simms (11:21):
It's almost a philosophical debate of do you believe it's better to reduce people's, or not even reduce, not regrow people's individual tax brackets or is it better to incentivize and spur manufacturing and energy policy in the US? It feels like those are what's on the table.
Jeremy Harrell (11:39):
Well, what we're finding is Republicans want to do both. They're trying to navigate how to do that. The unfortunate dynamic is because the original tax cuts were done by reconciliation, it means they expire at the end of this calendar year. So no action means tax increases in a wide variety of reasons. So what we have seen materialize over the course of this debate is some Republican leaders in states where significant investments are being made, where jobs are being created, where there's a national security imperative to grow American manufacturing or grow supply chains, them coming forward and saying they want to protect many of these incentives, expand some of them and scale back others and that's where we sit today.
(12:19):
So the House took action a few weeks ago. That was the first step in this process. They laid out a bill that ultimately they did get to pencil out in some shape or form. There's competing budget projections out there. In some cases as it relates to the energy and credits, they kept credits in place, things like the 45Q tax credit for CCUS and carbon dioxide removal were largely untouched, and we can go in a little more detail there. They extended credits like the clean fuel credit, which was the very first low carbon fuel incentive based on an LCA score into 2031, and then they scaled back a bunch of credits. Unfortunately, at the very end, a couple poison pills were added that complicate how anyone can use these credits. That's where we sit today where the Senate is having a conversation about wanting to extend some things that did get cut, potentially scale back some things that they don't agree with and really get at some of these poison pills that limit the ability to use tax credits to grow American energy, grow American supply chains and foster economic growth in this country.
Cody Simms (13:19):
The two big poison pills I think are one is around transferability and the ability for these tax credits to be traded by various partners, which in theory creates a lot more liquidity in the marketplace. Then I think the other one is around these essentially foreign entity ownership concerns, which has this funky acronym of FEOC. Do you want to maybe unpack each of those for us a little bit?
Jeremy Harrell (13:42):
Yeah, I would say there are three major concerning things that need to get taken care of. You're exactly right. Number one, this FEOC issue. So in the end, policymakers want to ensure that we are catalyzing investments in the US economy and American supply chains and reduce vulnerabilities related to foreign entities of concern. A big chunk of this is trying to get at Chinese investment. The language that landed in the House pass bill is frankly unworkable. It would be impossible for many companies to comply with, not because they're China exposed, because they would struggle to prove that they're not China exposed, and so they've got to get at that issue.
Cody Simms (14:17):
So what this would mean is even if they do continue to qualify for some kind of tax credit, otherwise that doesn't get canceled or rescinded or shortened. If it's still available to them, there's this thing on top of it that says, "Oh, but you've used some widget that the raw material for that widget was made in China, so sorry, you don't qualify for this tax credit."
Jeremy Harrell (14:38):
Some of the provisions put in place are effectively trying to micromanage supply chains and how investors and how you drive private capital these projects, which is a challenge.
Cody Simms (14:46):
How are you recommending that provision be amended?
Jeremy Harrell (14:49):
In the end, the goal is we want to drive more investment in the US. We want to diversify our supply chains, but it's got to be something that's predictable, that is effective but narrow and focused so the companies can prove the dynamics around their investment strategies and their supply chains and ultimately ensure these credits are still usable and getting at the goal of driving private sector investment into American companies.
Cody Simms (15:14):
We have a model for this in the financial services industry with CFIUS, right? It's just sort of a thing that everybody who invests financial capital just has to deal with and they know how to navigate it.
Jeremy Harrell (15:23):
Even recent defense bills have put in provisions to do it to reduce vulnerabilities on key supply chains that have a national security implications and was a key topic during the IRA on electric vehicle manufacturing as well. So this is not a new topic. Both sides have been trying to get at it. The key is we've got to get at it in a way, in a practical and effective way.
Cody Simms (15:43):
Spencer and Vikrum, anything either of you or working on with respect to the FEOC here or any particular concerns that you want to highlight?
Vikrum Aiyer (15:51):
From an Heirloom perspective, it's not something that we're actively tweaking. But I will say building off of Jeremy's point of view here, the goal here is a worthwhile one day anchor domestic manufacturing. At the same time though, as the Senate considers tweaks, at least two things need to come to fruition. One, I do think that any limitations on FEOC provisions, FEOC provisions have a phase in so it's less burdensome to American businesses I think will be a really, really important cleanup dynamic.
(16:21):
Then also to the example that you laid out, Cody, that Jeremy acknowledged did not speed the US to other markets inadvertently because a screw comes from China or a battery comes from China against very strong intent, but we need to be much, much, much more precise with the legislative language so it's crystal clear and self-executing because otherwise that uncertainty and the accident to trip up a small company because much of the world relies on those tiny tier-three part supplies from that foreign entity but actually pampered US manufacturing and sweep in a lot of paralysis. So clear language and save in provisions or at least two things to start.
Spencer Nelson (17:01):
Yeah, I totally agree. Being a lot clearer is important. At the end of the day, these credits are trying to incentivize new manufacturing and production in the US. If you make them too difficult to actually use, then no one's going to take the credits and then they're not going to follow that purpose, and then we're not going to be building the manufacturing supply that we need to be able to avoid reliance on China. So you really have to thread that needle. Right now, the current text goes too far in one direction and we need to pull it back so that we can continue getting off of China's supply chains.
Cody Simms (17:33):
All right. Let's tackle the next one that we highlighted, which was transferability. Jeremy, do you want to set the table on that one for us?
Jeremy Harrell (17:41):
Transferability is something that the clean energy communities, the energy community has been fighting for a decade to make these credits more efficient, that allows efficient financial partners drive more private sector investment and increase the uptake, the incentives towards the goal, which is driving construction and the build out of new technology and manufacturing here in the US. The House bill takes a very piecemeal approach on this. So Republicans and Democrats have been pushing for transferability for years. In fact, President Trump signed a tax bill in '17 that provided a couple years of limited transferability for a handful of credits like the 45J tax credit, and then the IRA ultimately extended transferability in many cases across the life of these tax credits to many of the tax incentives.
(18:24):
The House bill does this in a very piecemeal approach. It scales back transferability to a couple years for a handful of credits like the 48E clean electricity credit, for example. It allows utilities to use it across the life of the credit for things like the 45U existing nuclear incentives so utilities can monetize it as they draw new investments to preserve existing nuclear facilities, and then in a handful of credits, you get it for a couple years. So I mentioned earlier the 45Z clean fuel credit exists to 2031, but it only gets transferability for two years. There is way more support for transferability in the Senate. I think the preferred path forward would be for as long as these credits are going to stay in place, we should maximize the efficiency on which we can utilize them and try to drive as much private sector investment into the sector as possible. So we're pushing for the Senate to effectively fix this piecemeal approach from the House and extend transferability across the life of all credits.
Cody Simms (19:15):
You gave the reason why FEOC was created though maybe agree with how it was implemented. Why was transferability so dramatically limited? What problem was that trying to solve?
Jeremy Harrell (19:30):
Yeah, there are some ideological differences on being able to transfer credits as a whole and so folks will say, "Oh, well, you're transferring credit to a big corporate that doesn't need the tax cut or a big financial institution." What is detached from that argument is especially for early stage companies and even some later stage companies like investor-owned utilities with complicated ways that they can utilize tax equity or with complicated tax appetite, you need flexibility to fully monetize these credits and ultimately drive the investment in space. So especially from an organization like ClearPath, it's looking at technological innovation and trying to deploy new nascent technologies, in many cases these companies are pre-revenue, right? So they've limited tax appetite. So we should have transferability so that we can drive the private sector investment into those technologies-
Cody Simms (20:17):
That's right.
Jeremy Harrell (20:17):
... and ultimately catalyze them and make them commercial and show that their commercial viability.
Cody Simms (20:22):
Just to underscore what you just said, if you're a company that isn't yet generating a lot of revenue, you're trying to build your first facility, your first factory or even your second, but you're still not generating a ton of revenue from a tax liability perspective, you can't take advantage of a tax credit because you have nothing to offset it against. So your ability to then sell that tax credit to someone else can bring more revenue to you and can let them deal with applying that tax credit to their existing revenue liability.
Vikrum Aiyer (20:54):
That's exactly right. Cody, if I may, just even reflecting on the numbers, I believe since that point that the provision was enacted in 2022, some estimates say that profitability of unlock like nearly 50 billion in clean energy investments and catalyzed over 100,00 new jobs. So not only is it helping scale emerging industries like tripling US manufacturing capacity here in America, which is offensively the goal of the Big Beautiful Bill, but also I think it's really important to recognize how transferability can help impact equity markets come particularly at a point where the new administration is conditioned in with a perspective that these new projects, these pre-revenue early stage projects ought to pencil for the American people. One of the best ways that we can do that and that even the secretaries of energy and interior and telegraph that needs to happen is by suggesting that a little bit of angel investing from Uncle Sam can then quickly bring in private capital so that way it can transition off of those government subsidies and for perpetuity.
(21:58):
The transferability piece allows us to bring in all that additional capital. For every $1 in tax credits, we can bring in an additional four in private capital, which means that the projects can start the pencil not just on the own merits of the tech and how it grows by introducing an additional private stream of cash so that way you can eventually lean off additional subsidies over time. I think that's a really, really important dynamics that'll help ensure that the projects are working for the American tax payers.
Cody Simms (22:26):
Seems like it has a specific benefit to help emerging technologies that themselves are not highly commercial yet.
Spencer Nelson (22:35):
Absolutely agree. We just opened our first factory in West Virginia at the end of last year. So 2025, this is going to be the first year that we are delivering batteries to customers and we are technically still pre-revenue, but we've already had to front load building this factory. Without the ability for transferability, this is a lot more difficult to make the project.
Yin (22:57):
Hey, everyone, I'm Yin, a partner at MCJ, here to take a quick minute to tell you about the MCJ collective membership. Globally, startups are rewriting industries to be cleaner, more profitable and more secure, and at MCJ, we recognize that a rapidly changing business landscape requires a workforce that can adapt. MCJ Collective is a vetted member network for tech and industry leaders who are building, working for or advising on solutions that can address the transition of energy and industry. MCJ Collective connects members with one another with MCJ's portfolio and our broader network. We do this through a powerful member hub, timely introductions, curated events, and a unique talent matchmaking system and opportunities to learn from peers and podcast guests. We started in 2019 and have grown to thousands of members globally. If you want to learn more, head over to MCJ.vc and click the membership tab at the top. Thanks and enjoy the rest of the show.
Cody Simms (23:58):
Actually, Spencer, I didn't know your first factory was in West Virginia. So we've got you here building a factory in West Virginia and we've got Vikrum here building a facility in Louisiana, so two red states that are building large scale facilities relying on a lot of these provisions.
Spencer Nelson (24:13):
That's right.
Jeremy Harrell (24:13):
In no coincidence, some of the loudest senators you've been hearing over the last week have been Senator Shelley Moore Capito from West Virginia, Senator Bill Cassidy from Louisiana.
Cody Simms (24:22):
Jeremy, tell me a little bit more. There was a third poison pill that I didn't have in my list that I want to hear from you what it is because I don't know what it is.
Jeremy Harrell (24:29):
The other major concerning factor was something that happened at the very end of the House process. So it was basically injected in the wee hours the night before the final passage in the early morning of the subsequent day, and that was putting a 60-day requirement on the tech-neutral clean electricity credit on effectively what we think is one of the most important credits that exist in the code today to drive new investment in new energy generation in this country, especially in this moment where rising demand is meriting a significant need for more investment.
Cody Simms (25:01):
This would be like advanced nuclear, geothermal, I would assume hydrogen maybe things that are net new forms of power that we can use in our country.
Jeremy Harrell (25:10):
Exactly. All new generations. So the pre-IRA, the tax code was a bunch of technology-specific incentives and ultimately there was bipartisan momentum for years to try to go to a more tech-neutral approach. Ultimately, the IRA established this new 48E, 45Y clean electricity credit and it's an incentive put in place either investment tax credit or a production tax credit for new generation in the US.
Cody Simms (25:33):
So they have to be under construction within 60 days of bill passage in order to qualify?
Jeremy Harrell (25:38):
For a wind and solar and storage in particular, you would have to be commenced construction within 60 days of enactment. So it effectively means that nothing gets to benefit from it that isn't already in the queue. Frankly, many projects that are in the queue today are going to get undermined and so that has to get fixed as they look to adjust some of the dates and figure out how we have an incentive in place that helps drive new investment in new generation.
Cody Simms (26:03):
Moving into a few of the other various 45s and 40Es, the big giant boom we've seen in this country in the last couple years is the rise of commercial solar, right? It's just been phenomenal. I think something like close to 90% of new power generated in 2024 onto the grid was renewable power, and I think that 48E or commercial solar investment tax credit is facing a major tail down as part of the new legislation. Any comments on that and what that might do to the commercial solar industry in the U.S,
Jeremy Harrell (26:38):
Especially in a moment of rising demand, we've had two decades of where we've had largely stagnant commercial demand, providing incentives to drive new investment and new generation regardless of technology is going to be really important. I mean, by some estimates that ClearPath has done, we may have to build the size of today's Texas grid over the next decade to meet rising demand from electrification, from AI, from data center growth and an influx of new manufacturing in this country. So in the end, ripping out an important tool to drive investment in that new generation today actually works against President Trump's energy dominance agenda as well. I mean they've been talking a lot about the AI race in particular and energy supply is a significant limiter to there. So I am encouraged in the Senate, there has been a handful of members talking pretty publicly about this, about wanting to provide a longer glide path. How do we get at that poison pill that I mentioned, that 60-day commence construct requirement? Then how do you do a reasonable phase down of the credit for wind and solar?
(27:36):
Originally, the House proposed something in the 28 range for the full value of the credit and then three years of a phase down in value, something the industry, the solar industry and wind industry are actually pretty used to. That's effectively how the credits were phased down in 2015 in a big tax bill that was negotiated in a bipartisan way. Then the House also did put a longer lead time and gave a commence construct timeline on it for new nuclear. I think you're seeing a lot of members talking about new nascent technologies like nuclear and enhanced geothermal, maybe long-duration energy storage, hydropower. Even fusion should have something like a 2030, 2031 timeline so we can catalyze investment in this first wave of new projects. I think we need predictability. I think we need to ensure that we can still drive investment into new generation here in the US across technologies. We're going to need to build everything, and then I think it is reasonable to talk about these credits existing in a different timeframe for technologies that are commercial today, for technologies that are scaling up and are fairly nascent.
Vikrum Aiyer (28:36):
I think that's spot on. Well, I'm coming at it from one specific vantage point on the carbon management side. But just to set the stage there about what Jeremy is reflecting on when it comes to dominance, the global race for carbon management, we see it as actually frankly intensifying. It's driven by growing demand for CO₂ storage, utilization. I know it's making aggressive inroads in investments in DAC and CCS will secure their competitive edge. Europe plans to store and use about 50 million tons of CO₂ annually by 2030 embedding it into fuels. Frankly, even if we want to invest in hydrocarbons and make America the best LNG exporter again, one of the top export markets for LNG in Louisiana for example is Europe and may have carbon intensity requirements which require LNG exporters shipping out of the Gulf of America to go straight into Europe to also have that CCS or that DAC offset. Major subsidies coming down the pike in Canada, major incentives in Japan. So the race is heating up.
(29:36):
I think to answer your question, Cody, even though it was about a specific tax credit, what Jeremy said is spot on because if the United States fails to match this momentum, we really do risk ceding control, a critical industrial input becoming dependent on foreign controlled carbon dioxide-based products and feed stocks, and that's just from the DAC perspective. But if we see that control across a whole host of energy-dominant creating technologies, many of which that might be tied or might have to chase these incentives in other markets, it not only reduces the ability for us to build here, it could increase the possibility that some companies feel that they're too early so they have to take the incentives from the FEOC-registered countries, and frankly, it could expose US to addition of penalties weakening our competitive conditioning global markets.
(30:25):
So I think the problem statement is clear and one of the ways that we've seen the Senate approach this conversation, including as Jeremy mentioned, senators like Murkowski, like Senator Curtis, Senator Moran, Senator Tillis, Senator Cassidy, I think we're really looking forward to this conversation on the Senate side of this discussion because it allows us to take a step and take a beat and say, "Okay. The intent is to find and make sure the energy projects pencil, but let's also do so in a way that creates certainty. Let's do so in a way that's surgical and let's do so in a way that guarantees our energy security not ceasing."
Cody Simms (31:00):
Is there any world where the attempt to try to find cost balance in the overall package is found because these tax credits, which yes, do cost something to fund initially end up actually spurring GDP growth that shrinks the deficit because it actually spurs domestic growth in a true Renaissance way? If I'm trying to think about this from a Republican principles perspective, I feel like that's where I would net out.
Spencer Nelson (31:32):
Everything is a trade-off. One thing that we've also seen in some recent analysis looking at the expiration of these new tax credits could raise electricity prices in a lot of those states where there's a lot of electricity demand increases coming, right? So I've seen in some states like in Arizona or in California, maybe a 15% increase in electricity prices, which on an annualized basis is a few hundred dollars. That could be offsetting some of those tax benefits, but there's also a huge Renaissance happening in manufacturing of energy technologies. So we are just one company with one factory, but in the announced pipeline, I saw a report this week that was saying it's about 100,000 jobs and announced new factories across the country for technologies that qualify for the 45X advanced manufacturing tax credit. So there are all their industries where the US is finally regaining the lead and taking that back from China and we need to make sure that we're not inadvertently shutting those down before they have the opportunity to become a new part of the American manufacturing base, which is also is a goal of the President as well.
Cody Simms (32:40):
I just recorded an episode. I don't think it will have shipped by the time this one goes live because we're trying to expedite this one, but I just recorded with the Andreessen Horowitz team on their whole American dynamism thesis and that is the crux of the thesis, which is manufacturing coming back to America, particularly in areas where there's strong national interest that needs to see onshore innovation happening. Spencer, great of you to highlight that if these go away, we actually end up potentially in an inflationary environment on energy where energy costs increase dramatically, that hurts growth. Jeremy, back to my question on is it possible that the Senate decides, "Huh, actually, it may cost us a little bit more to do this, but we believe we will grow our way out of that cost." Is that a math that might end up resonating with people?
Jeremy Harrell (33:27):
It's definitely a case that resonates with members who are thinking about economic development. They're thinking about the national security to invest in these supply chains, the effort to win the AI race in this country. Unfortunately, as you think about how a bill pencils out from a pure congressional standpoint, and we're getting really in the weeds here, so sorry, folks, but that is not how the Congressional budget office or the joint committee on tax scores things, but is absolutely part of their calculus and their brain is they think if we think about how we use scant federal resources and federal scoring for the lack of better way of putting it, we should be providing financial incentives that have the chance to spur exponential economic growth because it's good for competitiveness and it's ultimately good for the long-term economic impact of this bill because in the end, this bill is going to... The judgment on this bill is going to come over the next decade as we see how it impacts economic dynamics and drives investment into the economy and grows jobs.
Vikrum Aiyer (34:21):
I think what's germane to that point too about how members are thinking about it is this may have come up in your prior pods that this morning, just a few hours ago, at least 13 House Republicans where the bill had already moved out of are urging Senate leaders to substantially and strategically edit the bill to have that kind of focus of like, "Let's use the scalpel approach." Those members, if they're pushing the Senate, to think about the very fixes that Jeremy laid out on FEOC, on transferability in other matters, I think that suggests that even within the House GOP caucus, even in Mike Johnson's caucus, there's an interest to improve clean energy production for America.
Cody Simms (34:58):
Yes, I wish that would've happened 30 days ago, but here we are. I'm glad they're speaking up now I guess. Okay. So going back the three poison pills, the FEOC, the transferability, and the 60-day commencement window to qualify for various credits, all things that you believe broadly speaking need to be dealt with, and then there's some individual changes on individual level provisions potentially, what should folks do? How can people listening who are motivated to take action do something? If you are a founder of a startup, what should you do? If you are a venture investor, what should you do? If you are just a concerned listener or an employee at a company, what should you do? What have you seen work?
Jeremy Harrell (35:42):
First and foremost, it's engage right now. The window is the next three weeks. If I had to put money in Vegas on when this bill is going to get signed into law, it's in the next six weeks. It could be before the Fourth of July. Action time is now.
Cody Simms (35:56):
That is because you said that it has to pass because the 2017 tax cuts otherwise run out. So the Republican motivation is do not let those run out.
Jeremy Harrell (36:06):
The debt ceiling is kind of the back end here, so Congress has to increase the debt ceiling by the end of July before they leave for August recess. I think there is motivation to give as much lead time for hiccups here, so they want to drive forward and get it done before they leave Fourth of July.
Cody Simms (36:21):
Okay. So the time is now and what does that mean? What is the thing to do?
Jeremy Harrell (36:25):
Reach out to key Senate Republican targets today. Your listeners, the investors, the early stage companies I think have a really unique and important voice here because in the end, corporates have varying different tax priorities, right? There's a lot of corporate tax related items that are touched on in this bill. There are certainly organizations like ClearPath that are working on the ground and working in this space. There's trade associations in D.C. that represent industry, but you all are the particularly compelling messengers. You're representing the cool tech startups that are going to transform this country, that are going to grow this economy and folks want to support that type of work. The investors in this community are the people who are putting private sector capital and leveraging the limited federal tax appetite and federal tax policy to grow this and it put significant investments on the private sector side.
(37:16):
So, target those members, talk to them about the economic impact, tell them how it is impacting the investment community and how private sector resources will be shifted into this sector over the coming years and ask for them to take that scalpel approach, fix these issues, and then we're going to invest more in American supply chains. We're going to grow American energy innovation. We're going to reduce emissions. We're going to have a significant economic growth.
Cody Simms (37:40):
Vikrum, Spencer, what has worked for you all in terms of engaging specific senators, specific members of Congress? How do you find the right people to target? Who do you try to reach? Are you trying to reach the actual senator? Are you trying to reach a specific staffer? What's that sort of game of finding the right person to dial look like and what kind of conversations do you end up having with them?
Spencer Nelson (38:05):
You have to figure out what are the specific issues that your company is going to face because of the potential changes that are in the House still and really try to understand what are the direct impacts that would happen to your company, both maybe on a technology perspective, on a future of your industry, but also on a very specific geographic basis too. So think through what is the footprint of your company, of the projects you're developing, maybe of your upstream suppliers, you work really closely with another partner in another part of the country and there's some kind of big change to the tax credit that would've an impact for you, and literally map that out and think through where would I have these impacts?
(38:46):
Bring the stories to those sappers. So a lot of times for every office there's going to be a sapper who's associated with tax or with energy. You can look them up online. It's all publicly accessible and reach out to the office and say, "Hey, I want to come in and talk about my concerns about this policy," and just make it really clear and say, "I'm concerned that if this happens, we're going to have this very direct impact that's going to be in your state or with my industry, and this is really what this downside is going to be."
(39:16):
It's really important to just be as clear as you can about potential impacts and the challenges you're seeing. A lot of times a lot of the folks who are working on the Hill, they're very busy. They've got a lot of different competing priorities. They honestly often are unaware of all of the various industries that they're working with or that have impacts on their state, and so hearing that from different cross sections of the economy and from different parts of the energy or startup ecosystem, it's really helpful to hear all the various different ways that some of these changes to the tax credits can make a difference.
Vikrum Aiyer (39:50):
From an Heirloom perspective, there's four steps that any company that finds themselves concerns can and should take. The first is in the spirit of what Spencer laid out, make very clear what these investments in America are economically. What is the job creation promise and how can these tax credits help? The second thing you should do is link the tax credits to the off-take of private time factoring and the injection of private capital. Again, these investments in clean energy are not there to replace incumbent energy majors. They're there to be additive and they're also there to bring in and onshore and reshore private capital are going to help these companies eventually get off of government reliance. I think both the economic gain and the fact that you're going to draw new capital is going to be really, really important of a one-two punch to make the case for why these are investments in energy dominance to all of the above approach and not a replace and transition or approach.
(40:45):
The third step is to target specifically members on Senate Finance Committee and the Environmental and Public Works Committee. If you need help getting in touch with those staffers for Senator Murkowski or Barrasso or Cassidy, you can feel free to reach out to us at Heirloom Carbon, Vikrum@heirloomcarbon.com. The final step I would take, number four, is think about the partners where you build. These projects pencil in communities. There are local trade associations, local community colleges, local workforce development organizations that also see the downstream impacts of your ability to build and to allow the tax credits to support penciling of that building. Make sure that when you knock on the door of those offices in D.C. that you're bringing them with you because oftentimes those local groups will have a powerful voice in making the case to the members in addition to the perspective of the industry corporate.
Cody Simms (41:36):
Just curious for what you all have seen, for folks who are listening who aren't a founder of a startup or don't run a venture firm and maybe just want to speak with their own voice, what works? Is it calling the D.C. office of your local senator? Is that a good step? Where does critical mass start to matter as well?
Spencer Nelson (41:56):
Each office will really pay attention to how many total phone calls they're getting on a given issue, and you'll typically see that a lot of senators and House members will want to know, "How many calls am I getting this week on this topic versus on this topic? How many of those are coming from constituents versus from non constituents?" So I think it's always good to touch base with your actual direct elected official. But also, if you can, try to identify who's the individual who's specifically working on energy or tax policy in a given office and find their email and just reach out to them and say, "Hey, could I give you a call about this specific issue?" In addition to just calling the office generally, actually try and just reach out and say, "Can we hop on the phone with this specific staffer?" that's usually going to be one of the most effective things as well.
Cody Simms (42:44):
How does the increased public awareness of just the fact that this is even happening because of the whole Elon, Trump thing in the last day or two, how does that impact this? I assume public awareness is good, broadly.
Jeremy Harrell (43:01):
Public awareness is good. I think you're seeing more attention to the bill, more attention to some of the policies that are in it. I also think it's going to build momentum for the bill to move more quickly as things drive forward. So I think it provides an opportunity for folks to engage, to show that they support these incentives. ClearPath does pulling on this work, and it's incredible. When you do pulling across the general population, 72% of Americans think that it makes sense for federal tax incentives to be used to drive American supply chains and grow American energy. It's a very politically popular policy, and so know that you've got that on the side, and I think members need to hear that very clearly from the folks on the ground directly affected by it.
Cody Simms (43:45):
I really appreciate all three of you for jumping in here really last minute to have this conversation. Jeremy organized a thing for our MCJ portfolio last Friday that I joined and just thought, "Hey, we need to help share this information that much more broadly." So, appreciate you joining, Jeremy, and then Vikrum and Spencer jumping on as well to bring a little bit of the startup and Entrepreneurs perspective to the conversation. Anything else we should have hit on that we haven't talked about?
Jeremy Harrell (44:15):
If you need help, reach out to us, please, Harrell@clearpath.org. We've got a 40-person team here in Washington. We're happy to help on that front. I know Vikrum must said the same, and I know Spencer feels the same way, but that's why we exist. We're in this push and we want to see investors and companies like your listeners succeed because we think it's the future of energy in this country.
Cody Simms (44:35):
Well, guys, thank you so much. Hopefully everyone listening is motivated to step in and participate in these dialogues because they're incredibly important.
Jeremy Harrell (44:47):
Thank you, Cody, very much. Appreciate it.
Vikrum Aiyer (44:47):
Thank you.
Spencer Nelson (44:47):
Appreciate it.
Cody Simms (44:49):
Inevitable is an MCJ podcast. At MCJ, we back founders driving the transition of energy and industry and solving the inevitable impacts of climate change. If you'd like to learn more about MCJ, visit us at MCJ.vc and subscribe to our weekly newsletter at Newsletter.MCJ.vc. Thanks and see you next episode.
