[background noises] think you guys so much. Thank you for being here. Im Lisa Freedman report on the Climate Change in the new york times. I am very grateful to have two stellar panels beginning with this one thats going to drill down into a lot of things david and jon just covered as a director and markets are the Brookings Institution the schwartz chair and Economic Development and studies in brookings. The initiative for Sustainable Energy policies on hopkins university. In the Center Senior fellow at Brookings Metro is it expert it infrastructure policy and urban economics. Particular focus on transportation Digital Technology issues. Is working to better understand how infrastructure policies the federal to the local level impact Economic Development social prosperitys environmental results directly to my left is a senior pardoning a non resident institution fiscal and Monetary Policy also a senior fellow at New York University and the volatility and recent years played a key role in choosing Climate Change considerations of the Federal ReserveAnalysis Research policy. Thanks to all of you for being here today. I had a larger introduction. I will repeat a couple of the statistics. Clean Energy Manufacturing investments in the last year. That was about 10070000 jobs. They include more than 70 billion in supply chain says Climate Policy want to start the claimant information prepress and abide had said by the end of this decade the ira combined with regulations is estimated to get us to about 40 . So first lets start with what happened already. What do we know how far the ira has gotten us to reduce emissions or to set up the dominos to do so . I think its a billiondollar question. I mentioned the first part is what is the ira intended to do . I will look at models coming up in the ira we take about 25 to 28 reduction we would have seen anywhere on the business as usual 240 44 . That is the plan the question does how much will materialize . Here its a much more of a central system to see how emissions are happening. What of these investments are facilitating the economy. This is a key difference of the carbon price and every facility has on a yearly basis. Its much easier to account for Emissions Reductions. For the ira what we really need is very Good Research to whether its working as intended or not. One is very early a lot of investments work on a much lower timeframe. So we cant really say it yet whether the Emissions Reductions are happening as planned. What we do see is definitely the ira has catalyzed Market Forces that exist before the ira towards the condition to a low carbon economy. Change the Market Dynamic and is pushing the market on an accelerated weight towards decarbonization. And has attracted a lot of investments around the world. We talked a bit about the europeans before theres a lot of companies deciding to invest in the u. S. Rather then accurate than accuratebecause of the ira. The biggest effects we have seen so far is the dynamism in the marketplace and investors about private and public money into this project. Ask how soon will we know if it is working . I think we will seat some things earlier. Well have to wait a few years to see how many tax credits are making up on cars for instance through probably get a better sense on the power sector. A bit more visible. Whether tax credits are being taken up which is baked into the models we only see as it plays out. The Emission Reductions are not guaranteed whether we use david brought up with jon the very low recognition rate of the ira. What do you see its a matter of time . Do you think that is true . Is this for small thank you with the level of humility i think this is going to be a permanent challenge. You have got all of the recipes here to have difficulty breaking through to a public that has a certain amount of skepticism about government delivers for it. I am reminded and also living through the ar are a private recovery and now we cant call that anymore its recovery stuff from now. How difficult it was many of you probably remembered logos on them for structure projects under the Grant Program and others it really struggled to break through. Those are publicly owned assets. Now we are talking about tax credits moving through the system you are often procuring a privately manufactured or seeing a change in the energy form of calories that are coming into your system. Its clean food effectively delivered by private country along a system you have never understood or maybe even seen. That is just going to be challenged. You rep all of that up where Peoples Trust in institution is way down. You have an entire twoparty system one side of the coin trying to show shade even back home more than willing to cut ribbons on facilities and said their districts. Thats all wrapped up in a communications challenges. Frankly that is far bigger than any administration can solve it is inherent in the process. I think we have got some underbrush here to deal with from a communication standpoint and i say this is a noncommunication expert. We work in infrastructure and theres a joke on the freight side which is a huge carbon emitter freight things magically show up at your home everyone expects it to work. But when it doesnt you want to point fingers. But what it does work its hard to understand why the ira is perfect for what theyre going to try to break through here. Its going to be as you heard from jon its going to be a persistent messaging this is not going away. Before get to the Financial Market you are saying or talking backstage while consumers may still be learning about the ira businesses know exactly what is available . We see a lot of interest in the Business Community and investment capitol and as i mentioned a lot of firms that have plans in europe and the u. S. Theyre thinking of shifting over because the credits are there they know they are there they are capitalizing on a lot of investments ironically going back to your points the announced off what weve seen so far our republican districts they are leading districts. A lot of people do not make that connection. If i could say one thing really quick though. I totally agree the distinction though our local businesses who are going to be responsible for delivering much of the local investment here. They come by some accounting is been great public reporting showing there is not necessarily awareness on the local mom and Pop Companies are going to be really big on measure and then to the ira itself. Can you talk about what you pound . And why this is important from the Financial Sector i think is underappreciated were often overlooked area. Its got an Important Role in the transition for sustainable economy for both allocating funds to Sustainable Investment but also in terms of managing risk. Whats useful about looking at the Financial Sector is its got this forward looking element fot thats going to take decades seeing progress over the last year important progress and investments to really we wont know for several years maybe a decade how the investment projects have gone through to say nothing of the Emissions Reductions and then of course the climate. So the forwardlooking nature can help give us an early read on how useful and effective the ira is. Financial markets have that allocating funds role managing risk but also this aggregation of information so we can leverage that. There were two events during the gestation of the ira. It looked like all hope was lost july 14, 2020. The policy seemed to go to zero and then on july 207th, 2022, the ira was released by the entire build. Its a great study, Climate Policy comes out. Waxman markey was tortured for a long time. We see in this Research Work a Brookings Institution working paper under the hutchison institute. Looking at the broad indexes and individual firms and see the green firms and low carbon firms of the low emissions measured in terms of emissions intensity and agencies or emission scores did better when the ira was announced. It was a huge jump in relative value. Thats what we are looking for but its an early indication that they expected to have effects of profitability in the firms either through a cost channel or investment subsidized or through the demand channel. The cost channel and demand channel makes perfect sense in terms of the perspective. Of the predictions dont always come through but here you found that affect and that is an early sign that its going to have those positive benefits and investments. Lets turn to what some of the major challenges are. You want to dig in but what do you see at this stage is the biggest hurdle towards implementing the ira . The second is permitting. We needed to build a lot of infrastructure and as we heard before it can take a very long time. We currently dont see anything that would focus on reforming it and to give an example, we looked at the different timelines and for a lot of the projects to get the rightofway takes nine years. If you want to build a load of this infrastructure you need to speed it up much more so that is a major turn and the third one is to be careful that is not a cost of the low end and middle income families because that could happen and we have to be very careful of that. It seems to indicate to the administration is doing everything it can. Can the administration on its own address this . I think they can do a few things and as was pointed out before a lot of it happened at the state level and local level and when you look at the permitting for instance it really is at the federal, state and local levels and a lot of the decisions this would need improvement and to speed up. An example currently we have federalized assistance for the Natural Gas Pipelines because they can overcome some of the opposition by states so that allows states to hold the lines especially those where maybe the lion is going through but they dont get much electricity so if we dont federalized that it could really prolong things. The other major issue of course is workforce. What problems are still remaining and how is this going to be addressed . There is a lot of trouble on workforce. Our team has a ton on infrastructure focused work force defined as green jobs although saying the word defined in green jobs next to each other is problematic folks cannot agree on exactly what it is. We tried our best in the past. So by a study we did a few years back judging the size of the inclusive economy that i will get to in a second, there are over 6. 5 Million People that work in these clean jobs that stretches across into this is even more important than that number over 300 unique occupations so this is an exhaustive set of workers that are going to need to deliver what it promises. They already mentioned two key numbers you will find with over 170,000 jobs, and this is key. I dont want an unannounced job. I want an actual job. To try to work in metaphors we often talk about construction in this industry but its much like constructing a stadium. That is just a shortterm infusion of cash for the workers. We are looking for sustainable employment that has real opportunities. On the energybased transition on generation distribution its going to take time to see how many sustainable jobs we get here and what is the green nature of them. At the local level that is important to delivering jobs, theres a continue to break down in the plans on the actual connections between workforce intermediaries and the infrastructure related agencies that what employee these folks on the Public Sector side. There is a lack of money coming in to train people so even if they have workforce in missions, theres no certainty where the money is going to come from. Weve got movement in jobs. How do we make sure for the other related manufacturing investments were construction power plants but all through the entire economy. What are some of the differences we are seeing in how the states that want to accept money, what are the variations we see for the state and local governments and their willingness to embrace the ira and ability to do so . We are seeing i already kind of mentioned. I think its been said it is your job to vote in one way but one thing my two cents on this is unlike what we sold during the recovery act governors were sending money back to washington so for excluding the state of florida in my home state. That is not the general attitude weve seen that there is a willingness. Part of it is because so much of what weve seen is not up to these governors. Ive worked in washington long enough anything that can be seen as a reduction on the private sector side i think we will continue to see state and locals able to benefit from the system but they need to put more walls into place will. Thats going to require state offices to set up and the feds have really done their job there. We are not going to know for quite some time which states are best equipped to get the word out to the actors that are responsible to make sure it gets to consumers and they can make those choices through that state economy. You wanted to jump in . In terms of implementation, theres a lot of implementation hurdles and details to be worked out and also a political element. Theres the possibility of the personal reveal that is certainly also a possibility. Can we pause on that for a moment . Should there be a republican elected congress and another trifecta what are the most likely i am told repeatedly that it would be difficult to repeal of the ira and more likely that parts of it would be to be repealed, what parts are most vulnerable, what do you see them eliminating . Not so much a wholesale repeal but there are issues in terms of some of the specifics. But i think its more of an administrative sort of implementing the details to be reversed over time to be developed. Either of your thoughts on what is most vulnerable . A lot of the implementation are up to the executive and regulatory agencies. Theres also one reason it will take time to be implemented so that is a slow walk it could be limited to that Grant Program and so that would hamper a lot of the intended effects and weve seen in many other areas over the last 15 years that because congress often doesnt act, what happens is the regulatory agencies. So to implement the regulations and they try to roll them back and put new ones into the previous ones, so thats where it is. I want to sort of inject a positive note again coming out of our study. Financial markets are important in terms of thinking about the financial or the climate risks. In particular theres been a lot of discussion about the transition policies to get a new Climate Policy or to implement the claimant Mitigation Strategy and stranded assets potentially. There are Financial Risks to the extent there may be financial crises or disorderly adjustments. In our study, we do not see that for the ira. There were certainly large movements, but it was certainly not disorderly and it looked like something that was manageable. And this was the largest Climate Policy action ever enacted in the u. S. Or in the next ten years. And it happened in a very short time period. We had this news come out over a very narrow window. And in that event, that Climate Policy event didnt create a disorderly transition that might give some support, some hope to the financial regulators, the treasury. They are very worried about this issue so it may be that the financial risk is more manageable from claimant transition and less of a worry going forward. Below the levels by the end of this decade the goal is 50 to 52 and after that the administration has pledged that the United States would be Carbon Neutral by 2050. So given the chance what would ira 2. 0 look like someday . As an economist i would favor common price. Theres the thought that if it worked as intended would make it easier to cut the carbon price. Is that crazy talk . When you look at the ira theres a methane fee and its pretty significant. Where we do see some potential we see their own carbon border mechanism and they are set on implementing it and a lot of others are thinking of following suit and it comes down to a simple question do you want to have your companies that export products to the European Market where you have the domestic price where you can get the revenue. Even on the bipartisan basis we could see an attack in the u. S. Without a domestic price which is crazy when you think about it conceptually but there are ways that it can be done and there are ways around it its more complex than a regular attack in a domestic price and also to put us in line with the rest of the world. Carbon pricing in the u. S. Seems like a heavy lift. You can put them on all sorts of things among all the taxes the most popular in the u. S. And if theres a good chance the adjustment mechanism more to be instituted. Would you then have to attach a price to regulation . Acknowledging the price of regulation. There would be a question of what the optimal level would be but you could implement without any sense of a domestic carbon price much like we implement on sort of the opposite of what you would do under the carbon tariff. That would be an open case and something that i think will be implemented. We wouldnt be surprised if it was implemented in the future. Beyond the adjustment you see the u. S. Primarily sticking with carrots rather than sticks . I certainly do but i think an Important Role for more disclosure where the new law passed to getting disclosure from private and public companies, so i think weve got a lot more to do in terms of understanding the emissions and accounting for the emissions and actually figuring out the sources both indirect and direct. I would like to go back to the Public Opinion of the many reporters including the number of stories on the energy transition. One of the stories that weve looked at to what extent if at all if the money from the ira as seen going into the states changing opinions or Climate Change. It railed against the agenda and they are very happy to see the manufacturing coming to their states but are very suspicious to those aimed at Climate Change. Why is this still so deeply ideological and do you see the ira having any impact on Public Opinion . I would love to connect the last two questions if we are going to have anna ira 2. 0, i would argue heart of the resilience and adaptation are going to be central to it because that helps answer the question that you just asked which is the requirement you have two options. Its an effective device i like reading at every time. What we are seeking in the institution and across town and across the country we are seeing more and more americans moving to the claimant risky locations. Arizona and georgia purple states by federal terms but mixed as they see higher days as other parts of the country see different kinds of claimant risk it becomes a whole lot easier to depoliticize. The adaptation but we still have not figured out yet at the federal level the right way to do that. It comes down to local land use decisions for a bunch of reasons that is a whole Different Event deeply seated in American Government so to connect those i think we are seeing a tide changing understanding the climate is changing and that it will impact them and their loved ones wherever they live in the country and we need to do something about it. If you think of questions, start raising your hands. I think what would be really important. We look at the claimant for what it is. If you buy a beachfront property everyone can understand across the political spectrum. On the extremes on both sides holding up commuters that creates a lot of backlash against the Climate Policies so what we need to focus on his experts and journalists and explain to people we have more extreme weather events, this is your property at risk. For instance adapting your home and vote for people in your local elections that crosses boundaries ideologically if it is brought down to this climate and we dont see much of this that is the problem the ideology playing the role. To the extent i think we can make progress through standards and actually drilling down in the regulatory process we still have more to do on the emissions. They would be rolled back by a new one. That is also true for the ira, the administrative actions. This political walker has over Everything Else these things at risk. I am an economist and would love to see this going on but its also difficult in europe to introduce it for the whole economy like transportation is an example where we still dont have the emission trading system but would it be possible that is not so emotional for people and voters. Two things when you see some potential we have the carbon price in california and i do think that in other states. Thats an interesting question as a backdoor for the carbon prices but i think much further down the line. More political will of the state level. The rating agencies are important for understanding risk and seem completely unconcerned that things like the ira and other efforts are going to have the effect of reducing the Economic Life if we transition to that sort of thing yet every year billions of dollars are being spent by the utilities investing in new Gas Infrastructure in your city in new york they spend about a billion dollars a year on new Gas Infrastructure or the maintained Gas Infrastructure. But the problem is that the rating agencies dont seem at all concerned that the utilities are using like 85 year depreciation on assets that the policies are trying to get rid of over the next 20, 30, 40 years. Is it that they dont believe that the policies will be successful or do they think the cost will go on to taxpayers . Why are the agencies ignoring the fact that we have these new policies that have had no impact . These are still early days for the claimant risk, eight, ten providers. Think about how hard it is to rate the credit risk and how we come across the credit crisis or when a bank gets into trouble and the Credit Rating agencies have little advance warning about that so these are early days of accumulated information about emissions and understanding exactly what the transition will look like. I dont know about the gas utilities in particular about to the appropriate trajectory for the asset prices given the regulated nature, but there is a lot more still to be done in terms of what the Credit Rating agency needs to do. The gentleman with the blue. Patrick with the representative of the german industry trade. Im glad you mentioned workforce in all of this because its repeatedly been the number one challenge. Theres not enough awareness on the federal, state and local or regional level especially its rough companies can find the workers they need to produce the work. We dont need more engineers, we need more for shop workers, mechanics and its one thing to require apprenticeship programs and the ira and another thing to set them up because its not happening not to the degree we need to. From talking about anna ira 2. 0, years down the line potentially, what is an avenue here . Because the way weve see it right now after infrastructure is a challenge to make this transition work. Yeah, thanks and not a surprise on our side to hear the germans are noticing we are not as good at this. Many of the workforce programs in multiple Different Countries youve probably been feeling on your side americans are absolutely trying to play catch up and to learn. Just to remind folks in the spirit of what youre speaking about, the vast majority of the jobs do not require a fouryear degree, absolutely not necessary. Wages exceed the average is certainly in those 300 plus occupations i mentioned further back in the clean economy. Across the infrastructure sectors what is often called the skilled trade you see higher wages at every skill level and experience level across. They also do extensive amounts of onthejob training both in scientific knowledge is into skills that again dont require actually formal education done at the worksite whether its apprenticeships or others. Theres a lot to like here, but america is and to speak for myself multiple decades in the Education System that over promoted four year degrees at the expense of other Skill Development if you will and we are now seeing that. There are some benefits to the system but this is one of the weaknesses so now what youre experiencing firsthand it seems like professionally is how do we write ourselves, so there is real opportunities here i will finish with one quick concept. We need new kinds of metropolitan scales were regional scale partnerships between local government, workforce intermediaries and then employers. Both inside the Public Sector as i mentioned from infrastructure and critically for the private sector. We really dont have that kind of system yet. The good thing is that even the federal government including the department of labor is moving forward with of the workforce systems that can address this so thats going to be one area to keep your eye on and i would be happy to talk after this and connect you with a colleague. Is there anything legislatively that should have been done or should be done to address some of these issues . Its a great question. Weve put out some research on this that there are billions of dollars available for Workforce Development inside both as well as effectively the ira, but its more so. To be clear for anyone that works for the workforce year when you say billions for Workforce Development, that easily his magnitudes more than you need to so theres a lot of money available. The challenge here, the quick answer is no, congress did their job. The challenge is that it passes the buck to states specifically the state departments of transportation and their versions that go by a different name. They have to decide to spend less on Capital Projects and more on the Workforce Development and that inherently requires culture change, so theres kind of what we are getting out a lot of information rather than dollars were second row. The carbon zero project. We talked a bit about the rating agencies but it feels as though insurers are on the front line in a number of states we can talk about florida and california. The narrative that substantiated one a lot are on the brink and one disaster away. It feels as though the Insurance Industries have not been quite as effective politically as i would imagine they would be and theyve aspired to be. Is there a way they can be in the increased effectiveness in terms of how we think about legislation and regulation . I can start and really bring it home. When we asked about the attitudes around politics and climate, the insurers are going to do some of the work here. When you lose insurance on a home and theres no one else to come and that is a quick way to understand. Weve just been doing some work in california around claimant risk and used granular risk data which is what the insurers have been gobbling up and theres private firms that also offer this kind of data. Its an emerging model land local governments do not even know what to do with it. This is clearly an emerging field and speaks to how the economics can beat the conversation even politics tries to hold it back. The other part of the answer is i dont think we are close to the maturity of our insurance models yet and what we need to do in terms of how we pull the risk in this new world. And again its a very state commission. California has been grappling with this. Theyve not been able, all their insurance models had to be backward looking. They were not allowed to use forwardlooking in the changing climate thats problematic so theres a lot to be done. Does anyone think they have the perfect last question . From the world bank, representing the world bank its good to hear that the ice is broken on the issue of carbon pricing. That this presentation there wasnt one mention of that issue. I want to mention one issue that hasnt been talked about yet and mainly what kind of model does the u. S. Policy have for the poor world . Is it a good model . The question is whether or countries could do something similar to what the u. S. Is doing. The u. S. Is typically a model for much of the poor world. Is this a model for other countries including developing countries. At the low cost or for free. The imf and other places. It may be undertaken. Thank you for a very engaging discussion. Thank you