Podcast: Does Climate Policy Stand a Chance?

The Inflation Reduction Act used tax credits, rebates, and other financial incentives to push manufacturers and consumers to make and buy the products that would fill out the market and herald a new way of living. 

And then, the rules were scaled back. 

On this episode of Insight Unpacked, can we still pass—and keep—climate policy? And what does it mean if we can’t? 

Podcast Transcript

Laura PAVIN: In August 2022, the U.S. government passed a pretty big bill. 

NEWS CLIP: President Biden is about to sign into law that massive healthcare climate and tax bill called the Inflation Reduction Act.  

PAVIN: The Inflation Reduction Act—also known as the IRA. And don’t let the name fool you: it was a huge deal for the climate—the largest of its kind in U.S. history. 

NEWS MONTAGE: It includes the largest federal investment ever, nearly $370 billion to combat climate change. The largest investment in clean energy in U.S. history. We make good on our promise to take on climate change and climate justice with historic investments in green technologies that will cut carbon emissions by 40 percent by 2030 

PAVIN: It looked like the United States was finally taking a big, meaningful policy step towards addressing climate change. And now, four years later, most of that bill’s programs are already gone. 

NEWS CLIP:  With the sweep of a pen, President Trump put the renewable-energy industry on notice. The one big, beautiful bill cuts down on the years solar and wind companies have to qualify for tax incentives, and a new executive order demands agencies rapidly eliminate the market distortions Trump says these subsidies cause. 

PAVIN: In the last two episodes we talked about how companies and markets can only do so much on the climate without a whole lot of help from policy to put the pressure on. But there’s a problem with going that route. And it’s that politics and policy are so messy. 

You’re listening to Insight Unpacked: Can We Still Build a Green Economy? I’m Laura Pavin. 

Just about every expert we talked to has said that getting to net zero will require policies—rules—to get us past the walls we keep hitting. In some ways, they feel like our last hope for getting anywhere on this. 

But even policy isn’t a panacea. 

Especially in a country that can’t make up its mind. 

America passed its biggest-ever set of climate policies, only to claw them back a few years later. One year it was requiring companies to report their emissions, and the next it wasn’t. And even when we do have the policies, we fumble the execution. 

What chance does climate policy stand in a country where nobody can agree on the solutions … or even on whether climate change is happening in the first place? 

We look at that next. 

... 

PAVIN: The Inflation Reduction Act wasn’t exactly the Green New Deal, the ambitious proposal that progressives have advocated for over a decade. But it borrowed a lot of its ideas and combined them with traditional government incentives. 

It used tax credits and rebates to reduce the cost of stuff like solar panels, electric vehicles, electric cooktops, and EV chargers so that more people could afford them. Promised money to manufacturers to make renewables. 

And it did another smart thing. It made sure that not just the states and regions that care most about greening the economy would benefit from the bill’s actions. 

The thinking was, if we build that stuff in there, it’s going to be real hard for the other side to dismantle it later. 

Meghan BUSSE: So there were extra incentives to build things like battery factories in places that had historically been reliant on fossil fuels so that you have, you know, specific people that you might be worried are gonna be thrown out of a job by your transition, there’s specific incentives to try to make the new energy technology businesses be in those locations for those people. 

PAVIN: That’s Meghan Busse again,  the Kellogg strategy professor you heard from a few episodes back, who talked about the levers we need to pull to build the green economy. She followed the IRA’s journey closely. And she says the bill made real overtures to states that didn’t tend to love climate action. States like West Virginia, where coal built the economy. The idea was simple: put the new battery factories where the old coal jobs used to be. 

BUSSE: And that’s really going to help preserve it because people, businesses, will make investments, and jobs will begin to be created. And even if you have an administration that has a philosophically different approach, there will be the jobs, and no one will want to vote against the policies and the subsidies that created jobs in their district. 

PAVIN: That was the thinking, at least. 

BUSSE: I think a lot of people were something between hoping and relying on this being true. And it has turned out not to be true. 

PAVIN: Enter a new administration. 

In May of 2025, the One Big Beautiful Bill Act—or the OBBBA—hits the scene and scales back a lot of the IRA’s gains. The EV tax credits were wiped. The money promised to manufacturers was cut off a little more selectively. Wind and solar were hit harder than nuclear and batteries. But overall, the things that made the IRA a historic climate bill were out. 

This is where we stand right now, and it kind of puts us back where we started before we had the IRA. Which is not very far. One could argue that we’re actually worse off because of the signal all of this sends. 

Busse again. 

BUSSE: The other problem about what has happened recently is that it increases policy uncertainty. So many of these investments that companies will need to make in order to develop these new technologies are long-horizon investments, and it makes it very difficult for companies to commit to that if they think that every time there’s a change in administration, some of the incentives that they were counting on might be suddenly taken away. 

PAVIN: From the companies’ perspective, once burned, twice shy. They’re not going to spend billions of dollars they don’t have building a battery plant if they’re not sure they’ll ever see that money back. 

That’s the trouble with inconsistent leadership. When no one really seems to be in charge on climate rules. No one knows what policy they can count on. So even if new climate policy were adopted by a new administration, it’s become harder to believe in. Which is perhaps the most damning consequence of all in this. 

… 

PAVIN: So that’s miss number one. We can’t expect much more to happen at the federal level now. 

Miss number two was one that happened around the same time but went under a lot of people’s radars. It actually could have made a big difference in how seriously companies engaged with the climate, and it came from a sort of side character to the IRA and the BBB. 

Klaus WEBER: The SEC is, in the background, is a powerful actor 

PAVIN: That’s Klaus Weber, a professor of management and organizations at Kellogg who studies how companies and markets respond to pressure around sustainability. 

The Securities and Exchange Commission—or the SEC—is the agency that keeps the stock market in check. Created after the fallout of the 1929 crash and Great Depression to make sure history wouldn’t repeat itself. 

And the SEC’s main job is to tell companies what they have to disclose to investors. 

 WEBER:  Factors that might materially affect investor decisions, so things that might affect the valuation of the company or the stock price. You make available information that otherwise you could sort of keep under the table.

PAVIN: The SEC said it was thinking about making companies disclose something new: their climate risk. This was about five years ago. Investors had actually asked them to think about that. And it was for a pretty logical reason. 

WEBER:  As an investor, what I’m interested in is the vulnerability of that company to the consequences of climate change. And the consequences can be sort of simply natural environments. So if I depend on, I don’t know, agricultural resources or water grown in areas where I have droughts, then that might affect my supply chain. Or it can be policy decisions. Let’s say one of my biggest markets is China or Europe, and there’s regulation that drives decarbonization, but my business is very carbon-dependent. That makes me vulnerable to losing business, right? 

PAVIN: Investors wanted to know that kind of thing before they made a bet on a company. The SEC could make the companies tell them. And that would set in motion a ripple effect. 

WEBER:  And once the investors are asking for it, then they will also ask for, so what are you gonna do about this? Like, what’s your, what’s your plan? What’s your strategy? They could require the companies that should really be doing their homework to actually do it.

PAVIN: A few years go by, and the SEC adopts the rules. 

But almost immediately, there are problems. There’s a change in presidential administrations from Biden to Trump, who we know isn’t a fan of climate policy. Businesses sue the SEC for overstepping its authority. There’s also a lot of confusion over how emissions should really be measured in the first place. And there’s just this overall feeling that the rules were an ideological project dressed up as investor protection. 

So the SEC abandons the rules—even quicker than it took to adopt them in the first place. And we’re back to where we are now, which is voluntary reporting. 

And just like with the IRA, we are once again reaping what we sow. 

Uncertainty. That affects how businesses think. 

Weber again. 

WEBER: The European Union regulation sets very clear transition targets in the energy sector, provides financial incentives, and you feel fairly certain that those incentives will stay in place. You can actually plan, right? You can plan over long time spans and make the investments and feel reasonably certain that this will happen and it will pay off. In the U.S. context, the regulatory environment has sort of flip flopped with every change in government, and there hasn’t been a very clear framework for an energy transition. The uncertainty is very high, and so you don’t quite know whether you can make those long-term bets. 

PAVIN: It seems crazy. The European Union is a coalition of 27 very different countries and economies; the United States is just one. Why is it so much harder to develop a consistent climate policy here? 

...

PAVIN: So the fate of climate rules in the U.S.? It’s looking a little grim. 

The reason why feels clear. Democrats and Republicans just don’t see eye to eye on this enough to make rules and keep them. 

Or do they? 

It might surprise you to know that Republicans were down with climate action, at a point. 

NIXON CLIP:  All across this great land has a stake in maintaining and improving environmental quality, clean air and clean water, the wise use of our land, the protection of wildlife and natural beauty, parks for all to enjoy. These are part of the birthright of every American. To guarantee that birthright, we must act and act decisively. It is literally now or never. 

PAVIN: The Nixon administration was the one that founded the Environmental Protection Agency—the EPA. And Cap-and-Trade policies, which essentially give companies a financial reason to emit less: they were originally a Republican idea. 

So if Republicans were once on this page with climate policies, why aren’t they anymore? I had a theory. 

PAVIN: How else is America going to push through green policies? Like they might have to rebrand them as something else.

Adam WAYTZ: The term that gets used in whatever political science is like negative polarization. It’s just, it goes back to the Republicans do care about climate, but then anything that’s coded as a democratic issue, they just say no to. Similarly with Democrats.

PAVIN: That’s Adam Waytz,  a psychologist and professor at Kellogg who studies how people understand and misunderstand each other. 

I’d witnessed this kind of behavior firsthand in my own family—apart from the climate—where any issue associated with the opposite political party was suddenly stripped of all its nuance because it was part of the other team’s thing, which of course, made that thing feel annoying for them. 

Waytz said, yeah, we do that with all sorts of things. 

WAYTZ: Like anything that gets coded as, I’m a Cubs fan and that’s a White Sox issue, then it’s like, oh, I hate that issue. 

PAVIN: Surveys have shown that Republican support for climate issues goes up when they’re framed differently, around things like cost savings, energy independence, American manufacturing. In fact, when Yale researchers described the Green New Deal to voters in 2018 without mentioning which party was behind it, 81 percent supported it—including 64 percent of Republicans. 

 So perhaps it’s time that climate issues hired a publicist, spun a new story about itself completely divorced from politics. 

PAVIN:  I wonder if we’re going to have to give it a different name that doesn’t look like we’re supporting Democrats. Just wondering if there’s another narrative here. 

WAYTZ:  If you were to ask me a few months ago, I would say like, there are a few things that I think would provide some encouragement for your point of view.

PAVIN: Waytz has thought a lot about what it would take to depolarize the poles. And one of the things that gave him hope was, of all things, hate. 

WAYTZ:   I wrote a book that was published in 2019 about like bringing people together under shared humanity. And a big part of that was like, oh, if two opposing groups are facing a common threat, then they would, you know, band together. 

PAVIN: The book was called The Power of Human: How Our Shared Humanity Can Help Us Create a Better World. 

And the ol’ common-enemy trope? It’s a real, observable, thing. 

9/11 briefly brought Congress together on an issue. World War II brought the U.S. and the Soviet Union together. An alien attack united the world to fight back against them. 

Actually that was just the plot of Independence Day. The 1996 movie. 

 MOVIE CLIP:  In less than an hour, aircraft from here will join others from around the world, and you will be launching the largest aerial battle in the history of mankind. Mankind, that word should have new meaning for all of us today.  

PAVIN: Waytz brought the movie up. 

WAYTZ: And it’s like, oh, if there was a big alien attack, that’s what would get Democrats and Republicans together. 

PAVIN: Metaphorically speaking, anyway. 

Waytz thought Covid-19 would be that thing that could bypass this sort of hyper-partisanship we see today. It was universally scary and existential. 

Taking his research cap off for a second, he was hoping it would get people joining hands across the aisle, because, well, at least it’d show there was still something that could bring us together. 

WAYTZ: And then it was like, that was the alien attack. Covid was, and it was like, nope. 

PAVIN: Political rhetoric, a fractured media landscape, and online chatter drove people into their ideological corners on masks, social distancing, vaccines, and how serious the crisis really was. 

And that was that. If Covid didn’t stand a chance at uniting us, it feels like a long shot to think that the climate could. 

...

PAVIN: Reflecting back on my talk with Waytz, I felt sad about future. That we might never agree on the climate enough to do something about it. But then, my editor in chief Rob Mitchum mentioned something that made my ears perk up, something to suggest that, to Waytz’s credit, maybe a common enemy plus a bit of quiet rebranding could work some magic. 

Allow me, for a second, to take you to an unlikely place for a green-tech revolution: Texas.  

Remember Winter Storm Uri in 2021? 

NEWS CLIPS:  Winter Storm Uri impacted the Lone Star State in a way those who lived through it will never forget. The severity of the cold weather is unprecedented in Texas history. The devastating cold snap knocked out the grid, leaving Texans without heat or power for days. It was such a life-changing experience. I’ve had so many medics tell me that it was the worst shift of their life. 

 PAVIN: It was an ice storm that knocked power off the grid for a dangerous period of time. It was responsible for hundreds of deaths. 

 Afterwards, the very Republican state government passed major reforms to its power system. They wanted to make the grid more resilient. And while they didn’t boast about it, that involved adding renewable energy. More solar power, more wind power, more batteries. 

By 2024, Texas became the leading state for solar and wind generation. In 2026, they surpassed California for battery capacity. 

And when another severe winter storm hit Texas in the winter of 2026, their power stayed on. Texas Governor Greg Abbott hopped onto Fox news to talk about it. 

NEWS CLIP:  If you look at what we’ve done to the power grid over the past five years, you can see why we’re not concerned about whatever winter storm may arise because, in Texas, we’ve added more than 40,000 megawatts of new power to make sure that the grid is gonna be resilient, regardless of what type of winter storm arrives. 

 PAVIN: It wasn’t branded as green policy; it was coded as grid resilience—but it had green results. 

 … 

 PAVIN: The story makes you think that, if Texas can do it, maybe other states can do the same with their sections of the grid. It would be a huge unlock for our climate goals if we could just rejigger what our grid runs on. 

Sigh. If only. There’s a problem that makes it hard for the rest of the country to just decide, like Texas did, to update the grid. 

David BESANKO: You take a new solar facility. It’s not like there’s some plug that connects it to a transmission line. You have to connect it to the grid.  And that’s, you know,  like connecting to the grid is not a trivial thing. 

PAVIN: That’s David Besanko, an economist at Kellogg who studies how policy shapes, and sometimes stalls, big infrastructure decisions. 

And you may or may not know that Texas has its own grid. The rest of the country does not. We share. So any changes we want to make require a lot of coordination. 

But in America, we give many different people many different ways to say “no” to change.  

BESANKO: If we want electricity generated from renewable sources, then we can’t ignore the procedural aspects of these projects. 

PAVIN: There are an exhaustive number of regulatory hoops you have to jump through before you can start pumping clean electricity into the grid. And the reason has a lot to do with the fact that the grid was never built with renewables in mind. 

Indulge me for a moment. 

Today we know the grid as this giant mechanical marvel that keeps our fragile lives running. Without it, we couldn’t refrigerate our food, or turn on our TVs, or charge our devices. 

But, when our grid got its start in 1882, it was in the form of a single measly power plant in lower Manhattan, opened by none other than Thomas Edison. It was a coal plant, and it was built to power lamps that were just a few blocks away. A real short distance. The grid got better at moving electricity over time, but it was never built to reach the remote places where the best renewable resources happen to be.

Wind and solar farms are typically far from where people are. The best wind is in flat, open, rural places like West Texas and the Great Plains. The best sun is in the vast, open desert, like the American Southwest. 

To get that electricity onto the grid, and over to the people, you need big ol’ long-range transmission lines. 

Besanko again. 

BESANKO: So just as you have a long-distance railroad that ships coal or wheat from Chicago to Los Angeles, you have these long distance lines that ship electricity from where there’s a group of electricity producers producing it, maybe in Texas, to Chicago, where the electricity is consumed. And, you know, they’re expensive. They have obviously some environmental impacts, maybe many, and they’re land intensive. Most importantly, they’re land intensive. They take up land. 

PAVIN: You have to build these lines—which are typically done with overhead towers—across many states, communities, and jurisdictions. Which, to bring this home, is where you run into a lot of different policy problems. Because before you even begin to work on the thing, you need a lot of people to say “yes” first.  

BESANKO: There are many veto points. And it’s not surprising, in light of that, that these projects typically take between eight to ten years. About half of that time is dealing with the permitting process and the approval process. 

PAVIN: Eight to ten years. And if you take a closer look at why that is, you’ll see that a lot of the holdup lies with the very tools we built to protect people and the environment. 

To see how that usually plays out, Besanko points to a project: the New England Clean Energy Connect. 

About a decade ago, Massachusetts was trying to figure out how it was going to make good on a commitment to reduce its emissions by 2030, and it was eyeing hydropower as a way to do that. Hydropower is basically electricity generated from the force of flowing water. But the hydropower they were looking at would need to come from Quebec. And, as it stood, they didn’t have the lines to deliver it. What’s more is that any lines they did build would have to cut through another state. 

It had some conversations that didn’t go too far. New Hampshire said it wouldn’t do it. But talks with Maine did go somewhere, and the state agreed to let the line pass through their land.  

Things moved forward. 

Not everyone was happy about it. 

BESANKO: Along the way, you have three environmental groups—Sierra Club, the Natural Resources Council of Maine, and the Appalachian Mountain Club—that file a lawsuit.

PAVIN: The groups worried, kind of ironically, that the environmental project would hurt the environment. Specifically, they didn’t love that It was going to cut through more than 50 miles of undeveloped wilderness in western Maine. 

But they lose the suit. And the project resumes. 

Until some citizens in Maine get wind of it. They also take issue with its environmental impact. So they pass a referendum, and the developer has to stop again. 

And at this point, the developer is like, come on. 

BESANKO: We put over $400 million into this project. And we got all the permits, like this was all done in good faith. You can’t challenge us like that. 

PAVIN: And the situation goes back and forth like this. Eventually, the developer comes out on top and is cleared to finish the project. But, when it was all said and done, it had been eight years, hundreds of days in court, and hundreds of millions of dollars at risk. 

BESANKO: From a clean-energy perspective, this has a happy ending. But this took a long time. 

PAVIN: It took a lot of time. Probably discouraged a lot of would-be developers from throwing their hat into the long range transmission ring generally, and for me at least, it raises a lotta questions about who and what we step over on our way to the green economy. 

So do these policies protect us? The answer depends on who you think U.S. is. Is it us now? Or is it us later? 

We can’t seem to decide. And we won’t move forward until we do. It’s the thing that sets us apart from, well, a corporation. 

Besanko again. 

BESANKO: In any organization of significant size, where the marketing people wanna do one thing, the operations people wanna do something else, and the strategy people are telling you something different altogether, somehow you have to be able to get everyone aligned. We know that that could be a challenge, but it’s less of a challenge because we know there’s someone who backstops the entire system, which is the CEO. So it’s harder in the process that we’ve been talking about, because there, you know, who’s the backstop? Who can get everybody aligned? The president can’t do it. The president doesn’t have the powers to do it. And that’s maybe as it should be, partly because we want to have a role for the courts; we want it to be possible for environmental groups to be able to sue on environmental grounds. I mean, that’s not a terrible thing. 

PAVIN:  But it’s still an area that can be improved. And maybe it’s what was missing from the Inflation Reduction Act. It had the incentives to start projects, sure, but maybe not to get them done. 

BESANKO:  Streamlining this process, I think is an important, perhaps underrated, but still an important public-policy challenge. We want to build stuff, and we want to make sure that it’s built quickly, cleanly, and that it does the things that we want it to do, which is to allow us to produce electricity with solar power, wind power.

PAVIN: The good news is that something as boring and procedural as permit reform might be a place where partisanship doesn’t immediately sabotage policy. Just in April, Democratic and Republican lawmakers teamed up on a bill that would streamline the federal permitting process for energy projects. 

BESANKO:  You know, this is not a case where partisan polarization is something that will block it. It appeals to the growing recognition of the importance of the so-called abundance agenda—that is to say, the need to do things that increase the amount of stuff we’re able to build. Reforms at the federal level to the permitting process are not reforms that will be blocked because Republicans hate them or Democrats hate them. 

PAVIN: So finding a policy solution that makes the green economy possible isn’t hopeless. But it might not be the big, splashy solution some envisioned: an EV in every garage, a solar panel on every roof. It might be more about the details: reducing the bureaucratic steps it takes to bring a green-energy project—or a “grid resilience” project—to reality. 

And ultimately, policy isn’t a magic bullet that will make companies and markets fall in line. Because there’s another problem with policies. They’re based on the world we see today and what we think will happen tomorrow. But what happens when a new player—a new technology—enters the game, and the whole board is upended? 

On the fifth, and final, episode of Insight Unpacked—we tried to electrify everything, and then a very power-hungry entity arrived on the scene. Will artificial intelligence be the answer to climate change … or accelerate it? 

[credits] 

 PAVIN: This episode of Insight Unpacked was written by Laura Pavin and Andrew Meriwether. It was edited by Rob Mitchum and produced by Andrew Meriwether and the Kellogg Insight team, which includes Fred Schmalz, Abraham Kim, Maja Kos, and Blake Goble. It was mixed by Andrew Meriwether. Our theme music is by Sam Clapp. Special thanks to Meghan Busse, Klaus Weber, Adam Waytz, and David Besanko. And additional thanks to the Eleven Eleven Foundation for their support. As a reminder, you can find us on iTunes, Spotify, or at kell.gg/unpacked. If you like this show, please leave us a review or rating. That helps new listeners find us.