Subsidy situationship

Hi there,

I don’t really feel like covering the day-to-day of what the new U.S. Federal admin is up to and how it impacts climate, energy, and the world. But I’ll do it today and, to an extent, on Sunday, as my Sunday sends are basically pure curation as is. Then I’ll probably stop, for the most part, for a while.

Why? Because as long as I pay attention to what Trump and his crew is up to, I’m a) giving him more air time, which has long been the mainstream media’s main mistake that’s actually helped him get to where he is, and b) I’m falling into a trap I cautioned all of us not to fall into in this piece. But I, of all people, with this newsletter and audience, feel some sense of responsibility to track what’s going on. Still, I’ll reiterate that it makes little to no sense to try to keep up with every iterative news bite pertaining to what Trump says, suggests, or does. That’s not to say a crumb amidst one of the loaves flowing out of his oven won’t matter—many will. But, as I wrote previously, the context behind the content of Trump’s strategy is designed to:

Today’s newsletter will provide some news and topical updates. But it will largely build on the theme of focusing on context above, if not at least alongside, content. And future newsletters for the rest of this quarter may well not be about U.S. climate and energy policy at all. Because, after all, it’s my stated goal to offer you climate and energy stories other outlets aren’t talking about enough. And I’m pretty certain most media outlets will spend a lot of time and energy fixated on the whims of Trump and his administration, which is exactly what he wants. As much as I suggest putting that on the back burner once in a while, I don’t expect many to listen (*aging white man yells at white clouds*).

♡ If you find this work valuable, you can support it here. I put a lot of time into it. ♡

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MEANDERING RANT AHEAD

Just about everything related to U.S. federal policy—whether germane to “climate” or not—is up in the air right now. Sure, some things are settled already. The U.S. dipped out on the Paris Agreement again, as it did the first time Trump was President. Plenty of other things have already been settled. I won’t list em’ all out; email me if you want me to send you some links.

More remains unsettled than not, though. I won’t list out all the known unknowns and unknowns unknowns here either, as that’d be quite literally impossible. Here’s one I care about, just to offer an anchor in case you like having one of those. And we’ll now take on a few more examples, in service of getting to some broader conclusions.

Tit-for-tariff

The past ~five days have featured a near-hourly flurry of updates on whether and with whom tariffs are on or off again. For a second there, the U.S. was going to impose tariffs on all imports from Canada and Mexico, our ostensible allies and literal neighbors. Then, Canada and Mexico acquiesced on certain things, like sending some troops to their respective borders to try and help prevent illegal border crossings. And Trump suspended the tariffs again. For a month at least.

As to what happens next? No idea. More tariffs are being erected between China and the U.S. as we speak, on top of many that already exist. That will definitely matter (if they stick—again, who knows?). For instance, for now, the U.S. has placed an additional 10% tariff on certain Chinese solar products. There were already tariffs on Chinese solar cell, wafer, and polysilicon imports under the Biden administration. Biden actually increased them recently (Section 301) from 25% to 50%. So there’s some bipartisanship to some of the tariff brouhaha, which has been a bit lost in the media frenzy. China, understandably, retaliated, adding new tariffs on U.S. energy imports and critical minerals.

More to come, I’m sure.

I digress. I don’t want to get into the weeds too much. Turning back to Mexico and Canada, while I understand Trump sees himself as a shrewd negotiator and the U.S. does have maximum leverage in these relationships, the whole thing is still moronic. By leverage, I mean to say that Mexico and Canada export a significant percentage of their total exports to the U.S., which means they make a big portion of their $ selling into the U.S. 25% tariffs are like a gun to their heads.

It’s not like the U.S. has 100% leverage, either, though. It does have more than Mexico or Canada individually, but the twain (and others) could band together. Which matters because exports and imports go, well, both ways. If tariffs were erected equally on all sides, it could easily occasion a stagflationary spiral. If you think inflation is bad, imagine even more of it and the absence of any economic growth to boot.

Again, I got a bit in the weeds. Tends to be a thing I do… ꩜꩜꩜꩜꩜꩜꩜꩜

My broader point is that all this tariff whiplash is a perfect distillation of why paying attention to the stochastics of every executive order or announcement from Trump’s admin is in and of itself a drain on capital resources, whether for you as an individual or company, country, or an entire continent. It’s equal parts geopolitical strongman posturing as it is a smokescreen to distract people to such a degree that other, perhaps more vital policy changes (legal or not) go undiscussed and unchallenged.

If we learned anything this week it’s that no executive order or policy implemented by the new administration should be viewed as permanent per se; it could and may well change overnight or at a later date. In some cases the change may be welcome. It’s for the best that the U.S. does not levy 25% tariffs on Canada and Mexico.

Still, even if tariffs are “off” for now in North America, the whole rigamarole, along with the information flood strategy, is severely damaging.

As I noted, it’s a huge drain on attention. Even for me, someone very accustomed to digesting seriously large amounts of news, it was way too much to follow. It was effectively “hyperscalar meets toxic off-and-on-again relationship.” It’s all also impetuous, ludicrous, and short-sighted. Why piss off our literal neighbors, especially given international relations in North America have been at least relatively stable for more than a century. That is not something that North Americans (including myself) should take for granted. Look anywhere else in the world (wherever you want, really) for devastating examples of what happens when neighboring international relationships aren’t relatively stable. Drawing on words from Nate Silver:

Said differently, would you threaten to bludgeon a lifelong partner (even if the partnership is just, say, ‘fine’) to get them to watch the movie you want to watch on a Sunday night instead of the one they want to? What’s the point of “blowing your entire load,” so to speak, in one fell swoop on trivial shit?

Uncertainty is risk. One of the most pernicious risks, really.

This brings me to an even broader point that I alluded to at the top of the email.

Uncertainty is risk, plain and simple. I often muse about a hypothetical conversation with someone who does not believe CO2 emissions are a predominant driver of global warming. I imagine them saying, “There’s a lot of scientific uncertainty around that, actually.” Then I imagine myself expertly retorting, “Well, let’s say that’s true. Wouldn’t we still be better off de-risking and adding less CO2 to the atmosphere? Even if we weren’t certain it mattered all that much, tinkering with the concentration of greenhouse gasses in the atmosphere isn’t wise unless you’re certain it doesn’t matter. Uncertainty is often just as good a reason to be careful or to take mitigative action as certainty is.

Many climate and energy companies are now dealing with significant uncertainty regarding subsidies, policies, or government funding that’s highly material to their businesses and development plans. Again, listing all the examples would be nigh impossible. So, let’s take Montana Renewables. Only a few months ago, the company secured funding from the Department of Energy’s Loan Program’s Office to the tune of nine or ten figures worth of loans to build a sustainable aviation fuel production plant. Now, the first tranche of that funding is on hold, pending a ‘strategic’ review of sorts to see if it ‘aligns’ with the new administration’s priorities.

Might the company still get the money? Perhaps. But sitting around and waiting for an answer is almost as bad as just getting told no right away. Financiers talk about the cost of capital all the time, and there’s opportunity and financial cost to time itself. In many cases, as an individual, I’d rather be told “no” right away and get on with it to make new plans and move on (hence the situationship allusion in the subject line). Waiting through an indefinite period of uncertainty and then getting a “no” is the worst-case scenario—worse than everything just getting gutted right away.

Mind you, there are thousands of companies in similar situations. The below from Sightline Climate visualizes capital allocated by the DOE during the Biden admin. It’s basically all at risk (maybe not “all,” but legality doesn’t seem to be a massive concern for the Trump administration and what it may consider itself capable of at this point).

I’d almost venture to advise people to assume the worst as long as uncertainty—broadly or with respect to a specific policy—remains the overarching “vibe” at play. Doing so could actually drive better long-term business outcomes for some businesses. Plus, if your business is wholly contingent on policies and subsidies, well, bad news. That probably wasn’t a great idea to begin with. Even before Trump re-took office, momentum for climate ‘do-good-ism’ at the global level, whether in the private or public sector, was already fading. Climate and energy tech solutions have always had to be economically competitive to actually “win,” as it were.

There was maybe a two-year mirage between 2020 & 2022 where sectoral hype was sufficient to convince some people otherwise. If that was you, I’m sorry.

Caveats to my ostrich (head in the sand) invitations

I do want to note that some people, organizations, countries, what have you—based on their circumstances—have no choice but to try and keep up with, interpret, and understand the implications of every iterative policy shift, whether implemented or even merely hinted at. Some have no choice but to sit the uncertainty through. I want to acknowledge that because I have immense privilege as an affluent, healthy, tall, straight white guy with two of the most powerful passports in the world and disposable income I saved while working largely unimpactful jobs. No self-deprecation intended; I’m proud of a lot of the work I do now and how I show up for my community. Just a lil’ self-awareness.

What I’m really here to say is that there are people whose lives depend on policies that are being uprooted in a fashion I can only describe as quasi-random. IDK, maybe sadistic? Take, for instance, people who may only be alive thanks to programs like PEPFAR. If you’ve never heard of PEPFAR, you’re one of the lucky ones. As Hannah Ritchie recently noted:

Funding for PEPFAR abroad is frozen for now. This will kill people. It could kill more people than climate-change-driven disasters, heat, or Earth climate system destabilization will this year or maybe even for years to come. Frankly, sometimes I don’t blame people for not having their eye on the ball on “climate” things 24/7. I wouldn’t inherently argue that climate change is necessarily the number one existential threat to humanity. If you put me in a debate class and made me come up with alternatives, I could probably make a solid case for a dozen or so other systemic, global risks and argue my case well.

But this is the ‘industry’ or ‘cause’ where I’ve planted a flag and am building (some, limited) expertise. Hence, as I also wrote about in this piece and others, it’s the best place for me to lean in to try and help. I didn’t know about PEPFAR either until Hannah posted about it. So that’s probably not where my efforts and attention are best devoted.

That’s why I, once again, salute folks like Quincy Lee, who are working tirelessly to interpret policy adjustments and updates—as they come in—that they have sufficient time and expertise to parse and then communicate to and distill for others. Trying to drink the ocean isn’t a great idea. Drinking water throughout the day is, though.

The net-net

Tl;dr – five takeaways:

1. If you have the privilege to do so, you don’t have to wear yourself out tryna keep up with day-to-day news. My job here at Keep Cool is to try to sort of ‘meta curate’ for you. I.e., I curate a lot of news sources that are already curated. At this point, I watch a massive flood of the stochastics of day-to-day climate and energy news (to my own detriment, often). Then, once or twice weekly, I try to offer up what I think is worth your while to spend a few minutes skimming.

2. Of course, bearing witness matters and getting more knowledgeable matters, too. Especially for things you’re uniquely interested in, care about, or have a vested interest in. But you gotta be resourced—to the extent possible—yourself first.

3. All of what we discussed today is a perfect crystallization of what I wrote about regarding Trump’s approach to his second term as president so far. The strategy is to make things as confusing and overwhelming as possible. It’s not intended to be productive; it’s intended to make you feel powerless. How do you reclaim agency? You remember you are the sovereign arbiter of how you allocate your time and attention, which, alongside capital, relationships and holistic health, are among your most valuable assets (actually, that’s probably the top 5, full stop).

4. This shit is all really juvenile. More and more, I think climate work might as well start with therapy for everyone’s core childhood traumas and wounds. There’s no other explanation I can wrap my head around for some of the behavior out there.

5. I’m tired. I’m getting stuck in all the same traps I’m tryna help you avoid. So, expect more newsletters soon on things, including positive ones, that have nothing to do with Trump or U.S. policy. It’s a big world. And good things still happen every day, all over the place. For those with eyes to see, at least.

Take good care now,

—Nick