Listen: Climate tech as economic driver — a chat with former US Commerce Secretary Bill Daley

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Taylor Kuykendall:
Hello, and welcome to the Energy Evolution Podcast. I'm your host, Taylor Kuykendall. On this show, we explore the latest developments in the energy sector covering topics like renewable energy, clean technologies, and generally, the transition to a sustainable future. We have a special guest for you today, William Bill Daley.
Daley served as the 24th White House Chief of Staff from January 2011 to January 2012. And as the 32nd US Secretary of Commerce from 1997 to 2000 under President Bill Clinton. He recently took on a new role with Crux Climate, a platform for trading transferable tax credits under the Inflation Reduction Act. Now we've talked to Crux in the past on the show about that platform and how the new tax credits are enabling a speedier energy transition in the United States. But I recently spoke with Bill about how climate technologies can be used as an economic driver, creating wealth and jobs for the country as we pursue climate goals. It was really great chat. So let's just dive right in and check that out.
Well, just to get started, we've had Crux Climate on the podcast before, so hopefully, our listeners are familiar, but just remind us what Crux is and what you're doing at the company now.

William Daley:
Crux is a sustainable finance technology company. The first product which has been created by the founders is a platform for the transferability of energy credits. As you know, and I assume your listeners know, the Inflation Reduction Act for the first time allowed transferability of energy credits, which has opened up a whole new opportunity for sellers and buyers.
So, Crux was started about 18 months ago, have some great investors, very successful investors in the tech world that had joined to support this company. And they've had great success in a very short period. So I joined a senior advisor most of my career, to be honest with you, Taylor has been in large organizations and around the intersection of finance and government, and politics. I was vice chairman of Wells Fargo, oversaw our public affairs group. I had a similar role at JP Morgan a while ago before I spent time in the government. And I do see a real exciting opportunity for Crux and for the economy going forward with all the changes and the opportunities that are there created by the Inflation Reduction Act.

Taylor Kuykendall:
Now I'm glad you mentioned your time in the government before but our listeners are not familiar, you were the US Secretary of Commerce from 1997 to 2000 under President Bill Clinton. So I think you've got a pretty good view on the economy and how it works and what can be done there. Kind of glossed over there a little bit with time in government, but tell me a little bit about how you see climate technology being an opportunity can shoot it to economic growth and job creation.

William Daley:
To be very honest with you, Taylor, back when I was Commerce Secretary, which seems like a hundred years ago, it was about 25, 26 years ago in '97 to 2000 President Clinton and obviously, Vice President Gore is someone who has been engaged on the climate issues and energy needs. And the opportunity that this change would create. 25 years ago was talking about it. And we were talking about it as Commerce Secretary, the opportunities that that transition could provide. The truth of the matter is there's been fits and starts in that area for a long time. The statement by the Biden administration with putting together so much government support and opportunity to help not only address the climate issues but also be part of a new economy that's growing out. There was new technologies on how to spur new innovations in the energy space. Energy needs going forward are enormous and we've got to have additional means of energy production and efficiencies and effectiveness or else we will have a very hard time meeting the needs, especially now with AI and all that that's going to require as far as energy needs.
So we've talked about this a long time, and I've been around it in some degree or another for quite a while. Obviously, in the banking business, there's lots of opportunities and challenges in the energy space that the banks are engaged in. And so it's been this progression to now Crux in some ways. I've been hanging around the hoop as one would say, and now I've kind of just joined the team and trying to be helpful in helping this new younger company continue its progress and make a difference.

Taylor Kuykendall:
Now, before we started this podcast, there was a recording we were talking about from West Virginia. So I think that I'm kind of always curious about this question of as we do this energy transition and there's this huge opportunity where those opportunities kind land because as you know, West Virginia kind of base its economy on coal, it's now getting into renewable energy, but it was relying on one sector and obviously, those resources are where those resources are at, right? But a lot of these kind of new technologies can be placed a lot of different places. I'm just wondering, what do you think the geographic distribution looks like for some of this economic growth that can come from the energy transition and then are there regions that benefit more than others?

William Daley:
I mean if you kind of plot it out over the last 18 months and some publications have done this and I think we even at Crux probably have some data on this, but I saw an article recently in a sort of standard publication out there, Bloomberg it was, noting that even though you have this continuing and have had for as long as I've been around a lot over the last 25, 30 years, the continuing debate about climate and opportunity, blah, blah, blah. And allegedly the red states are against different forms of energy. The vast majority of these sort of new investments and new technologies that are advanced manufacturing are in what would be considered politically sort of the red states. Obviously, West Virginia would be one of them, but they're in rural areas, they are in urban areas, they're spread out all over right now.
Texas has a lot of investment in new energy-related technologies and efficiencies. And so it's hard to kind of pinpoint and say, okay, this is a geographic area that's really benefited from it. So far it's been pretty well spread out throughout the nation. And my sense is as more and more projects get begun to be done and parts of different states who maybe have been left out of some of the economic expansion in the last 30 years, will have the opportunity to begin to benefit by virtue of new development, new construction, new technologies, parts of the country that haven't really played in that new technology game will have the chance to do that. And that's been shown by many of the investments so far the last couple of years in the new energy space, let's call it.

Taylor Kuykendall:
I think for the longest time there was always this big split. It's like should the government be pushing this forward, which we just let the market take care of itself. It seems like we kind of moved beyond that and I think most people can accept that the government can play a role in sparking some of these new technologies, whether that was shale development or getting the solar industry off the ground. I'm just wondering, what role do you see for the government today in deploying and developing climate technologies obviously going beyond the big things we've seen in Inflation Reduction Act already?

William Daley:
I think it is as much conveying an attitude. Obviously, the Inflation Reduction Act has enormous support credit subsidies in this space, but for every dollar that the government puts in, whether it's through a subsidy or credits, the private sector is investing $5 so far. So the private sector is seeing the opportunities, obviously, they're willing to take risks. I think the government can continue to encourage advanced manufacturing, continue to encourage new technologies around energy needs. And I think there is also the acknowledgement, be honest with Taylor. I mean that this idea that you got to let the marketplace do it all on its own for such a transition that's needed. And I'm not talking about one form of energy to another form of energy, just more and different forms of energy that can meet the needs of our growing economy and an economy of the 21st Century, not at the 20th or 19th Century, that the government has an obligation in my to be part of that and not just talk it and say, well, the private sector ought to do that.
And I think that's really what the Inflation Reduction Act helped to create that and other countries around the world that some of our main competitors have absolutely call it industrial policy, whatever you want, and certain sectors that they thought were important, they supported and do support tremendously. And I think it's sort of a naive in the 21st century to think that we could have a blanket sort of, not that it's ever been the case, sort of a hands-off, let the free market decide. Well, in the energy space especially we've had energy credits, we've had supportive different forms of energy needs for years and years and years and rather substantial support because it was important to the growth of the country and important to the economy of the country. So there may be changes going on around the focus on some of those sort of energy supports, but that's just the process that's evolving.

Taylor Kuykendall:
And you mentioned the private sector is investing in a big way because I don't want to downplay that, but I do think that there is also an argument that a lot more needs to be poured in there and invested into the space. But especially when I think of things like critical minerals and the things that we need to build some of these technologies, we hear people all the time saying that private investors just aren't jumping in there and getting into some of these more kind of niche sectors or things that maybe aren't as easy to understand as a solar panel manufacturer. What's it going to take to get those people in? Is it a matter of education? Is it just going to take time? I don't know. How do we get the private sector to put more in?

William Daley:
It is a bit of education. It's a bit of people being convinced that the need for those minerals are vital to different energy creation and therefore there'll be an opportunity there and the private sector will see that. So some of this may be difficult, and I don't pretend to be an expert by any stretch of any mine, and I'm sure there's lots of listeners through your podcast who have a thousand times more knowledge than me on this. I would imagine many of these minerals are difficult to identify, get to and be able to take them from their location and process that. And that's heavy cost. So the need has to be proven and seen. And the opportunity then may be with that, albeit very challenging, whether the government "can" support that beyond the sort of things that maybe the Inflation Reduction Act does. And that is create supports subsidies and credits as those challenges go forward.
I'm not positive. But I think there's an evolution as we all know that's going on both with technology and new energy sources that could be developed that are adding to the overall US economy. And surely in many parts of the country, in small towns and small population-wise, relatively small, that are having a big impact on the jobs, on job creation temporary or long-term and just the sort of mindset of attracting a different group of workers that maybe had worked in a certain field forever, whether that's the coal industry or the traditional energy, oil or gas. And now you've got new technologies, new opportunities that those jobs may also be paying more than the jobs of the 20th Century in the energy space.

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Taylor Kuykendall:
As you look out at this landscape, are there any specific maybe sectors of this climate technology economy that you think have the greatest potential to provide growth in terms of both economics but also job creation?

William Daley:
Well, obviously the solar and wind and batteries and advanced manufacturing with this enormous subsidies that government and the need that the government has identified. But I think what's exciting in this space is people are looking at different hydrogen, nuclear even. I mean, when was there an honest discussion of nuclear lately? Now you've got now, albeit we all know the challenges with it, a cost and difficulty of thought process, but people are willing to take the gamble. Bill Gates is taking enormous gambles. So I think it's across the board and I wouldn't want to go too much further just because to be frank with you, Taylor, this is relatively, in some ways, in a specific sort of way new to me as opposed to the broader sort of general economy and the impact of it that all of these activities are having and the potential to have a change in our sort of framework about how and what produces the energy that drives this enormous economy of ours.

Taylor Kuykendall:
Absolutely. That totally makes sense. And I would encourage people, we have had a couple discussions on nuclear and energy evolution, so people might have to go through the back catalog a little bit and learn a little bit about that too. I'm just wondering, just generally speaking, maybe getting outside of the specific sectors. I'm going to try to pick one. What kind of advice would you give to someone that wants to be an entrepreneur innovator, trying to get into the climate technology space? Is there just some general advice that you would say just to get breaking into this field that's maybe different about other sectors?

William Daley:
Most of my career has been with big companies, big organizations, so an entrepreneur has not been my sort of MO, so I'd be a little hesitant to lecture anybody or give people advice. Obviously, those self-starters, those who have a technology background and a concern about the energy needs are prepared to take a risk. And entrepreneurs, as I see from the founders of Crux, Alfred Johnson, and Allen Kramer, and the young people that may have all brought into this organization in a short period are all risk-takers. But they're also committed to not only the purpose of the company, but the greater sort of question that they're trying to be part of and the answering. And that is how are we going to help solve our energy needs and how do we support those energy needs going forward? So I probably should be the last person to give an entrepreneur advice because it's not been my sort of MO over my long career.

Taylor Kuykendall:
That would be fair. Maybe just generally speaking then, some of these large organizations, do you think they're doing enough on climate and is there a way to tell me a little bit more about their mindset and how they approach this problem, what might need to be done to get them to do more on climate?

William Daley:
In the big companies and the banks, two of the banks that I was with, JP Morgan at Wells Fargo are very committed to this transition. They also understand, as do many other companies, not so much in the finance piece of this, that it much happens in our political world today, that's the extreme. There ought to be no more fossil fuel burning to just burn fossil fuel and just use the old forms of energy. Both of those extremes are ridiculous. We're not going to do away in our needs. We're going to have to have a combination of all the above and more. And that's part of what's going on right now. We're not going to end fossil fuel powering much of our economy over the next 20, 30, 40 years. And the impacts of that, we all know and are real and there are other efforts trying to counter those impacts.
But at the same time, the more we can find alternatives, whether it's nuclear or something beyond the little dipping of the toe in right now that's going on. But as a more broader means, and I come from a state of Illinois that much of our power has been driven by nuclear over the last 40 years, 50 years, maybe not 50, but at least 40. So I just think the sort of stale-old debates, and I heard a lot of this stuff back in the nineties when I was Commerce Secretary and especially Al Gore sure heard it all the time from certain people.
And I just think all of us have got to those who believe in we've got to keep the economy strong, we've got to have lots of energy sources to power the economy of ours in the world and have technologies and power sources and technologies that we can export to other parts of the world and be the leader in certain things. As China's become the leader in solar panels and wind turbines, they have been, and the US is trying to catch up to that and change that. We just have to be more determined that we're all in this together and it's only going to be solved by a combination of different ways of providing energy without shutting down the economy by any stretch.

Taylor Kuykendall:
So I was kind of generally wondering how we can ensure that climate technology innovation can stay a priority for future administrations. I think it's important context. We have an election coming up this year. Are you worried that all the progress that we've made in the past couple of years reverses under a new administration?

William Daley:
I'm less so. Now there may be certain amounts of dollars that change or that, but the fact of the matter is you're having out there in the country, and as I said, even in many, many red states who you would believe, most people would say, those people in those states aren't as committed to climate change maybe, but the need for energy sources and new energy sources. And 25 years ago, fracking was a new source of energy, meeting our energy needs. And lots of people jumped on that immediately, obviously for the opportunity, not just for another form of supply and energy, but as opportunities for business growth in parts of the country that were lacking in that economic boom that was going on in the nineties.
So I think you're seeing part of that and that will build a certain constituency out there amongst political leaders that is maybe not just about the energy needs and the climate impact positive that may happen from some new technologies and root forms of energy, but the economic impact that that's having in certain parts of the country that, do we really want to step on that over some political idea, long issue? I sure hope not because I think that overall hurts the overall economy and is rather short-sighted.

Taylor Kuykendall:
Great point. Hey, thank you so much for joining Energy Evolution today. It was a great guest. Great conversation. Thank you so much.

William Daley:
All right, Taylor, nice talking to you and to your listeners. I appreciate the opportunity.

Taylor Kuykendall:
All right, listeners, thank you so much for listening to the latest episode of Energy Evolution.
I want to give a special shout-out to our incredible podcast team members. I am once again, Taylor Kuykendall, but other people behind this podcast include Dan Testa, Camilla Naschert, Camellia Moors, Christopher Coats, Karen Willenbrecht, and our wonderful agency partner, the 199.
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