Former director of the U.S. National Economic Council Brian Deese sat down with The Globe and Mail in Ottawa on Oct. 10, where he was speaking at a conference hosted by the Canadian Climate Institute and the Net-Zero Advisory Body.Dave Chan/The Globe and Mail
As the former head of U.S. President Joe Biden’s National Economic Council, Brian Deese was a key architect of the centrepiece of the most ambitious American industrial strategy in generations: the Inflation Reduction Act, aimed at making the country a world leader in fighting climate change and challenging China’s dominance in supplying energy-transition technologies.
Now, Mr. Deese is an economic adviser to Democratic presidential nominee Kamala Harris, during a campaign in which Republican nominee Donald Trump is vowing to roll back as much as possible of the IRA, which is distributing many hundreds of billions of dollars in subsidies to build domestic clean-energy sectors.
He recently sat down with The Globe and Mail in Ottawa, where he was speaking at a conference hosted by the Canadian Climate Institute and the Net-Zero Advisory Body.
In the interview, Mr. Deese weighed in on how much danger the IRA is really in from Mr. Trump; what next steps he’d like to see Ms. Harris take; where he sees room for greater partnership with Canada; and how his public call for a “clean energy Marshall Plan,” in which the U.S. would finance deployment of American-made clean technologies in developing countries, has gone over.
How Trump-proofed is the IRA? There’s a common view that the tax credits, which are the biggest part of it, are comparatively safe; grants and financing programs, maybe less so. Does that oversimplify it? How much is in jeopardy in November?
It’s uncertain, so the best way that you can answer it is: What do we actually see?
The overwhelming majority of investment is in Republican districts; Republican leaders are already saying either let’s not mess with those tax credits or let’s not take a broad brush approach; and the private sector in these districts is acting in reliance that these incentives are not going to go away.
If, all of a sudden, you introduce that uncertainty, it’s going to land in a very painful and powerful way in lots of places across the country. I think there’s a growing understanding that that’s an outcome that a lot of people want to avoid.
Now, sometimes this question is asked very narrowly around the IRA. I think there’s a bigger step-back question around what would the impact be of the Trump administration on effective implementation – solving some supply-side problems around building and interconnection queues, and those types of things. And there, I think, if your objective is to starve the government’s capability to effectively execute, then you can create a lot of damage.
You’re referring to overcoming some of the regulatory and systemic barriers around things such as clean power projects that the IRA helps fund. Is that the most important next step, do you think, that a Harris administration would need to take to build off what’s been done so far?
It’s much bigger than the issue of permitting, the way most people mean it. I think there will be a window of opportunity, but also a necessity, to put a national policy framework in place to say: How are we going to actually build the energy to meet the nation’s AI needs?
I think that’s an emerging issue that is going to come very quickly, and will require a national policy response, because it’s not just a permitting issue. The scale of energy-need requirements is potentially historic, and the tools needed go beyond permitting.
I think it creates a really interesting policy opportunity, because if you believe that that demand is real, then the ability to use that demand to drive even faster innovation on some sources of power we’re talking about is potentially exciting. It’s the question of: Can we actually build clean, firm power like advanced geothermal or advanced nuclear in the U.S.?
How far along do you think that the U.S. is right now, in catching up with and compete with China in developing clean-tech sectors? It doesn’t seem as though domestic supply chains have fully taken shape yet, for things like batteries and solar …
I think we have, for the first time, the real outlines of a plan in place. But success will require a lot more implementation and maturation of that plan. And part of it is recognizing that the goal is to get this balance right, of fostering and protecting strategic sectors, but not allowing the size of the fence around our yard to get so big and unwieldy that the task becomes implausible.
I think one big, important part of that is to continue to encourage and accelerate inbound foreign investment into the United States. For example, the amount of investment from Korean companies has been historic. That’s important, and frankly, if we’re going to actually get to those next stages – demonstrating the framework can scale – it’s going to require more cross-border investment and trade with allies and partners.
What’s been the reaction to your pitch for a green Marshall Plan, especially from other Democrats? How much traction is it getting, including in Vice-President Harris’s circle?
In general, there’s been an enormous amount of enthusiasm for the basic proposition that, for the first time in a long time, we have this really growing industrial capability in the U.S. – and what can we now do to extend those capabilities.
Second, there is a lot of enthusiasm to say: How can the U.S. play a more pro-active and constructive role, particularly in the context of this competitive environment with China? There’s then questions of: Okay, legislatively, how would this work, and all of that.
Some of the feedback I’ve gotten is this approach is too pro-American in its orientation that we have to recognize that a country like India, or Brazil, has got their own industrial ambitions.
Part of my response has been that this is not just a U.S. export promotion idea. This is about building durable partnerships with countries to figure out how to most effectively accelerate the transition.
Where do you see the most opportunity for Canada and the U.S. to partner on energy transition?
There’s clearly more opportunity to partner directly on a framework to diversify clean energy supply chains, be that from technologies or inputs such as critical minerals. But I think also there’s opportunity for our two countries to partner on helping to provide a vision for a broader multilateral architecture.
You mentioned in your public remarks today the possibility of the two countries working together on carbon border – basically tariffs on emissions-intensive imports. But the way those have been applied so far, particularly by Europe, they’re tied to a carbon pricing system – which Canada has, for now, and the U.S. doesn’t. Would it still be possible to align somehow on it?
Technically, you can look at it multiple ways. You have explicit carbon pricing. You have implicit pricing, where in some sectors in the U.S., regulations generate carbon prices implicitly. And then you have embedded emissions, where if you look at certain parts of our industrial sector, our emissions are lower than almost any other sector in the world.
If the question is, technically, can you find a way to harmonize a cross of those three – yes. My view is that the answer is going to need to be, increasingly, a pragmatic approach that recognizes that there isn’t a single solution. Politically, that becomes the question.
This interview has been edited and condensed.