A conversation with Saul Griffith

In this episode, Saul Griffith — co-founder of Rewiring America
and, more recently, Rewiring Australia — chats about all the
things that energy nerds love to chat about.


(PDF
transcript)


(Active
transcript)


Text transcript:


David Roberts


If you are a Volts subscriber, you are almost certainly familiar
with Saul Griffith. I've been following him and his work for
years, and I think I can say without hyperbole that he is the
smartest person I have ever met.


An Australian by birth and an MIT PhD by training, he got his
start as a tinkerer, inventor, and entrepreneur, responsible for,
among other things, the kite-based wind power company Makani and
the innovation incubator Otherlab.


A few years ago, alarmed by the lack of progress on climate
change, he turned his attention to public advocacy, authoring the
book Electrify and co-founding Rewiring America. That
organization has, in relatively little time, become incredibly
influential among US thought leaders and policy makers. It played
a key role in the passage of the Inflation Reduction Act.


In 2021, Griffith and his family moved back to Australia, where
he helped found Rewiring Australia, and sure enough, it has
already become as or more influential than its American
counterpart. As Volties know, I am currently down in Australia. I
was scheduled to do a public event with Griffith, so I thought it
would be fun to meet up a little beforehand to record a pod.


Neither of us had particularly prepared for said pod, but it will
not surprise you to hear that Griffith was nonetheless as
fascinating and articulate as always, on subjects ranging from
IRA to Australian rooftop solar to green steel. Enjoy.


I won't belabor any further introductions. Saul, thanks for
coming.


Saul Griffith


Thanks for joining me in a strange little kissing booth in
Sydney's central business district.


David Roberts


Yes, we are. This is the second ever Volts recorded in person.
And just so the audience knows, this came together at the last
minute and neither of us have prepared at all. So we're all just
freestyling here and we're just going to have a conversation. So,
Saul, let's start with you were intimately involved in the
sausage making of IRA. Why don't you just start with telling us a
little bit about how on earth someone like you ended up in the
halls of DC with the ear of lawmakers. What's the origin story of
this?


Saul Griffith


The romantic origin story is just before I married my wife and I
think it was 2007, I said, if the world hasn't made sufficient
progress on climate change by 2020, can I become an ecoterrorist?
To which, it was so far in the future, she said yes.


David Roberts


Surely, well, by then, surely.


Saul Griffith


And then 2019 came around and I said, remember that you made that
promise to me. And she said, yes, but we didn't have two
children, so you're not allowed to do that. And she sort of
actually first planted the idea in my head. You're always
complaining that the hardest thing to do in energy technology is
the regulatory stack. So why don't you focus on regulatory and
policy for a while? I give you leave. We can afford it. See what
you can do. Right about then, I was having another conversation
with a guy called Alex Laskey. He was a founder of Opower.


He wanted to talk to me about heat pumps. We were working on some
new heat pump technologies and the conversation spiraled out of
control and we said, well, working on heat pumps is good, but
these Democrats keep saying climate change. So this is in the
primaries. Every time any of them say climate change, they wince
a little bit and try to shy away from what you would do. So we
started Rewiring America. We booked a few tickets to DC, we took
a few trips to DC and we thought that we were going to be an
advocacy organization, trying to help Democrats talk positively
about what the energy transition could be, how we could save
money, how our health outcomes could improve, how we could change
local community economics.


So we were trundling along with that effort, working with all of
the presidential candidates at the time, and I can retroactively
say I loved them all exactly equally.


David Roberts


Didn't you love Jay Inslee just a slight bit more, though?


Saul Griffith


Understanding where you're from, I know why you say that. And I
did love Jay Inslee just a little bit more and just a little bit
more than Jay Inslee I also loved Elizabeth Warren.


David Roberts


Yes, RIP, I know she's still alive.


Saul Griffith


I'm sure she's, well, maybe not politically.


David Roberts


But RIP to her.


Saul Griffith


I have a habit of judging people by their staff and it was so
obvious to me that her staff loved her and believed in the
mission and it was extraordinary to behold. So we were doing that
and then the election was won and it became — we'd hired, Alex
and I are probably both ADHD to an extreme, so we hired a
competent adult to run the organization Rewiring America, a guy
called Ari Matusiak. He'd actually worked in the White House
under Biden, worked on similarly complex legislation, the
American Healthcare Act. So we knew a bunch of people on the
climate team going in and we were worried, so we went to talk
because really what we wanted to prosecute was the case for —
electrification of everything is really the only pathway to
eliminate the majority emissions and secondly, that any spending
should equally or even maybe bias more a focus on the demand
side.


And what I mean by the demand side, the places where we use
energy. So households, small businesses. Part of that was because
there was still the idea that you just decarbonize the grid and
they were thinking about clean electrification standards. But if
you just do that, you don't also electrify the cars and electrify
the homes and eliminate all their stuff. So I was worried that we
were going to have insufficient climate policy because of that.
So we did a lot of work working on the demand side. The early
days, we didn't know whether the Democrats were going to take on
the filibuster and whether they were going to go big, so they're
— sigh yes.


So there was three or four or five months where we thought there
was going to be regulation and legislation and I think people
were thinking about regulating and legislating the grid and
electrification grid. When that fell through, let's say that ears
were a lot more receptive to what we were trying to propose,
which was this demand side electrification. We got extremely
lucky a few times he's told this story himself, so hopefully I'm
not speaking out of school, but Senator Martin Heinrich of New
Mexico, his dad was a lineman, so familiar with electricity, the
only senator with an engineering training. He had heard not to
belittle your podcast, but he had heard another fabulous podcast
with me and Ezra Klein when he was driving across the country
with COVID and he cold emailed us at Rewiring America, and we
actually let the email sit in our inbox for a few weeks.


But eventually he became a champion and, in fact, helped us. I
got up at 02:00 a.m — so in the middle of all this, we were going
to move to Washington. We had booked an AirBnB. My parents were
going to come and live in Washington. My kids were going to do
homeschooling on the Mall, and I was going to do six months of
door to door knocking, Republicans and Democrats selling the
abundance agenda of climate solutions. And three days before we
left, San Francisco went into COVID lockdown. So we persisted in
San Francisco for another six or nine months.


Then when San Francisco shut down the schools for another year,
we said, well, we know the schools are open Australia. So we
ripped off the Band Aid and got the hell out of Dodge. Anyway,
that meant that Rewiring America Now is doing a lot of this work
internationally. We were still a tiny team. And I got up at 02:00
a.m. one night to talk to the Democratic Senate Caucus, basically
a tutorial of how the U.S. Energy system works, why you have to
electrify, which there is precedent for. During the oil crisis in
the 70s, there was a book produced by Georgetown University which
in the opening paragraph in the book is like, this book will show
the competent person in 1 hour or less how the U.S. energy
economy works. So I was trying to do that.


David Roberts


In an hour or less.


Saul Griffith


In an hour or less with the Sankey diagrams. Here it is. And we
made the case for demand-side electrification. We were lucky in a
million ways. We got involved with a large coalition of people
who were working on pieces of the bill. People, you know, like
Leah Stokes, Jesse Jenkins. And we rolled up our sleeves, sort of
sensing that unless people outside of government put as many
ideas down as possible, it would be underwhelming.


David Roberts


A lot of my audience, I think, is quite familiar with IRA at this
point. But maybe tell us a little bit about the sausage making.
What is your impression of how a bill becomes a law, as they say?
Was it more or less irrational than you expected? Were there more
or fewer sort of sane people involved who had their head on
straight?


Saul Griffith


I think there was a huge number of people very well-meaning and
diligent and working hard. I think there were a lot of people who
would fit those descriptions, but you might say had 30 and 40 or
50-year-old ideas that they wouldn't let go of. I was surprised
at how much we were facing opposition from the gas industry in
many different forms on all aspects of the bill, really. I was
politically naive. I was a Silicon Valley entrepreneur for 20
years. I never really cared for politics, so I thought that
legislation was written by politicians.


But I had an unbelievable awakening that it's actually written by
lobbyists. So we became basically a lobbying organization and
worked with a few others. So it was all a giant learning journey
for me, for all of us.


David Roberts


My impression is that the sort of — because originally, Build
Back Better was this massively sprawling, it had health care, it
had childcare voting reform, et cetera, et cetera, et cetera, and
everything got winnowed away, basically, down to just the climate
stuff —


Saul Griffith


Oh, you know, I saw a little bit further back even than that.
AOC's staff contacted me when it was the Green New Deal. Can you
help us come up with some climate policy? I think they gave me
four weeks, and then they announced something two weeks before
I'd been able to do much. But yeah, it went from — I think the
transition from Green New Deal to Build Back Better was just as —


David Roberts


Winnowed and winnowed and winnowed and went, shrunk shrunk shrunk
shrunk. But my impression was that in the details, a lot of that
sort of original wonky thinking and a lot of that original
legislative writing more or less survived. Like for all the
drama, Manchin took out the beloved clean energy, whatever the I
can never remember the name of the damn program, but the one sort
of stick, right, the one stick left in IRA. But otherwise it
seems like in the details, nobody really mucked around too much
with what the wonks originally put on paper. Is that your
impression, too?


Saul Griffith


Pretty much. The wonks came out strong. It felt to me like a
special process. Like this was the first time that engineers and
physicists were in the drafting room.


David Roberts


And modelers, and it seemed like I was shocked and surprised,
like I was anticipating that Manchin, because of all the fits he
was throwing, would have policy opinions, and if he came and
could be persuaded, he would have policy asks. But instead he
just woke up one morning is like, sure, whatever, this thing
that's sitting here is fine. So he ended up actually not messing
with it. Maybe to his subsequent chagrin.


Saul Griffith


The rumor I heard from people who were in those negotiations were
like, normally this is fairly easy. You have an obstructionist
senator. You ask them how many schools and highways they want.


David Roberts


Right.


Saul Griffith


You give them schools and highways and anyway, rumor has it that
there was no negotiating.


David Roberts


Yeah. It was unclear what he wanted, and then it was unclear why
he changed his mind.


Saul Griffith


Yeah, I don't know exactly why, but I do remember we made a
presentation called electrification is anti-inflationary, and
it's an extraordinary graph. You can look at the household cost
of energy in the US for all of the energy you use. So your
petrol, your gasoline sorry, I'm living in Australia now, so I
have to translate all the cost of your gasoline, your diesel,
your propane, your network gas, your electricity, and you can see
it, that chart from 1980 through to 2020 is upwards to the right
at roughly the price of inflation. That shouldn't surprise you
because the energy is a core part of the consumer price index.


David Roberts


Yes, a big part of the inflation we experienced. And that Manchin
claimed to want to do something right.


Saul Griffith


So we then showed a chart that here it is, up into the right. If
you electrified everything in an American household, this is the
amazing thing. When you buy solar cells and put them on your
roof, you're paying for 20 years of energy up front, and so then
you're paying a fixed interest payment. So you've got no — you've
inflation-proofed your energy inputs. You've bought — you're
depreciating your electric vehicle, you're depreciating the
electric stove, you're depreciating the electric water heater.
And so in fact, your cost of energy stays dead flat at your price
of finance. And that's a pretty profound insight that this energy
transition is the substitution of finance for fuel.


David Roberts


Yes, I've been trying to carry that message here to Australia.
This is true at the micro level, it's true at the household
level, and it's true at the —


Saul Griffith


True at the macro level, too. I don't think economists have
grappled with this yet. It's really amazing.


David Roberts


And the implications are, you know, you follow that string for a
while, it is transformative. So then let's just briefly wrapping
up on IRA. Obviously, it had to go through budget reconciliation.
So obviously the whole regulatory and standards side got chopped
off. So just say a little bit about what you think it's missing,
where you think it falls short, what you would have liked to see
more of in it had there been a more sane policy process and
vehicle.


Saul Griffith


Industry would have more certainty if there was regulatory teeth.


David Roberts


Right.


Saul Griffith


Some sticks. And industry would make investments with more
certainty. Were there — Norway, ICE vehicles in 2025. Victoria
just announced they're going to stop gas in new built homes. So
there's these precedents that sort of certainty would certainly
help, and I would have loved to have seen that. I remember
actually in talking to that Senate caucus pointing out that
really only three fifths of the US energy economy was being
addressed by the bill. There was actually a huge amount for
vehicles and transport, a huge amount for households, but very
little for the commercial sector and very, very little for
industry apart from a few advanced manufacturing things.


And so I think Jesse Jenkins is a bit optimistic when he predicts
maybe it'll get 40% emissions reductions. I think it probably
gets 25. I'll have that conversation with him soon.


David Roberts


That's quite a delta.


Saul Griffith


I hope he's right. That would be great. But, I think they missed
large pieces of the economy, didn't have regulatory teeth, but
quite honestly, in retrospect, it was the only thing it could be,
and probably was more by accident than anyone's grand plan kind
of genius. Because I think it gets some Republican proofness
through being all incentive-based. I still remember the moment
where we're a year into the process and everyone's like, "Oh,
pens down, tear up everything you've done. Now it's a tax code
hack." It's a tax code hack.


David Roberts


Much like virtually all of US policy, federal policy for the last
whatever decade or two.


Saul Griffith


Yeah, but I think there's something really — I now am prone to
saying to the Australian government, "You're not serious unless
you're rewriting the tax code." And that's the evidence of
whether you are going to fix climate policy.


David Roberts


So, Biden is now out saying, and he has his people out, "This is
Bidenomics," by which they are saying the era of sort of free
trade, free market neoliberalism is over. To what extent do you
think that is sort of a retroactive wrapper to put around IRA?
And to what extent do you think that's really sunk in in DC? How
dead is neoliberalism in DC?


Saul Griffith


This is where the podcast goes off the rails. I don't remember
most of the people doing the modeling, wrestling with
international trade in the work. So, I think it is a little bit
retrospective by my interpretation, but I think it's a very
honest assessment that we are not operating in anything remotely
like a free market. China is producing 90 plus percent of the
world's solar cells with 90% of them containing technology that
was invented in Australia, about a mile from where we're sitting,
or 1.8 km. China is producing the overwhelming majority of the
batteries. The Australian steel industry, which I stay in touch
with because my first degree was in metallurgy, my first job was
in a rod mill, is extremely aware that you could not make the
tower pieces for a wind turbine. That's maybe the simplest thing
in renewable energy is to make a giant steel tube. But the best
estimates are that China is underwriting those 25% to 40%. So
unless you figure out some way to rebalance that, then your
economy is not going to make the transition very elegantly.


David Roberts


It takes two to neoliberalism.


Saul Griffith


So that piece of neoliberalism is maybe dead, but there's another
piece of neoliberalism that is alive and well, which you might
call the porous borders for international capital. Headline in
New Zealand last week is that BlackRock is huge amounts of money
going into New Zealand's regulated electricity industry to buy
all the offshore wind turbines. So in regulated monopolies around
the world, you get a guaranteed profit margin. Australia gives a
guaranteed profit margin of 9% to transmission and network
companies, which is why most of our transmission network
companies are owned by Singapore and China. So, I worry that if
countries aren't aware of that, all of the profit, all the
margins are going to leak away from these countries. If really
you can generate your own energy domestically. So, Australia's
economy is about a 10th the size of the US. But we import 40-50
billion dollars a year in oil. We import basically all of our
oil. We have abundant sunshine driving an electric car in
Australia on rooftop solar costs you about two cents a mile. It's
about twenty-eight cents a mile to drive it on gasoline or
diesel. So we could totally have this $40 billion a year windfall
driving Australian electric cars, but we may not choose to do
that well.


David Roberts


You'd prefer to keep that in Australia, obviously.


Saul Griffith


I think you would like to keep as much of that in Australia as
possible. I think the fact that we've sold off our gas networks
and electricity networks to overseas interests in a bunch of
places is a bit of a disaster that will hamper this transition,
that won't allow us to build a lowest cost energy system. Because
the rules that we wrote 20 years ago that were a good idea in the
fit of neoliberalism at the turn of the century are not a good
idea now. So, I think neoliberalism, it's got some wins and
losses, hopefully a few more losses.


David Roberts


Half dead.


Saul Griffith


Half dead, it'll zombie along. You remarked to me yesterday on
the phone that you smell a bit more neoliberalism in Australia
than you thought you might. That's been my experience in
returning home.


David Roberts


Interesting. Well, let's talk about speaking of which. What's
your impression of the international effect of IRA? The effect of
IRA on the international conversation in other countries.


Saul Griffith


It's extraordinary. And this is a win that America should take
and the Biden administration should loudly pronounce as their
victory. Without IRA, the world wouldn't have done anything
particularly significant. Because of IRA, Australia is now
engaged in a conversation with itself and amidst government of
what is our response to the IRA.


David Roberts


Every government, I think, is.


Saul Griffith


Yep, we now have Rewiring Australia, Rewiring New Zealand. In
both places, we're trying to look at policy that you would write
in those contexts. That goes further than the IRA. I think Jesse
and my argument of 25-40% aside, we really need 60 or 75%. And
that's made obvious by all the fires we're seeing around the
world and the heat waves. And so we need the IRA to become better
versions of itself as it's written in every new legislative. You
know, it might sound strange to you, but I'm doing a lot of work
in New Zealand. They're four weeks out from a transformative
election.


They could set very interesting precedents for ways to use their
carbon credit system to help electrify and decarbonize. They
could set precedents in household financing. The IRA was
regressive because it was a tax code hack. You had to earn enough
money to be able to get the rebate for the electric car. The
Australian government has a tradition of more progressive policy.
I think we could do IRAs that reach all demographics and do a
much better job for low middle income households. I think the
world has to take every one of those opportunities to get
ambition to beget more ambition. It's our only real climate hope.


David Roberts


I, relevant, the other day was in a small roundtable, including,
among other people, Australian Energy Minister Chris Bowen. And
he said that in his estimation, the IRA was the single most
important thing that's ever been done for climate, including the
Paris Agreement. He thinks it's bigger than the Paris Agreement
in terms of the international reverberations, which may or may
not be a bit of exaggeration, but I think it's testament to the
transformative effect it's having on other countries' thinking.


Saul Griffith


I think he's right. I wouldn't have thought that he would think
that. I'm glad he's thinking that and I think it's true. The IRA
has put everyone on notice a little bit.


David Roberts


Yeah. So, let's talk about Australia, then. We're here in
Australia, you're working with Rewiring Australia, and from my
sort of discussions around with various people here in Australia,
my sense is that there's not a lot of "should we or shouldn't we"
anymore. It's all "how should we?" Right? It's all "what should
we do?" It seems like, obviously, I'm not talking to the
Conservatives here, but at least among the ruling coalition, it
seems like they want to do something big. But it also seems like,
as you say, there's this lingering "we can't just spend a bunch
of money, we can't keep up with the US on sheer spending, we need
something else."


There's this lingering sort of like, "we've got to be revenue
neutral, we've got to balance our budget." All this the lingering
hold of the aforementioned neoliberalism. So what's your sense of
how wide the range of practical possibilities is here? Do you
think there's an appetite for going as big as you want to go?


Saul Griffith


I know there is, and I'm encouraged by conversations I've had
with the coalition government. I'm even more encouraged by some
of the conversations I have with the independents that made an
incredible showing at the last election.


David Roberts


The Teals. See my previous podcast.


Saul Griffith


Yeah, they don't have a lot of political power, but they're
having some influence, which is good, but I see there's a lot of
appetite. The challenge is we have a very strange economy. Two
thirds of our emissions don't even count on us.


David Roberts


Right. Scope three.


Saul Griffith


Yeah. So we make coal for the rest of the world and have some
liquid natural gas and none of that counts on us. In fact, 10% of
the Australian emissions that do count us is using fossil fuels
to get those fossil fuels to international markets. Because of
that, there's the fear that if we lose the prevailing fear that
we lose fossil fuels and what do we replace that with? Is driving
a lot of misinformation. Two or three months ago, I went with a
Smart Energy Council and a bunch of people variously involved in
renewables and electrification to Parliament House, and there
were 40 of us and everyone was self-congratulatory, like, "Isn't
this great?"


And I was giving the motivational speech and I was like, "you
know that there's 80 gas industry people here every day. This is
the first time we've ever showed up with 40 people," and that's
what we're facing. A manifestation of that is in the last budget,
we got a billion dollars in the bill for electrification. They
got $2 billion for hydrogen. Hydrogen production in Australia can
only increase the retail price of electricity for Australians
because they have to take the lowest price electricity to produce
hydrogen, otherwise it won't make it economic. And we don't need
hydrogen to decarbonize any major portion of the Australian
economy, so that's really just to do exports.


David Roberts


There's a lot of talk about Australia becoming a hydrogen
superpower. So we can talk about that in a second.


Saul Griffith


Yeah. So the genius of the Inflation Reduction Act is the
majority of the incentives went to consumers. That's good
politics. I'm going to help you have the shiny things that will
help you go green, get to zero emissions and lower your cost of
energy. The majority of the conversation here is, how do we do
handouts to largely foreign-owned industry so that we can
maintain their jobs, but the jobs we get aren't that great and
the profits are foreign-owned. I think 85% of our coal and a huge
amount of our iron ore industries are foreign-owned at this
point.


David Roberts


Good grief.


Saul Griffith


So I think we need to win the argument in Australia that do make
it good politics. Help single mothers in the outskirts of Sydney
or Melbourne buy an electric car so they can save $3,000 a year
on their horrific commute. That would be good politics and the
fastest way for us to address domestic economy emissions
reductions, the government's first two pieces of climate policy
my apologies, Chris, I think are going to be a bit troubling for
the government. So one was the safeguard mechanism, which is an
incredibly complicated, arcane way for industry to basically buy
industry credits, unclear that that will deliver any emissions
reductions this decade.


The second piece was a program called Rewiring The Nation, which
was to connect the renewable energy zones, which were picked
politically, not necessarily for energy cost reasons, to connect
them with big transmission lines. So it'll take five plus years
to get those transmission lines in the ground. You're going to
piss off every farmer and everyone in a small town who has to
look at the wires, and it'll take another couple of years for the
solar and the wind to connect up to them, so it will not deliver
any emissions reductions by our critical 2030 date. So I think
it's more reasonable to say, look, the thing you can do now,
rooftop solar, we could power 60 plus percent of all of our
household energy uses, including our cars on our rooftops here.


It's the cheapest electricity in the world as Australian rooftop
solar, three to four cents after financing. And you could do all
of those emissions reductions very, very quickly, because pretty
much all the industries are, if not at scale, getting close to
scale. Electric vehicles, electric heat pumps, induction
cooktops, household batteries.


David Roberts


Let's talk about rooftop solar for a second. I've said this
before, but the sort of freakish success of Australian rooftop
solar seems oddly little discussed here in the sort of policy and
energy discussions I'm having. And I don't know why it's not
trumpeted more. So maybe just tell us a little bit about why is
it so cheap? And something I hear, I mean, I've heard a lot of
confident, very opposing opinions. Some people will say it's
creating this huge Duck curve. There's this huge swamp of solar
during the day. We're having to curtail it now. We've already
like, building more is basically pointless at this point until we
have more firming and more transmission.


And then other people say, oh no, there's plenty of runway,
there's plenty more rooftops, there's plenty more we could do
with rooftop solar. So maybe just say a little bit about why it's
so damn cheap and how much headroom you think there is.


Saul Griffith


I tried to do a column for the New York Times. They actually
published it on why Australian rooftop is so cheap. They flubbed
it. They didn't want me to say that American rooftop solar is
more expensive than the grid, which it is, because they didn't
want to deter people from purchasing rooftop solar. So much for
integrity in journalism. So I actually interviewed a whole bunch
of people who were very early in the 1990s, early 2000s
Australian solar industry, and I got roughly ten different
answers for why. Some was political luck. We got John Howard
traded sort of a yes to doing some rooftop solar stuff because he
was going to throw Australia under the bus at Kyoto. And some
academics and some smart early industry people took advantage of
that.


Part of it is we created a certification and training program
that took a lot of the liability away from what you'd call
contractors; we call them tradies. That took a big chunk of the
cost out. And then Australians abhor — Americans like to think
they're small government, but we really want to be small
government and low bureaucracy here. On average, it takes three
months to get a permit to put solar on a rooftop in the US. 50%
of sales are canceled in that three months. Because you get cold
feet, you have to go through what's called an ASJ, an Authority
Having Jurisdiction.


They have different rules in every single state. I think there
are 11,000 ASJs in the US. In Australia, you get the permit over
the phone in 24 hours and the tradie is on your roof 24 hours
later.


David Roberts


Wow.


Saul Griffith


I keep trying to convince my colleagues at Rewiring America we
should run a "Get the Government off My Roof" campaign in Texas
because there's no reason. In fact, an Australian solar installer
is paid about 10% in real dollars, more than an average American
solar installer.


David Roberts


Are those good jobs here? Because in the US they have a pretty
bad reputation.


Saul Griffith


They're not fabulous jobs, they're not terrible jobs, they are
definitely hardworking trade jobs.


David Roberts


And so what's the headroom one out of three?


Saul Griffith


Australia 35%. I think California just touched 2% penetration.


David Roberts


And already California is panicking and trying to change the
rules and saying we have too much blah, blah, blah.


Saul Griffith


Well, I now work with what they call here DNSPs again. In a fit
of neoliberalism, in the 1990s, we introduced market reform. We
split our utility monopolies into four functions: transmission,
distribution, retail, and generation. The price of electricity
went up because now you had four times the overhead. But the good
news is that the DNSPs sort of see the opportunity. So they
control the local poles and wires. When you talk to the CEOs of
the DNSPs, they understand that you need to deliver 300% of the
electricity over those local poles and wires to accommodate the
electric cars and the electric cooktops and the electric water
heaters.


So their business is going to grow. They understand that even if
you saturate Australian rooftops, which might saturate at 75 or
80% penetration with big systems, 8 kW, their business still
grows. And so the natural partnership for a lowest cost energy
Australia, is a partnership between the city, the householder,
and the DNSP. And when you talk to those DNSPs, they understand
that the batteries are coming, they understand that the electric
cars are coming, they understand that all the demand response
systems are coming and that that will solve this problem. But if
you talk to a generator, they don't think about batteries, then
electric cars is the storage and mopping all this up.


If you talk to the retailer, they're a bit scared that they might
get cut out of this because the householder can do it without
them. And if you talk to the transmission companies, they're a
regulated monopoly that gets a guaranteed return on investment
for building wires, whether or not you like it. So none of them
are particularly interested in the truth, shall we say. So I
think that's why the answers vary greatly.


David Roberts


And so you think you can go from 35% to 70 or 80% of rooftop
solar.


Saul Griffith


With 75% penetration in Australia of 8 kW systems. We would
produce 60% of all electricity required for 11 million households
with all electric vehicles, all electric appliances.


David Roberts


And you think you can balance that out and firm that just with
household EVs, household batteries, household demand response?


Saul Griffith


Not entirely. And so people often hear me and they think, oh,
he's the off-grid guy, but I'm not. You need other renewables in
the mix. It is handy that Australia has some hydro. We're doing a
big pumped hydro project. It's over budget and behind schedule,
but that's true of all big infrastructure. Nevertheless, we need
that. We need wind, which counter correlates with solar and will
fill the gaps in in winter and really, Australia's best strategy
is oversupply. So you don't install — California has rules that
make you install sort of the summertime amount of solar to just
do your electric appliances in your house.


Solar in Australia is so cheap that you should install enough
solar so that you've got enough to run your house and your cars
in the winter, which is a 12 or 15 kilowatt system. And it's much
cheaper to have 200% of three or four cent generation cost solar
than a huge amount of batteries, all these other things. So
Australia can actually quite easily do this, curiously, with an
oversupply strategy and good energy management. And, yes, you
have to have a mix of renewables, but everyone agrees and expects
that. And we're doing offshore wind and onshore wind and all the
things.


David Roberts


Let's talk about the other huge topic that is extremely front of
mind for Australian politicians, which is Australia's
extraordinary amount of critical minerals that are going to be
needed for the energy transition, and batteries and solar panels,
et cetera. How much does it have? What does it currently do with
them and what ought it to do with them?


Saul Griffith


We have the first, second, third or fourth largest known ore
bodies in the world for all of the above materials. Cobalt,
nickel, iron, aluminium, silicon, lithium, copper, tin, which are
all the things you need. We sold 55% of the world's lithium last
year. So we can easily be a much, much more dynamic, much, much
more profitable economy, selling those minerals and metals to the
world. You don't even need the super exotic stuff like neodymium.
If we just processed our iron ore domestically into steel here,
which will be a good idea because we will have the cheapest
renewables in the world, it will be hard for someone else.


If you make hydrogen in Australia from our sunshine, it's going
to be, by the time it's in China, five times more expensive than
our sunshine. Half of the cost of steel making is the energy that
goes into it. So we have this fundamental advantage in the new
economy that we'll be able to make all of these metals. We only
process 1% of our iron ore into steel domestically at the moment.
If we processed 100%, it would be more than a $1 trillion
industry that is ten times larger than all of our fossil fuel
industries. So even if we don't do the exotic stuff like lithium
and copper and nickel and tin and all the other things just on
iron and aluminium, we can make hay. And it's a better export
economy than the fossil fuel economy that we have.


David Roberts


You think it makes more sense, rather than using the wind and
sunshine to make hydrogen, exporting the hydrogen to other steel
making countries where they will make green steel, you think it
makes more sense to just make the green steel here? And do you
have the infrastructure and skills? And how much would it take to
revive that industry?


Saul Griffith


Well, this is a bit of a question about neoliberalism. My father
was the first person in the history of his family to get a
degree. He was paid by the Australian wool industry to become an
expert in wool making when that was our major export. I had a
full paid ticket through university, paid for by the Australian
steel industry when that was what we were going to do. So we used
to, as a country, invest and they were fully funded, free
educations for both of us. We used to understand that you
invested in the people to do those things and then they would
build the industries.


We stopped really doing that in the 2000s. If we can find the
courage to do it again, we can do this. And we still do have
enough muscle memory in Australia. We are losing it rapidly, but
we could still do it. I think it's just a matter of political
appetite.


David Roberts


So how do you make an argument? I mean, what do you say to a
politician who says, sure, OK, yes, let's do more processing of
our critical minerals, let's move farther up the value chain of
critical minerals. Sure, let's process our iron ore, let's even
make steel and then let's also continue exporting met coal
because there's a huge appetite for met coal and it's good for
our economy. What is the freestanding argument for seizing fossil
fuel production, is there an argument?


Either the high-met process in Scandinavia or the Boston Metals
process or one of these things will eliminate met coal within the
next decade?


You think so?


Saul Griffith


So it's existential and a little bit to your last point, but also
to this question: The energy cost of coal into steel making is
about a half a cent a kilowatt hour equivalent in heat. The
energy cost of natural gas in steel making is about one cent per
kilowatt hour in heat. The Australian stretch goal for hydrogen
is $2 a kilogram, which is copied from America's $1 a kilogram,
that's six or seven cents a kilowatt hour at the electrolyzer
that's before you've transported or shipped it, it'll be 12 cents
in any reasonable optimistic estimation. So you're not going to
make steel with a lot of hydrogen because you're going to make
steel cost five or six times as much.


So I think we've just got to get with the program and invest in
those things. They are the critical industries for our next
century. We got to invest in them. We have all the American
problems. We gave away all of industry between 1980 and now. With
my metallurgical degree, I went off to MIT because there were no
jobs in metallurgy in the 1990s, because we were just starting
the neoliberal ideal.


David Roberts


So talk about then this ties into very closely the export
economy. Talk a little bit about Australia's relationship with
the sort of Asia Pacific region like Japan, for example. Japan is
an island not blessed with a lot of domestic energy supply
resources. It wants to, I think, has some illusions that it's
going to become that it's going to sort of import a bunch of
hydrogen fuels from Australia to run its economy on. What is the
sort of political valence of these other countries? What do they
want and what do you think would make more sense to give them?


Saul Griffith


We've had long standing relationships with Japan. My son is in
high school in Australia. He's much more likely to learn Japanese
in Australia than you are Spanish. Germany and Japan both lost
World War II because they didn't have a domestic supply of liquid
fuels. Germany was developing hydrogen for the V-2 bombers, and
the V-2 bombers were powered with hydrogen. They were using coal
gasification.


David Roberts


Yeah, right.


Saul Griffith


We had seven years of both of those countries believing that
their path to energy independence was through hydrogen. And that
explains probably more than anything else, why the last two sets
of automakers in the world to really commit to electrification
are the Germans and the Japanese. As giant trading partners of
ours they're driving our hydrogen fever. But refer to the
previous conversation. It's just a very expensive way to do
everything. We will do some hydrogen, and you need it for ammonia
and you might need it for steel making, but only the redox
component, not for the energy component.


Redox meaning the reduction reaction, getting rid of the oxides.
But we are still addicted to this idea that we're going to sell
them gobsmacking amounts of hydrogen.


David Roberts


Well, they're addicted to the idea too, are they not?


Saul Griffith


They are also addicted to the idea, and I think there's a
reckoning there.


David Roberts


Interesting. So what is Japan's answer? Because it seems like one
of these really difficult equations in the transition. What does
Japan do?


Saul Griffith


Japan will almost certainly turn its nuclear power back on, or it
will figure out a better relationship with its geothermal
resources. It also has extremely good offshore wind, and they're
a manufacturing and precision engineering powerhouse. That's not
going away anytime soon. The question is, can they survive the 20
year head start they gave to China on electric vehicles? So
that's my concern for Japan.


David Roberts


Interesting.


Saul Griffith


Toyota and the Japanese companies drive so much of the economy.


David Roberts


So turning back to Australia, you — obviously play a big role in
your sort of head, your scheme is played by EVs, playing a role
as storage. Let's just talk briefly about vehicle-to-grid (V2G).
Because this is another thing: When you sort of toss it out in
public, you get a lot of extremely confident, extremely mixed
opinions about its potential. It's realistic, how realistic it
is, whether consumers will put up with it, whether cars are
available when you need them, et cetera, et cetera. How bullish
are you on that, on V2G?


Saul Griffith


I think there will be some V2G. I think it will take longer than
we think and I think we'll give up a smaller portion of the
battery to the grid than people expect. And I don't think that's
really the relevant question. The only thing that matters is are
the cars going to be plugged in when the sun is shining and the
wind is blowing? So really, it's about a profusion of vehicle
charging infrastructure. So that is absolutely critical and we
have to do that. And you can make the numbers work without
intoning huge amounts of V2G. I think V2G will happen.


The battery packs are just getting bigger. Unfortunately,
Australia, I would have hoped — speaking of Japan, Japan has Kei
cars. Do you know, K-E-I? They're fabulous.


David Roberts


They've gone viral on Twitter several times recently.


Saul Griffith


Yeah. I was hoping Australia would — we could manufacture cars in
Australia again if we'd made Kei cars, because we'd only compete
with the Japanese. If we wanted to make trucks or utes, we can't
compete. And Australia looks like we're going to go down the
giant ute path. I own a Rivian in the US, a giant 172 kilowatt
hour battery on four wheels. I will use in an all electric
household, driving two cars, the average amount Australians, 37
kilowatt hours a day. So the battery in that Rivian is five days.
The battery in the second Rivian is another five days.


So, I've got ten days of energy from my household in my two utes.
I kind of hope for the planet that that's not how we solve
climate change. But you can tell that story now where I think
it's still a political sore point in Australia. What are we going
to do with our utes? I mean, it's a religion here.


David Roberts


What, the utes?


Saul Griffith


Yeah. And a lot of 23-year-olds own 70 - their best asset is a
$70'000 or $90,000 ute and they're probably in debt in every
other way. So it became strangely central to the Australian ethos
in the last 30 years while I was away. I was surprised when I
returned.


David Roberts


Yeah. What is going on with the obsession with big trucks? Do you
think Australia will ever — speaking of moving up the value
chain, you go all the way up from critical minerals, you get to
battery cells, you get to batteries, you get to EVs, and then you
get to battery recycling. How far up that chain can and should
Australia go all the way?


Saul Griffith


I think we are fine if we are the foundry of the world, if all we
do is make the metals turn bauxite into aluminium, turn iron ore
into steel, turn lithium brines into lithium. Would I like us to
go further up the value chain? Yes. My father was employed in
going up the value chain in the textile industry. He made the
spinnaker that defeated America in the America's Cup in the
1980s. We know we can do those things. Very hard to imagine how
we do it in Australia. Our prevailing wage is ten times higher
than all of our neighbors.


David Roberts


Oh, really?


Saul Griffith


I mean, our neighbors are Indonesia, Asia, Southeast Asia, Sri
Lanka. We can only do it with extraordinary amounts of automation
and probably things like border carbon adjustment mechanisms.
Something that was announced today in Australia with the idea
that — your mate Chris Bowen. But it's pretty hard to imagine
that we'll do these things otherwise. We do have a solar
manufacturer here. They make incredibly high-quality cells.
They're 25% more expensive than the Chinese ones. They are
better, probably. They come with a better warranty. But we are a
Walmart bug and hunting country like yours, which is not called
Walmart, it's called Bunnings here.


So I worry we could easily make electric cars. Again, there's no
reason not to do any of these things. I suspect in the wind
turbine space, we'll make towers and maybe the floating
platforms. We won't make the nacelles. Denmark and Korea have and
America have a 20-30 year head start on that. We could make the
blades, but we probably won't. But it doesn't matter if we were
in the best use of our extraordinary abundance of very cheap
renewables, if we are the world's foundry, we're in great shape.
And to put that in perspective, Australia could supply all of the
energy for our domestic economy and process all of our metals
with about a quarter of 1% of its land area dedicated to
renewables.


America would need 2% to do the same and China would need up
north of 10%.


David Roberts


Interesting.


Saul Griffith


So really, only if Australia steps up to be the foundry of the
world does the whole world get there.


David Roberts


Yeah. And what a better moral position to be in than the one
you're in currently, which is the entire health and success of
your economy is contingent on the failure of humanity to solve
its biggest problem is that moral dilemma sinking in to the
public.


Saul Griffith


The public that I hang out with? That's not the public, it's the
public you hang out with in America. I think in Australia and
America, 2% to 5% of people worry about the moral dilemma. What I
don't understand, and I was reflecting upon this, for whatever
reason you sparked this thought, we still have never had any
important global politician in command of a reasonably sized
economy, stand up and say, solving climate change is going to be
good for us. Like, if you think about all of Biden's —


David Roberts


Biden says, jobs, jobs, jobs. When I think climate, I think jobs.
That's his shtick, right?


Saul Griffith


Yeah. But no one ever stood up there , and Winston Churchill'd
we'll fight them on the beaches, we'll succeed. I'll improve the
air quality of your children. I'll do all of the things right.
Biden's message is very simple: Jobs, jobs, jobs. It would be
within reason and not exaggerating for Prime Minister Albanese to
stand up and say, I have a vision for the country. Here's the
50-year vision. We will be the world's foundry. We will increase
our exports by five x. We will own more of them because it's on
crown land, the majority of the ore.


We will lower energy costs because of our abundant renewables.
And I think that would go along in a similarly important
historical moment to the IRA. I think if Australia did that, that
would also get a whole bunch of countries to be like, oh, because
of our rooftop solar, we're ten years ahead of everyone else on
the cost curves.


David Roberts


Yeah. And it's so much more inspiring than being a hydrogen
superpower, because for the average citizen who gives a f —


Saul Griffith


No, Australians don't think we're a superpower in anything. I
mean, we're a superpower at women's soccer this week.


David Roberts


Go Matildas.


Saul Griffith


Go Matildas. But — I don't think truly identify with that
superpower narrative. I understand the political origins of that
narrative. That's what environmental organizations had to sell
ten years ago to a very conservative government as the reason to
do anything in climate.


David Roberts


Running out of time here. There was one other subject I wanted to
talk to you about, which is a very beloved subject of yours and
of Rewirings, which is anytime you bring up let's electrify
households to average folk, what you hear is, it's too expensive.
I can't afford solar on my roof, I can't afford a heat pump. It's
so much more than a gas boiler. EVs are so much more expensive.
These are all toys for rich people. There's a real populist, faux
populist, call it pushback to all this stuff. And your response
to this in various and sundry ways has to do with financing. So
in the Australian context —


Saul Griffith


Which brings us to neoliberalism.


David Roberts


Once again, we're back to our old friend neoliberalism. Let's
talk about what would it look like to finance Australians shift.


Saul Griffith


So the perception of those things in America is a little bit
true.


David Roberts


People are not making it up.


Saul Griffith


Yeah, your fossil fuels are cheaper, your bureaucracy is heavier
and incurs more soft costs. And because it was a tax code hack,
the IRA, it's regressive. So you have to be a rich household to
make enough money to earn the tax credits. There's a few in the
margin.


David Roberts


Some are refundable, right?


Saul Griffith


I mean, some are refundable and Rewiring America, and others are
trying to figure out creative ways to actually package these up
so you can deliver it to low-income households in smarter ways.
But my true hope for Australia is because we have a stronger
tradition on the labor side, on the left side of politics and of
broad social policy, including Medicare and Medicaid and the
Australian public health system, which is a little teetering
right now but has been extremely strong for a long time. I think
we are capable of big — and we had a higher education
contribution scheme here. It's a little out of fashion right at
the present moment because the rules of it changed a little bit
under the neoliberals.


This is how you finance your education. But we have in the past
written global, precedent-setting social policies that were
really around debt and about how and who people pay for things.
And so I think there's an extraordinary opportunity for this
government to get emissions reductions this decade which are
critical. And the only way where the majority of those are this
decade is in our vehicles and our homes. Because we don't have
green steel yet. We don't have green hydrogen yet. They would
address the cost of living crisis and the government could do
concessional financing, so they could either buy down the
interest rate the biggest problem in America and Australia is
probably 60% or more of homes don't qualify with a credit rating
that allows banks to lend them the money.


So while a single mother in Western Sydney would absolutely save
$2,000-$3,000 a year on gasoline even if she's a nurse her credit
rating probably isn't good enough to finance an electric car to
access those savings. There are ways that the Australian
government could step in either by backstopping the banks or
guaranteeing the banks doing something like income contingent
loans which is how we finance their education system. And if you
look at the macroeconomics, it's a slam dunk for the country. If
all of Australian households were all electric, we'd save $40
billion a year. The problem with revenue neutral, because you
brought up the thing that I hate the most is we have an
obstructionist treasury that thinks the country is broke, that
wants it to be revenue neutral.


And the problem is like a —


David Roberts


Like a household budget, Saul.


Saul Griffith


Right. But that's because they think that they will pay the costs
and the households will receive the benefit and that that's not
revenue neutral —


David Roberts


Well the households pay f*****g taxes!


Saul Griffith


They don't understand that the households will take all that
savings, they'll spend it elsewhere in the economy and the
government will see back in taxes.


David Roberts


They're not lighting the money on fire.


Saul Griffith


David Roberts can we end with your Jedi mind trick that convinces
Australia's neoliberal treasury that this is a f*****g great idea
and they should do it to save the world?


David Roberts


Yeah. I mean, this, I feel like, is in the wake of IRA, even in
the US. But also here, definitely: This is sort of one of the
last barriers to truly good policy, is just breaking this notion
that the government has, like, this box of money, and when it
spends it, it's gone. And then the government's broke. Like, no
household behaves that way, no business behaves that way, no
growth enterprise is revenue neutral. And why would it be? And so
you give money to households, they flourish they spend money —


Saul Griffith


Government flourishes.


David Roberts


They pay taxes.


Saul Griffith


Here's an extraordinary thing that I —


David Roberts


Spend money to save money, spend money to make money.


Saul Griffith


I'm not sure if this is a useful idea but I keep getting stuck on
this: Australia's housing stock is worth about $100 trillion. It
would cost you far less than $1 trillion to electrify all of the
households, including all of their vehicles, over the next 20
years. You'd be zero emissions by 2040 and for less than 1% of
the value of the asset base. We're there. Like absolutely, you
don't need to be a banker to know that we can afford to do that.


David Roberts


Yes. All right, well, let's finish on that note. One last gut
punch to neoliberalism. Seems like a good place to wrap up.
Thanks so much for coming, Saul. It's been a delight doing this.
I've meant to have you on the pod forever. We'll probably do it
again sometime, but good luck cracking heads in Australia,
getting people — and I hear rumor has it that big things are in
the works relatively soon. October-ish, November. Albanese is
going to DC, I think, in October, November and may or may not
announce something.


Saul Griffith


We will either see something — the announcements in America will
likely be, you know, we'll give you cheap lithium if yo give us
big monster trucks.


David Roberts


Oh Jesus.


Saul Griffith


My KPIs are, or OKRs, I can never remember the difference between
the two damn things. Neoliberals invented both of them. But my
KPI is federal budget of next year. Are we fixing the tax code
structurally in a way that enables this to happen? And then what
is the platform climate-wise for this government for the next
election? And they will be the political moments where we know
we've either done a better job of the IRA or whether we've been
lackeys to the gas and coal industry and we're merely trying to
squeeze a few extra dollars for some multinationals out of there
—


David Roberts


Ha, right. All right, with that, we'll conclude. Thanks so much,
Saul. Thank you for listening to the Volts podcast. It is
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