EV Boom vs. Climate Doom
Tom Steyer on combating climate change via capitalism, silly plastic straw bans, and citing the environment as a reason not to procreate
Tom Steyer earned his millions, very nearly billions, as an aggressive investor who identified trends before others could. He became a large political donor, and founder of NextGen America, a Political Action Committee and advocacy group focussing on his greatest area of concern, the environment. On a platform emphasizing environmental concerns, Steyer ran for President in 2020. Steyer is out with a new book “Cheaper, Faster, Better: How We'll Win the Climate War.” I spoke to Steyer on the Gist, the following includes portions of that interview, edited for length and clarity, that did not air on the podcast.
Environmentalist can mean many things, but you're very practical––and even if you don't explicitly say this, you obviously view our environmental dilemma through the lens of risk, bets and resource allocation. Do other environmentalists have that orientation?
Tom Steyer: I'm a professional investor. I've been a professional investor since I was 22 years old, and that's what I've done as a career.
Being an investor means you use the word bet, but it is really about assessing the future and thinking: What's going to happen? What can I do to be part of the good things? What can I do to avoid the bad things? What can I do to make the good things better? That is a way of thinking about the world, and also allocating resources as you said, that's completely alien to a way of thinking for most human beings. That's just not how they think. An awful lot of people come to environmental problems from a scientific standpoint, and say: here's the problem. As an investor, okay, that's the first point to get to. But the real point is: How do we solve that problem and turn it into an opportunity for us to have a better life?
Where has your orientation led you to insights that others might not have?
Well, I think that one of the things about being an investor is you have to be, as you said, completely practical. If you think about the title of the book, Cheaper, Faster, Better, it's saying producing a product that works is not nearly good enough. You know, for a long time, people were pushing for solar power, but it was much more expensive than fossil fuel power. In this world, no one is going to buy much more expensive commodity energy to be nice. And that's exactly what happened: people didn't do it. What happened was the cost curves crossed.
If you think about the story that I tell in the book: one of my best friends, a traditional business Republican who loves cars, when I first met him at the age of 18, put me in his car took it up to 100 miles-an-hour. He had been driving an expensive European sports car and traded in for a Tesla. And I said, “Matthew, basically you're trying to save the world.” And he was like, “Absolutely not. This thing has pickup like you can't believe. It handles really well.” And his basic point, my point, is cheaper, faster, better; that we're gonna win this because people are gonna buy things that they want and that serve them, and that we're gonna have to come up with an awful lot of innovations. We're gonna have to build an awful lot of companies and businesses because business and profits scale. That’s how you solve a global problem.
So let's take Teslas or EVs. As of 2023, 0.83% of all registered cars were electric vehicles. We're going to have the internal combustion engines in cars for years and decades. So then you have a problem: What do we do in terms of extracting the oil to power those cars? Do we stop production? Or do we acknowledge we have to keep extracting oil and extracting fossil fuels?
Let me just disagree politely with your assumptions. You're using the amount of cars that are existing EVs. Is that in the United States or worldwide?
The U.S.
Right, so let me say the US is not the world, particularly around cars. That in fact, the way that new innovations, in general, for the last couple hundred years have worked is it follows kind of an S-curve: It takes a long time for them to be better than the status quo technology––whether it's whale blubber or kerosene or now oil and gas––but when the cost curves cross, and when the new technology is legitimately better, it goes up almost vertically. If you look for instance in the largest car market in the world, which by the way is China, 30% of the cars sold last year were EVs. The expectation is that 80% of the cars sold in five years in China will be EVs and that that will be true around the world because they're so much cheaper to buy, so much cheaper to maintain, and so much cheaper to fuel up that we literally cannot afford to do the amount of emissions, pollution, associated with fossil fuels for the next 30 years. We literally cannot afford it. The events coming all connected by the fact that the climate is changing are incredibly expensive to human safety, human incomes, and to our future.
So my question is––and I read all the stuff in your book about whales and blubber including excerpts from 1858 shipping publications that weren't on the right side of history, unless maybe you're a whale––but the point is: this is a hard choice. This is a hard choice thrust upon us, and even if we say, one day things will get better––and I believe you––what will we do in the meantime? We do need to extract a ton of oil, sadly, unfortunately, in the interim, don't we?
I absolutely agree with the idea that we're not getting off fossil fuels in the short term or the medium term. I understand that. But I also understand that we literally cannot afford not to reduce emissions very substantially between now and 2030 and really get to net zero by 2050. So when we think about what does that mean, what you're really talking about is oil reserves, oil and gas reserves. We literally cannot afford to produce half of the proven oil and gas reserves in the world right now. But the point of the book I wrote is we need to win in the marketplace. Right now, I would bet there are EVs sold in China for $8,000. We're just at the beginning of dropping the cost of electric vehicles, and the reason for that is an electric vehicle is kind of a car surrounding a battery, and that's it. It's really a big battery. And the technology in batteries is going through revolutions. We will have two revolutions in batteries this decade. That’s gonna bring down the cost and drive up the range of EVs so that this is gonna be a superior technology in terms of cost and performance. And that is the S-curve, when somebody sits there and goes, “it's cheaper, it's faster, it handles better, it's way easier to control.” It has to happen this way, Mike, and the reason that I'm optimistic is that I'm looking at these technologies every day as an investor.
Yeah, I'm optimistic too. In fact, I was looking into buying a Chinese EV sold in Mexico to see if it would be street legal here. They don't allow it, but it is so promising. So I am optimistic, but optimism doesn't get people to work, right? You don't put 87 hope-tane gas in your car. In the interim, is there evidence that were we to ban drilling or stop excavation for oil in the United States, it would in some way drive down the demand for oil?
So let's step back for a second, Mike, and talk about the different forcing functions in how we go forward. The assumption that you're making, which is a commonly made assumption, is that the forcing function is that we need to have fuel to drive our economy, and that that is the most important thing, and if we don't have that, it's devastating for us. Let me say, we do have alternatives that are, if they either aren't cheaper, faster, and better now, they definitely will be. I can go through each one of the cases for fossil fuels, but the forcing function is really about the very near term. You're talking about a maybe five-year problem, and you're talking about a maybe 50-year solution.
Do you think the environmental movement has been too beset by doomerism?
Definitely. I think the reason I wrote the book was I felt there were two very common, what I think of as, misapprehensions. One is that fossil fuels power this economy and always will, and that just can't be true and isn't true. And the second one is we're in a doom loop of climate disaster, and that we can't get out of it, so we should just throw up our hands. This is a big problem, but it's a problem we definitely can solve, that we have to solve, and we definitely will solve it. It's just a question of how fast we decide to do it and how fast we pull together to succeed.
Do you think some climate activist groups that share your goals, like Extinction Rebellion and Youth Vs Apocalypse, should change their framings, or even their names?
I think that there's a big generational divide here, Mike. The people in Extinction Rebellion are mostly young people, and they are furious. They are furious because they think that we are leaving them a world that may be uninhabitable, unsafe, and that includes a massive amount of suffering. They're angry about it because they feel like our generation––my generation, I'm older than you––has been very irresponsible and selfish and they're pissed.
I do think a lot of the messaging has overwhelmed the senses of the average 12 to 16 year old, and talk about the doomed environment has more of a detrimental impact than an inspirational impact.
Exactly! That's why I wrote the book, Mike.
And Hannah Ritchie, have you read her book? Or do you know about her?
Of course I know about her.
She's really trying to reclaim this. If we don't embrace the idea that you're articulating, which is that we can do big things, we can solve big problems, we always have––if we don't have that mindset, we won't be able to do it.
When did we start to think we're a bunch of losers? We're not a bunch of losers. This is a country that is amazing.
My own daughter said to me, “I don't think I want to have kids. I don't want to bring kids into this world.” And I said, “Ev, be more optimistic. We can do this.” The idea of having kids is part of being in the future, part of preparing a better world, making a better world, and enjoying this world. I strongly believe that we have to have the attitude––let's bring a little swagger, for goodness sakes. We know how to do things, and we know how to succeed. And winning is the most fun thing you can do.
You're her dad. She drew lessons from you. If she's saying, I might not want to have kids, and she's exposed to all your research and thoughts on this, is the pull of climate doomerism just so powerful that it can't even overcome living in the Steyer home?
I don't think she feels that way now. She is somebody who is an investor in climate-related food, agriculture, and oceans, is getting involved in solutions, and is really working full-time in terms of trying to create companies that will help solve this problem; it’s something that I think has given her a lot of confidence. I don't want to speak for my daughter––she's a fully-formed adult who's got, trust me, a mind very much of her own––but I think that that was something which reflected an attitude of her generation. I honestly don't think it's true anymore, but my original statement was that the young generation is very, very angry, and they feel as if they have been left something that is unsafe. That is why I'm saying let's do it in the best way. Let's use capitalism, self-interest, and success to build the changes that we've got to make. Let's having a meaningful life, a meaningful country, and a meaningful goal.
So let's talk about capitalism. You got people to invest billions of dollars with you over the years for one main reason, you promised to make them money. So how do you, or how does one, talk to an oil company like Exxon or BP––gigantic players, extremely powerful, not just rich, but politically powerful––and level with them: you're going to have to make less money?
My attitude in all of this is there are going to be winners here, and there are going to be losers here. Change is here. That's capitalistism. If you persist in hanging on to the past in a competitive capitalist world, it doesn’t work out so well. Let me give you the example that you're probably familiar with. Probably the best businesses of the 20th century were newspapers. They were local monopolies. The only way you could advertise for a job, or a car, or an apartment, or just about anything, was to put an ad in the classifieds. So you had a local monopoly on advertising, it’s the greatest business in the world, they make a bunch of money, it's totally safe, they have political power, everything is great. It turns out they invent this thing called the internet, and you can now advertise online for almost nothing. If you asked newspapers when that came in in the late 90s, they would say “the internet is important, it's going to take away a lot of our growth, and it's going to be part of the classified advertising world going forward.” Yeah, it is part of the classified advertising: it's 100 % of the classified advertising. People thought newspapers ran on people paying 25 cents for a paper, but it was always break even on the paper, make the money on the ads. When the ads went away, the business went away, and that was the best business of the 20th century.
The world changes when new technology comes in, and when new ideas come in. Do I believe that it's possible for us to have a different economy powered by different things, even though from the late 19th century until now, it's been a fossil fuel world ,and the standard of living is incredibly closely connected with how much energy you have? Yeah, because I can look at the costs. I can look at how much solar costs compared to fossil fuels, as in way cheaper. I can look at how much wind energy costs compared to fossil fuels, as in way cheaper. I can look at battery costs down 80 % in the last decade, with a couple more revolutions in, not just cost, but in duration, and say, “yeah, we are at a place where we can make amazing changes that are better for consumers and companies.” That’s when capitalism really works: answering people's needs in an effective way, and scaling around the world. That's what we're trying to do.
I enjoyed the chapter in your book on having a good bullshit detector.
TS: Well, you're a New Yorker, of course you do. That's key to living in the city.
Yes. I wanted to ask you about, it's not exactly bullshit, but there are some aspects of the environmental movement like plastic straws, and, here's a big one and a sad one, personal recycling at home. In the case of plastic straws, they are such a tiny, infinitesimal, portion of the problem. When it comes to recycling it doesn't do what it is said to do. Do you think that these things have been overemphasized? Do you think that they've been cynically proposed by industry? Or do you put them in a sort of category where they're okay, and maybe they're a little virtue-signally, but as long as you keep things in perspective, then you should be fine?
Well, I do think that people have a responsibility to try and run their lives in a responsible way for their fellow citizens. I think that's important. But let me say that I agree. When you come to recycling, let's talk about plastic recycling. I've seen ads on TV in the last two weeks with companies talking about plastic recycling, or plastic-related companies, and how they're really serious about it, and how it's changing everything. It’s terrific. To be clear, in the United States, we recycle 6% of plastic. Six. That means 94% is not recycled. We know that plastic is in every cell in your body. We know it causes birth defects. We know that it's expected to ramp up. It's all over the world.
So when I think about if plastic is something which has a real health issue, and if we need to be an incredible amount better about it, that is absolutely the truth. Do I think that plastic straws are a very small part of this? Yes, I do. I think that plastic in the environment in a large part is already having results we don't really know. The basic point I'm trying to make in the book is this: we need systemic change. We don't need perfect people because we're not getting perfect people. You aren't, and I'm definitely not. We need to change things on a systemic, high level, so that, in fact, things change. The example that I used was that in World War II, people had victory gardens, and it showed that they cared, and that they were trying to have food grown so we could send more food to the troops in Europe and Asia. Okay. I get that, and it was important, but the other thing is we didn't make a passenger car in the United States for four years. We turned all of those plants to make tanks, ships, and planes. That is a society that decides we have to win, and it's not a choice. We have to win. What are people proud of? It's when we come together and do something really good together.
It’s true, and it gets me thinking that the shared sense of sacrifice, even of a victory garden, which was mostly symbolic––and what it did was it made people feel good. The anathematization of the plastic straw on the other hand seems to me yet another bummer, the accretion of which maybe convinces a young woman in her twenties not to have children. And you know this, you know the media better than anyone––you ran for president, you tried to break through with messaging, you saw it upfront. But it does seem to me that there is much more of a negative sheen on this challenge than is constructive.
I'm trying my heart out to show that there is a positive, wonderful side to this. We’ve got to get away from all the blaming and naming and shaming. This is about us pulling together and accepting each other. People actually are good-hearted and are trying to do the right thing. \
I did want to ask you a question about running for president. How much of a rocket ship to recognizability was it? And, is that a good thing or bad thing for presidential politics in general?
I don't think it's bad in a duopoly to occasionally have new ideas thrown in from the outside. I'd like to believe that there are people who are not lifelong politicians who occasionally think about the United States and have something to add. That doesn't bother me in the least. I think the truth is we need some new ideas. My whole point in that campaign was to say, “let's stop talking about the same old things that we're not going to act on, and let's talk about the things that are really happening in America, and that are affecting American lives.”
I think RFK Jr. would say the same thing though, wouldn't he? I don't know what you think about his run.
You know, for everything I just said, I am, for my sins, a Democrat. I believe that this is honestly a two-person race, for whatever reason, and I feel that that's where this is going, and that's a choice that I was very happy to accept.