The US Needs A Marshall Plan For Itself, Not For The Developing World – CleanTechnica

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In the past couple of months, an idea has been percolating through Washington and entities dependent on the United States’ good will that the US should reach back into history and create a Clean Energy Marshall Plan for developing countries. This idea is US economic wunderkind Brian Deese’s brainchild, or at least he’s the high-ish profile figure most advancing it. Its arrogance, and even desperation, given current realities is fascinating.

As a reminder, especially for Americans, who tend to have a bit of a history challenge, in the aftermath of World War II in 1948, the United States launched the original Marshall Plan, officially known as the European Recovery Program (ERP), a sweeping initiative aimed at rebuilding the shattered economies of Western Europe. A big sales pitch for it was containing big-C communism, a staple in US foreign policy and media coverage since 1945 regardless of the ground reality. Named after Secretary of State George C. Marshall, the plan responded to widespread devastation that left factories, infrastructure, and agricultural systems in ruin, while economic instability threatened to make Europe susceptible to the spread of communism.

The US provided $13 billion (equivalent to over $150 billion today) in aid to 16 nations, including the UK, France, and West Germany, to revitalize industrial production, restore trade, and stabilize currencies. By 1952, the program had succeeded in significantly boosting economic recovery, while also fostering political stability and cooperation, laying the foundation for future European integration and the containment of Soviet influence during the early Cold War. Oh, and building a big market for US-manufactured products.

Under President Obama, Deese served as a senior advisor to the president while in his mid-30s, where he focused on climate change, energy policy, and conservation. His work was crucial in the development of the Paris Climate Agreement, as well as in the closure of coal-fired power plants and boosting renewable energy. More recently, Deese served as the Director of the National Economic Council (NEC) under President Joe Biden from January 2021 to February 2023. In this role, he was one of Biden’s top economic advisors, responsible for coordinating economic policy and the administration’s economic recovery plans, including the response to the COVID-19 pandemic. He played a key role in helping develop and push forward Biden’s “Build Back Better” agenda, which focused on infrastructure investment, climate action, and equitable economic growth.

To be clear, I’m not asserting that Deese isn’t trying his best to come up with some way out of the mess the US is in and fight climate change. Deese has done great work in trying times for two good US presidents, being part of finding viable and sellable, if sub-optimal, solutions for large issues, making the country slightly less bad at them. My criticisms are reserved for the results, not the intent.

In late August, he published a piece entitled The Case for a Clean Energy Marshall Plan in the serious outlet Foreign Affairs. That magazine has a small but very influential readership of 200,000 to 250,000, both within the USA and globally. It is highly regarded for its thought leadership and is considered a key publication in shaping discourse on foreign policy among elites and decision-makers in both the US and abroad.

Deese’ article argues that the United States should launch a new Marshall Plan for the global transition to clean energy, drawing lessons from the original Marshall Plan’s success in rebuilding post-World War II Europe. It outlines how today’s challenges, such as a fragmented global order and competition with China, mirror those faced in the 1940s, and positions the clean energy transition as the most important planetary and economic opportunity.

The US could leverage its industries and innovation to promote clean energy globally, benefiting its economy while aiding developing nations most vulnerable to climate change. By scaling investment in technologies like nuclear, geothermal, batteries, hydrogen power, and carbon capture, the US could secure leadership in global energy markets, create resilient supply chains, and counter China’s Belt and Road Initiative. The plan would require public financing, market-based strategies, and international partnerships, echoing the pragmatism and economic self-interest of the original Marshall Plan.

Deese isn’t remotely satisfied with that opening salvo, he’s taking the idea on the road. Recently he was in Canada’s capital, Ottawa, for the Canadian Climate Institute’s annual conference and pitched it there. The Institute is an independent research organization focused on climate policy. Its annual conference brings together policymakers, industry leaders, and experts to tackle Canada’s climate challenges. The event features high-level discussions on decarbonizing the economy, clean energy innovation, and balancing sustainability with economic growth. With a focus on evidence-based research and policy recommendations, the conference provides a key platform for shaping climate action in Canada and fostering collaboration among various sectors to meet national and global climate goals.

Given Deese’ long time in the corridors of power, influential roles in energy and climate initiatives in two administrations, and close relationships with Democratic Presidents and other senior politicians and power brokers, this is not an idea that can be dismissed as the musings of an armchair policymaker. It is a domestic and foreign policy framework that is undoubtedly being read and taken seriously not only in Washington, but in capitals around the world. As such, it deserves careful consideration, as it might form the basis of actions in a Kamala Harris Presidency. (It might also be considered as a job application for an even more senior role in a Harris Administration.)

It’s certainly a much bolder and more easily sold vision than Harris’ platform related to climate change and the rise of China. As I and others noted in assessing the Democratic platform on climate change recently, the difference is so stark that climate change is almost being avoided, as people for whom that’s important have only one choice, and people who don’t consider it important could be turned off. This might even be a Harris proxy climate strategy that’s deniable, signaling where the US would go without becoming a campaign issue. Harris’ strategy related to China is best understood as wonky.

Let’s start by asking if conditions for the original post-WWII Marshall Plan and the proposed Clean Energy Marshall Plan are highly similar, as Deese suggests. Spend a moment on each question. I know my answers to each and have published on many of them, but you should consider each thoughtfully.

Are the targeted countries lying in ruins, devastated by the most destructive war in the history of humanity? Are the targeted countries full of people that more than not consider Americans to have been instrumental in delivering them from a horrific war by a fascist, expansionist conqueror? Are the targeted countries full of white people that influential Americans identify with?

Is the United States overflowing with manufacturing capacity desperate for a new market now that bombs, tanks, war planes, and jeeps are no longer in demand? Does the US have the only major manufacturing capacity in the world not bombed back into the Stone Age? Is the United States a leading manufacturer of solar panels? Batteries? Wind turbines? HVDC transmission components? Electric cars?

Is the United States facing a country which doesn’t accept market capitalism and which is expanding with military force, political ideology, and funded insurrections? (Be careful on this one.) Is the United States united in a patriotic moment of collective pride over their defeat of fascists in Europe? Is the United States remotely united in assisting foreign countries with… anything?

Are the targeted countries much more like the banana republics and other countries the US has exploited, manipulated, overthrown, and invaded in the past 150 years? Are developing world countries excited to invite the US in?

Is there a major country which has been implementing exactly such a plan for over a decade? Does that country have massive industrial capacity building the clean technologies required and is looking to expand its markets? Is that country viewed much more positively globally than the Soviet Union was, and in fact than the US is today? Has that country been providing reasonable terms for debt financing for infrastructure along with reasonable refinancing and debt relief as necessary? (Read this Harvard Business School research before answering this.) Has that country already had three-quarters of the countries in the world sign up for its plan?

The context and conditions for success for a US-led Marshall Plan focused on clean energy, in other words, are radically different than they were in the aftermath of World War II. The US doesn’t have excess manufacturing capacity demanding markets, and countries begging for rebuilding and grateful to American GIs.

What other things are worth considering in this assessment of this odd, nostalgic, unrealistic idea that’s being promoted?

Is the US leading the world in health outcomes? Is the US leading the world in value for money for healthcare provision? Is the US leading the world in exactly the wrong healthcare metrics, bankruptcies due to medical bills and declining life expectancy?

Is the US leading the world in educational outcomes? Is the US leading the world in STEM graduates? Is the US leading the world in PhD graduates? Is the US leading the world in cost of education and education-related debt? Is the US leading the world in patents? Is the US leading the world in income equality? Is the US leading the world in social and economic mobility? Is the US leading the world in housing the un-homed? In the US leading the world in harmonious race relations and an inclusive society?

Is the US leading the world in decarbonization? Is the US leading the world in electric vehicles? Is the US leading the world in freight decarbonization? Is the US leading the world in electrification? Is the US leading the world in carbon dioxide emissions reductions? Is the US leading the world in methane emissions reductions? Is the US leading the world in carbon pricing? Is the US leading the world in carbon border adjustments?

Is the US leading the world in mining and acquiring critical minerals for electrification? Is the US leading the world in processing rare earths and other critical minerals?

Is the US leading the world in climate resilience? Is the US leading the world in climate adaptation strategies including managed retreat? Is the US leading the world in rewilding?

Is the US leading the world in terms of any climate policies or technologies? Is the US leading the world in anything that the rest of the world actually wants? Or is the US leading the world in fossil fuel industry growth, emissions, and exports?

There’s a reason that Deese’ plan leans on carbon capture, nuclear energy, geothermal, and hydrogen for energy. The US can be said to be leading, having had historical leadership, or at least have a chance of being relevant in those purported solutions.

Unfortunately, they mostly aren’t big parts of any realistic solution set. Carbon capture is a fig leaf for the fossil fuel industry, best understood as diverting money from real solutions into enhanced oil recovery schemes and as an easy sell to weak thinkers who would love to believe that someone will clean up their filthy homes for them.

Nuclear energy is a rounding error technology that is incompatible with free market capitalism, requiring massive state ownership, funding, and management to thrive. Even in countries such as China, a mischaracterized boogey-man in Washington across party lines at present, nuclear is barely moving the needle compared to wind, water, solar, storage, and transmission, and despite recent press, nothing is changing there.

Hydrogen for energy is a thermodynamic and economic dead end, requiring massive subsidies in perpetuity to compete with clear alternatives, mostly direct electrification. That Deese is fully inside the hydrogen hype bubble is indisputable. His fingerprints are all over the IRA’s subsidies and the infrastructure bills, where hydrogen for energy is mistakenly seen as a solution, not a decarbonization problem.

As for geothermal, this is best understood as the hope that deep geothermal will actually pan out, something that might even be true. I’m skeptical, personally, that it will be more than a rounding error in energy globally even if it can be made to work effectively and efficiently over extended periods of time. While I haven’t published on deep geothermal, I’ve spent time looking at it, including professionally, as well as many other subsurface energy and construction technologies. There are a lot of failure conditions which are non-trivial and long-tailed risks far above those experienced by wind and solar. The US does lead the world in drilling and horizontal drilling at depth, as those are essential technologies for the fracking and shale oil industries which are now emitting more methane than any other country’s oil and gas industry globally. The ability of these technologies to unlock deep geothermal and underground pumped storage are being oversold, in my opinion.

What is actually happening with these oil and gas derived drilling technologies globally? India and China are both working to unlock domestic shale oil and gas with them, and seeing the same poor results of short-lived output and massive energy requirements, of course. In other words, the technology is already being exported, part of the set of reasons for the US oil and gas industry’s imminent and significant reductions in the next couple of decades.

Deese flexes in some very odd ways.

“The clean investment boom is turning novel technologies into market mainstays: emerging technologies such as hydrogen power and carbon capture now each receive more investment than wind.”

The US is lagging badly on wind energy, with zero new offshore wind farms commissioned in the past four years compared to massive deployments in Europe and China, and when compared to China, relatively minor increases in onshore wind energy deployments. Bigger investments in non-solutions isn’t something to brag about, especially when, as Deese notes, wind energy is fully commercialized and a mainstay of actual decarbonization.

In reality, the sole American utility-scale wind turbine manufacturer, GE, is dropping rapidly in terms of rankings in global capacity deployments. It’s actually not even GE anymore, having split into three smaller firms as Jack Welch’s disastrous financialization and offshoring strategies led to their inevitable conclusion. A real American wind energy industry would be something to work toward, but Reese is simply ceding this entire space to European and Chinese manufacturers.

“For some goods, such as electric vehicles, batteries, and solar panels, China explicitly aims to dominate global manufacturing.”

Yes, and Reese’ Marshall Plan has exactly nothing in it for solar energy. No attempt to build a US solar industry, just an assertion that China’s long-running and completely transparent decades-long policy to dominate the industry — as well as other aligned industries including wind energy, batteries, and electric vehicles — is bad. To be clear, China saw where the ball was going to be as early as 2001, and ran to that point. The US, in the meantime, chased balls through the markets, and often completely the wrong balls like carbon capture and hydrogen for energy, never running to where the ball would be.

Solar energy capacity additions in the US have been comparatively flat for the past four years as well, with the uptick in 2023 hopefully a sign of progress.

“Manufacturing investment in the battery supply chain went up nearly 200 percent over the same period [2022 to 2023].”

From approaching nothing compared to China, to approaching nothing compared to China. CATL, the world’s largest EV battery firm, has over 20,000 people in research and development alone, more than the combined workforces of every battery firm in the US combined. As CATL’s CEO points out, China has more than 50 graduate-level battery programs in universities and the US has barely any, with graduates preferring to focus on finance and apps.

The US has ignored the critical minerals industry for decades, preferring to massively expand domestic oil and gas extraction. Meanwhile China, as ever running to where the ball will be, has been tying up critical mineral reserves globally and building the supply chains and processing necessary for them. Deese’ plan is to get a coalition of the willing to try to cobble together what remains into a supply and processing chain that isn’t 80% dependent on China. The cynical might assume that the US will try to find developing countries to host the processing with its attendant pollution, and certainly that the US is unlikely to go to China for its massive intellectual property lead on cleaner minerals processing, something it’s also been focusing on for a decade and a half or longer.

On the point of education, a lot of the hundreds of thousands of jobs Deese’ plan asserts will be created require advanced STEM degrees and highly skilled trades. The US public education system has been gutted, STEM education is falling, and STEM PhDs from American universities have been dominated by foreign students, with China having a huge share of them. In 2022, almost 50% of PhDs in US universities went to immigrants and the large majority didn’t stay in the US after graduating. In 2020, 17% of STEM PhDs went to Chinese foreign students in the US. Now those Chinese academics, engineers, and researchers are returning to China in droves because the US has become so explicitly hostile to them. The US isn’t hostile to just Chinese students, but all Asians who are lumped in together with the Chinese, and most all non-whites as well, given the return of explicit and overt racism in the country in recent years, including from a former President who is trying to return to power. Now their countries of origin are often thriving, and the students are just going back.

Chinese universities are now among the best in the world, and Chinese students are increasingly staying home because they can get a better education there. China has been graduating far more PhDs per year in STEM fields domestically than all US STEM PhDs for years. That shows up in other places as well, notably publications and patents. Chinese academics and researchers are publishing far more top quality research and locking up international patents than Americans, once again something that’s been happening for years. That’s true across all STEM fields, including AI.

On the skilled trades front, there is some good news in the US. Apprenticeships in the space have increased substantially in recent years with federal programs recognizing that there are pathways to the middle class that don’t require university degrees after decades of neglect in the space. The US has a goal of a million new apprenticeships over five years. Of course, that compares to the hundreds of millions in the labor force of China, as well as Europe’s long-standing focus on skilled trades. That the US is rebuilding a competent labor force doesn’t mean it has one for the targets Deese outlines. And unfortunately, they are required just to maintain and adapt the existing infrastructure, which is the most expensive in the world because of the massive sprawl in the country.

Historically, the United States has supplemented its domestic quants, hedge fund bros, and aspirant Silicon Valley app billionaires with a strong immigration focus for people to do deep tech and labor. However, China isn’t the only country feeling the US chill on foreign workers and immigration in general. This is part of a larger trend in the west as climate change destabilizes fragile countries like Syria in 2014 and Central America since, leading to floods of refugees across borders into developed countries.

The combination has led to a very serious question of where exactly skilled resources will be found for these industries that Deese is proposing to scale and export globally.

Further, it’s questionable how many of these targets will deliver significant US jobs in any event. Exporting deep geothermal means drilling in foreign countries, not building a billion solar panels or batteries domestically. Exporting nuclear means decade-long megaprojects in foreign countries, not building a million wind turbines domestically. Exporting carbon capture and storage means building pipelines — likely not with US steel — and drilling sequestration sites in foreign countries, not building millions of electric cars domestically.

Regular readers may have understood where this is going, to American Richard Rumelt’s kernel of good strategy, articulated, explained, and exampled in his book, Good Strategy / Bad Strategy. A good strategy has to start from an acceptance of reality, warts and all. Then policies based on the reality to exploit it for benefit and avoid the risks of it have to be formulated. And then action plans based on these gimlet-eyed realities and policies can be created and have a chance of success.

Answering all of the questions above clearly and without mythologizing, and looking at the reality of the current situation in the US, makes it clear that what the US really needs is a Marshall Plan for itself, one that builds massive amounts of wind, solar, storage, and transmission, especially in depressed economic regions. A plan that weans the country off of the fossil fuels it’s addicted to consuming and selling globally to devastating climate effect.

A plan that reinvigorates public education that includes accurate and inclusive history lessons, civics, and STEM curriculums. A plan that creates skilled workers for both the knowledge economy and the trades. A plan that doesn’t require massive personal debt to gain the education and skills required for gainful employment. A plan that leads to a surfeit of talented, trained Americans to build the products of the future. A plan that provides gainful employment opportunities and economic mobility to the bottom 80% of income earners.

Of course, the US saw the development of a clear plan for exactly that within the past 20 years. In the mid-2000s, thoughtful Americans started figuring out where the ball was going to be and what would be necessary to bring all Americans along on the journey. The plan that emerged was called the Green New Deal, and it was castigated heavily by people on both sides of the aisle. Yes, the US actually had a good plan that was aligned with actual reality and threw it aside, to its lasting detriment and the world’s. (Something that causes me deep and abiding perplexity is that the New Deals are at the same time one of the most effective domestic programs in the history of the world and the basis for an extraordinary amount of US wealth in the second half of the 20th Century, and are also considered by a plurality of Americans to be creeping communism.)

The US has now become the world’s largest extractor and exporter of fossil fuels, leading by a long, long way in both oil and natural gas, and one of the handful of top exporters of coal. The Inflation Reduction Act and the Infrastructure Bill are providing a lot of money to the domestic fossil fuel industry, wasting money on hydrogen for energy and carbon capture, skewing markets into dead ends by intentionally picking losers due to massive fossil fuel industry lobbying.

If you think that’s an inaccurate portrayal, I’ll point out that Congress’ act mandating the creation of a hydrogen strategy for the country explicitly calls for making hydrogen from US fossil fuels and preserving US fossil fuel infrastructure, along with assigning the strategy to the US Department of Energy instead of Commerce, which deals with industrial feedstocks, the category hydrogen actually belongs in.

Is it entirely possible that Deese and his closest advisors agree on all of the above? It’s possible, but unlikely. The degree of US self-mythologizing is very strong and its perspectives on multiple subjects such as China are riddled with psychological projection, xenophobia, deeply misplaced anti-Communist zealotry (China is succeeding globally in selling products on markets under globalization and has incredibly competitive domestic markets, and has for decades), and other cognitive biases that they don’t rise above. They’ve replaced their once world-leading State Department with ambassadors for political donations, with plum assignments such as Tokyo or Paris going to the highest donors to political parties of both persuasions. As a result, their understanding of the world outside of their borders is diminishing, not growing, much to their detriment and, again, the world’s.

Assuming that Deese and his coterie do understand all of this, assuming that they do understand that most countries in the world are deeply leery of more US meddling in their economies and politics, assuming that they do understand that the world doesn’t consider the US to be remotely a climate leader and in fact a deep laggard with the hardest to decarbonize economy in the world, assuming that they understand that the developing world has been very, very clear about what they do need — money to decarbonize with few strings attached — then why in the world would Deese come out with this nostalgic fantasy with very limited chances for success? Especially as the US has not contributed what is considered to be its fair share given income and total greenhouse gas emissions to the US$100 billion decarbonization fund for the developing world stipulated in the Paris Agreement.

It’s probably because they know very well that an actual Green New Deal, what is really necessary for the US, is completely unsellable. They know that most Americans have no interest in reality related to the US or the world. They know that most Americans arrogantly assume the rest of the world wants more of the US. They know that most Americans assume the US is leading on all of the fronts where data shows it’s clearly falling further and further behind, including behind many developing countries. A useful plan that actually addressed the issues would be unsellable, as proven by the failure of the useful plan that actually addressed the issues.

And so, the Clean Energy Marshall Plan. It’s immensely sellable inside the United States, even if outside its borders it looks like arrogant failure in the making, American hubris. Boomers will love it because it will remind them of the days when America was leading the world and when Americans were actually welcomed with open arms globally. The fossil fuel industry will love it because it’s all about their technology and products, with carbon capture on fossil fuel emissions, drilling out carbon sequestration facilities, building pipelines for carbon dioxide all over the place, making lots of blue hydrogen from their fossil fuels and exporting their deep and horizontal drilling expertise while pretending it’s for geothermal energy.

To this point, Deese leans into the industry, saying “the most important tool the United States wields is the Strategic Petroleum Reserve,” and as noted, touting carbon capture for fossil fuels and its fossil fuel drilling technologies. It’s notable that oil is mentioned far more times than wind or solar. The Plan is a paean of praise to the industry that’s massively increasing domestic and global greenhouse gas emissions, and a promise that the good times will keep on rolling, even though they won’t.

However, the Marshall Plan is such a beloved, if long distant in the past, success of US policy, that innumerable new Marshall Plans have been proposed, something Deese acknowledges, saying “gauzy invocations of the Marshall Plan often induce eye rolling, and with good reason.”

Still, the Clean Energy Marshall Plan may be the only thing that can be sold domestically, even if its success is incredibly unlikely. However, it says nothing about dealing with all of the educational, health, and equity problems that are leading to the US thrashing itself to pieces and declining in world standings. Without building a healthy and educated domestic workforce that can live on the money they make from their work, it’s all for nought. The country will keep being split between leaders trying to make things better — and the Democratic Party, Biden, Harris and Deese are clearly among them — and leaders exploiting the fractures to give tax breaks to the top 20% at the expense of the US and the world, i.e. Trump and the current Republican Party.