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Widespread federal layoffs bring even more uncertainty to the DAC hubs program.
Grant Faber suspected his short tenure as the program manager for the Department of Energy’s direct air capture hubs initiative was up when he saw an article circulating that the department was set to terminate up to 2,000 employees — generally those who were new to their jobs. When he hadn’t received any news by the end of the day on Thursday, February 13, he told me he felt a sense of “anticipatory survivor’s guilt.” But it wouldn’t last long.
“I woke up Friday morning and I was locked out of all my systems, and I had to get my termination letter emailed to my personal email address,” Faber told me. “It more or less just said it’s in the public interest to do away with your job.”
President Trump's campaign to fire federal workers has hollowed out the DOE's nascent Carbon Dioxide Removal team, which sits within the Office of Fossil Energy and Carbon Management. When Trump first took office there were five employees on the CDR team, which helps to oversee implementation of the $3.5 billion Regional Direct Air Capture Hubs program, Faber told me. Now, he said, there’s only one left.
Trump’s layoffs targeted probationary employees, i.e. those who had been hired, promoted, demoted, or reassigned within the past one to two years, who enjoy fewer job protections than those with longer tenures. Faber had been at his job for 11 months. His former boss, Rory Jacobson, was also terminated a few weeks ago, as he’d recently been promoted to a new role as director of carbon removal at the DOE. “To my knowledge, this was not about terminating people that were doing DAC work, or climate work, or even CDR work,” Jacobson told me. “This was just a gross termination of federal employees, career federal employees across the federal government that were on probation.”
But the cumulative effect of these layoffs certainly increases the air of uncertainty around the DAC hubs program, which thus far include two large-scale projects — the South Texas DAC Hub and Louisiana’s Project Cypress — as well as 19 smaller hubs in earlier stages of feasibility and design development.
The various hubs’ commercial partners, which include universities, oil giants, and DAC startups themselves, were already mired in the limbo created by Trump’s Day One executive order, which froze funding from the Inflation Reduction Act and the Bipartisan Infrastructure Law. That order also led to an effective communications embargo, which prohibits the DOE from discussing or taking action on things such as contract negotiations or personnel decisions with its external partners. These recent terminations just add to the confusion.
“We’ve had no communications with DOE for three to four weeks now,” the lead of one DAC hub in the feasibility study stage told me. “So we’re kind of just waiting to see what they tell us to do.”
In the meantime, awardees are frustrated and unsure where to turn, Jacobson told me. “Should they reach out to their congressperson and try to get them to advocate on their behalf? Do they send a letter to the White House? What is the next step to try and make things move for their projects?” These doubts pose a big problem for startups with novel technologies trying to build out large infrastructure projects, as they generally have smaller margins, less patient investors, and thus less room for error than industrial stalwarts with proven strategies. “Especially for these first-of-a-kinds, they are working on pretty dire timelines for project finance,” Jacobson said.
The DAC hubs were already off to a slow start, according to Jacobson, who told me that the $1.2 billion from the initial funding opportunity issued at the end of 2022 took much longer to get out the door than anyone hoped for. Project Cypress didn’t see any of its initial $50 million award until March of last year, and the South Texas hub had to wait until September for the same funding. Jacobson chalked up the delays to the fact that the awardees are generally relatively early-stage startups that have yet to build significant infrastructure projects, and that the DOE is unfamiliar with negotiating such large-scale proposals.
Thankfully the DOE’s small CDR division isn’t the only government entity interfacing with the DAC hubs. The Office of Clean Energy Demonstrations is overseeing the buildout of the larger South Texas and Project Cypress hubs. And the National Energy Technology Laboratory is overseeing the implementation of the smaller DAC hubs, which are in the feasibility study and design planning stages. They’ve received a combined total of $121 million so far, though some are still negotiating the size of their awards.
OCED and NETL have also been impacted by the government-wide staffing cuts, however, potentially affecting their ability to pick up the slack from the decimated CDR team, which helped to provide top-level oversight and expertise. As Jacobson told me, his job was to “make a theory of change” that united the DOE’s various carbon removal initiatives, aligning them with the administration’s overall energy strategy, whatever it was. Absent this broader vision and explicit strategic direction, coordination among the various government agencies and implementation partners could suffer.
Day-to-day organizational details also stand to falter, Faber told me. In his role, he primarily provided oversight for the 19 smaller, earlier stage DAC hubs. “A lot of times, progress can come down to literally just things like getting signatures, getting approvals, communicating things to leadership back and forth,” he said. “If you don’t have a team in place coordinating those things at headquarters, everything’s just going to be more difficult.”
All that’s to say that further hold-ups could hit the hubs hard, especially the two large projects, which could eventually receive federal funding of up to $500 million to $600 million, provided the hubs can match that with funding from other sources. “If the DOE tries to back out or withholds funding and there’s uncertainty, then yes, it could severely delay or even kill some of those projects, or just result in massive reductions in their scope,” Faber told me. Perhaps other investors, such as climate tech VCs, would be willing to step in if this were to happen, he added.
Faber noted that one proof point that could give investors and other industry leaders confidence in this tech is the forthcoming large-scale DAC facility called Stratos from developer 1PointFive, a subsidiary of Occidental Petroleum, which is designed to remove up to 500,000 metric tons of CO2 annually and set to come online later this year. While Stratos is not a part of the hubs program, Occidental is using the same technology for its South Texas hub — tech that the oil giant brought in-house when it acquired DAC startup Carbon Engineering in 2023. And Heirloom, a DAC company that’s helping to lead Project Cypress, also recently raised a huge $150 million Series B round, showing continued investor confidence in this technology.
The DAC hubs program also still has billions of dollars yet to be awarded. A few months ago, the DOE announced a new $1.8 billion funding opportunity for mid- and large-scale DAC projects. Interested parties have already submitted their required concept papers and pre-applications, with full applications due at the end of July. But the current chaos puts applicants in a tricky spot, as the new administration’s commitment to the program overall is now somewhat of a question mark.
That being said, Jacobson told me there’s no indication that either Trump or Secretary of Energy Chris Wright is necessarily opposed to DAC, or carbon dioxide removal overall. “I still don’t think that we’ve seen a clear signal that this administration is not excited about CDR,” Jacobson said. “I have not heard Secretary Wright say — or other leadership at DOE say — that we are not still very enthusiastic about DAC hubs.”
DAC buildout also has an array of bipartisan benefits, both Jacobson and Faber noted, and hasn’t been a target of right-wing ire in the way that electric vehicles and offshore wind have. On the contrary, Republicans (and oil and gas companies) often argue for it as a way to continue fossil fuel production in a world that’s moving towards lower-emissions sources of energy. Not to mention the fact that these DAC facilities are mainly being built in red states, thus adding jobs and GDP in these regions.
“I thought these kinds of projects would get to keep going,” the DAC hub leader, whose project has had elements halted, told me. “They’re creating jobs, they’re investing in technology. I think they could be well aligned with unleashing America’s energy dominance.”
But these days, few Biden-era initiatives are safe. As Faber told me, if the Trump administration chooses to take a hard line stance against “any and all government funding and regulation, and anything that even has a tinge of being associated with climate,” then DAC is going to have a target on its back, even if some congressional Republicans have previously expressed support for it.
The budget reconciliation process will give us more insight into the specific IRA and BIL funding provisions Trump and other Republicans are looking to axe. That same process will also determine the fate of tax credits such as 45Q, which encourages carbon capture and sequestration. In the near term, Democrats are pushing to get language into the government funding bill (which is separate from the reconciliation bill and must pass in some form by mid-March) that would require Trump to deliver congressionally appropriated money. If that happens, funds would start flowing to the DAC hubs — but don’t bet on it. Republicans are adamant that they won’t stand for such limitations on presidential authority.
DAC grantees, government employees, and implementation partners alike will have to do the wait-and-see thing for a while longer. “I do believe that when we get out of this fog of the first 100 days of the new administration, when they’re just trying to move fast and break things and get big headlines and try to make it seem like they’re keeping campaign promises, maybe things will slow down,” Faber told me. “Maybe they’ll get distracted or just move on to a new issue other than dismantling the federal government.”
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When I reached out to climate tech investors on Tuesday to gauge their reaction to the Senate’s proposed overhaul of the clean energy tax credits, I thought I might get a standard dose of can-do investor optimism. Though the proposal from the Senate Finance committee would cut tax credits for wind and solar, it would preserve them for other sources of clean energy, such as geothermal, nuclear, and batteries — areas of significant focus and investment for many climate-focused venture firms.
But the vibe ended up being fairly divided. While many investors expressed cautious optimism about what this latest text could mean for their particular portfolio companies, others worried that by slashing incentives for solar and wind, the bill’s implications for the energy transition at large would be categorically terrible.
“We have investments in nuclear, we have investments in geothermal, we have investments in carbon capture. All of that stuff is probably going to get a boost from this, because so much money is going to be flowing out of quote, unquote, ‘slightly more established’ zero emissions technologies,” Susan Su, a climate tech investor at Toba Capital, told me. “So we’re diversified. But for me, as a human being, and as somebody that cares about climate change and cares about having an abundant energy future, this is very short-sighted.”
Bigger picture aside, the idea that the Senate proposal could lead to more capital for non-solar, non-wind clean energy technologies was shared by other investors, many of whom responded with tentative hope when I asked for their thoughts on the bill.
“The extension of the nuclear and geothermal tax credits compared to the House bill is really important,” Rachel Slaybaugh, a climate tech investor at DCVC, told me. The venture firm has invested in the nuclear fission company Radiant Nuclear, the fusion company Zap Energy, and the geothermal startup Fervo Energy. As for how Slaybaugh has been feeling since the bill’s passage as well as the general sentiment among DCVC’s portfolio companies, she told me that “it's mostly been the relief of like, thank you for at least supporting clean, firm and bringing transferability back.”
Indeed, the proposed bill not only fully preserves tax credits for most forms of zero-emissions power until 2034, but also keeps tax credit transferability on the books. This financing mechanism is essential for renewable energy developers who cannot fully utilize the tax credits themselves, as it allows them to sell credits to other companies for cash. All of this puts nascent clean, firm technologies on far more stable footing than after the House’s version of the bill was released last month.
Carmichael Roberts of Breakthrough Energy Ventures echoed these sentiments via email when he told me, “the Senate proposal is a meaningful improvement over the House version for clean energy companies. It creates more predictability and a clearer runway for emerging technologies that are not yet fully commercial.” Breakthrough invests in multiple fusion, geothermal, and long-duration energy storage startups.
Amy Duffuor, co-founder of Azolla Ventures and managing director at the Prime Impact Fund also acknowledged in an email that it’s “encouraging” that the Senate has “seen the way forward on clean firm baseload power.” However, she issued a warning that the unsettled policy environment is leading to “material risks and uncertainties for start-ups reliant on current tax incentives.”
Solar and wind are by far the most widely deployed and cost-competitive forms of renewable energy. So while they now mainly exist outside the remit of venture firms, there are numerous climate-focused startups that operate downstream of this tech. Think about all the software companies working to optimize load forecasting, implement demand response programs, facilitate power purchase agreements, monitor grid assets, and so much more. By proxy, these startups are now threatened by the Senate’s proposal to phase out the investment and production tax credits for solar and wind projects beginning next year, with a full termination after 2027.
“I think solar and wind will survive. But it's going to be like 80% of the deals don't pencil for a long time,” Ryan Guay, co-founder and president of the software startup Euclid Power, told me. Euclid makes data management and workflow tools for renewable project developers, so if the tax credits for solar and wind go kaput, that will mean less business for them. In the meantime though, Guay expects to be especially busy as developers rush to build projects before their tax credit eligibility expires.
As Guay explained to me, it’s not just the rescission of tax credits that he believes will kill such a large percent of solar and wind projects. It’s the combined impact of those cuts, the bill’s foreign entity of concern rules restricting materials from China, and Trump’s tariffs on Chinese-made components. “You’re not giving the industry enough time to actually build that robust domestic supply chain, which I agree needs to happen,” Guay told me. “I’m all for the security of the grid, but our supply chains are already very constrained.”
Many investors also expressed frustration and confusion over why Senate Republicans, and the Trump administration at large, would target incentives for solar and wind — the fastest growing domestic energy sources — while touting an agenda of energy dominance and American leadership. Some even used the president’s own language around energy issues to deride the One Big Beautiful Bill’s treatment of solar and wind as well as its repeal of the electric vehicle tax credits.
“The rollbacks of the IRA weaken the U.S. in key areas like energy dominance and the auto industry, which is rapidly becoming synonymous with the EV industry,” Matt Eggers, a managing director at the climate-tech investment firm Prelude Ventures, wrote to me in an email. “This bill will still ultimately cost us economic growth, jobs, and strategic positioning on the world stage.”
“The only real question is, are we going to double down on the future and on American dynamism?” Andrew Beebe, managing director at Obvious Ventures, asked in an emailed response. “Or are we going to cling to the past by trying to hold back a future of abundant, clean, and affordable energy?”
Su wanted to focus on the bigger picture too. While the Senate’s proposal gives tax credits for solar and wind a much longer phaseout period than the House’s bill — which would have required projects to start construction within 60 days of the bill’s passage and enter service by 2028 — Su still doesn’t think the Senate’s version is much to celebrate.
“The specific changes that came through in the Senate version are really kind of nibbling at the edges and at the end of the day, this is a huge blow for our emissions trajectory,” Su told me. She’s always been a big believer that there’s still a significant amount of cutting edge innovation in the solar and wind sectors, she told me. For example, Toba is an investor in Swift Solar, a startup developing high-efficiency perovskite solar cells. Nixing tax credits that benefit the solar industry will hit these smaller players especially hard, she told me.
With the Senate now working to finalize the bill, investors agreed that the current proposal is certainly not the worst case scenario. But many did say it was worse than they had — perhaps overly optimistically — been holding out for.
“To me, it's really bad because it now has a major Senate stamp of approval,” Su told me. The Senate usually tempers the more extreme, partisan impulses of the House. Thus, the closer a bill gets to clearing the Senate, the closer it usually is to its final form. Now, it seems, the reconciliation bill is suddenly feeling very real for people.
“At least back between May 22 and [Monday], we didn't know what was going to get amended, so there was still this window of hope that things could change more dramatically." Su said. Now that window is slowly closing, and the picture of what incentives will — and won’t — survive is coming into greater focus.
Rob and Jesse talk with John Henry Harris, the cofounder and CEO of Harbinger Motors.
You might not think that often about medium-duty trucks, but they’re all around you: ambulances, UPS and FedEx delivery trucks, school buses. And although they make up a relatively small share of vehicles on the road, they generate an outsized amount of carbon pollution. They’re also a surprisingly ripe target for electrification, because so many medium-duty trucks drive fewer than 150 miles a day.
On this week’s episode of Shift Key, Rob and Jesse talk with John Henry Harris, the cofounder and CEO of Harbinger Motors. Harbinger is a Los Angeles-based startup that sells electric and hybrid chassis for medium-duty vehicles, such as delivery vans, moving trucks, and ambulances.
Rob, John, and Jesse chat about why medium-duty trucking is unlike any other vehicle segment, how to design an electric truck to last 20 years, and how President Trump’s tariffs are already stalling out manufacturing firms. Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Robinson Meyer: What is it like building a final assembly plant — a U.S. factory — in this moment?
John Harris: I would say lots of people talk about how excited they are about U.S. manufacturing, but that's very different than putting their money where their mouth is. Building a final assembly line, like we have — our team here is really good, that they made it feel not that hard. The challenge is the whole supply chain.
If we look at what we build here in-house at Harbinger, we have a final assembly line where we bolt parts together to make chassis. We also have two sub-component assembly lines where we take copper and make motors, and where we take cells and make batteries. All three of those lines work pretty well. We're pumping out chassis, and they roll out the door, and we sell them to people, which is great. But it’s all the stuff that goes into those, that's the most challenging. There's a lot of trade policy at certain hours of the day, on certain days of the week — depending on when we check — that is theoretically supposed to encourage us manufacturing.
But it's really not because of the volatility. It costs us an enormous amount to build the supply chain, to feed these lines. And when we have volatile trade policy, our reaction, and everyone else's reaction, is to just pause. It’s not to spend more money on U.S. manufacturing, because we were already doing that. We were spending a lot on U.S. manufacturing as part of our core approach to manufacturing.
The latest trade policy has caused us to spend less money on U.S. manufacturing — not more, because we're unclear on what is the demand environment going to be, what is the policy going to be next week? We were getting ready to make major investments to take certain manufacturing tasks in our supply chain out of China and move them to Mexico, for example. Now we’re not. We were getting ready to invest in certain kinds of automation to do things in house, and now we're waiting. So the volatility is dramatically shrinking investment in US manufacturing, including ours.
Meyer: And can you just explain, why did you make that decision to pause investment and how does trade policy affect that decision?
Harris: When we had 25% tariffs on China, if we take content out of China and move it to Mexico, we break even — if that. We might still end up underwater. That's because there's better automation in China. There's much higher labor productivity. And — this one is always shocking to people — there’s lower logistics costs. When we move stuff from Shenzhen to our factory, in many cases it costs us less than moving shipments from Monterey.
Mentioned:
CalStart’s data on medium-duty electric trucks deployed in the U.S.
Here’s the chart that John showed Rob and Jesse:
Courtesy of Harbinger
It draws on data from Bloomberg in China, the ICCT, and the Calstart ZET Dashboard in the United States.
Jesse’s case for EVs with gas tanks — which are called extended range electric vehicles
On xAI, residential solar, and domestic lithium
Current conditions: Indonesia has issued its highest alert level due to the ongoing eruption of Mount Lewotobi Laki-laki • 10 million people from Missouri to Michigan are at risk of large hail and damaging winds today • Tropical Storm Erick, the earliest “E” storm on record in the eastern Pacific Ocean, could potentially strengthen into a major hurricane before making landfall near Acapulco, Mexico, on Thursday.
The NAACP and the Southern Environmental Law Center said Tuesday that they intend to sue Elon Musk’s artificial intelligence company xAI over alleged Clean Air Act violations at its Memphis facility. Per the lawsuit, xAI failed to obtain the required permits for the use of the 26 gas turbines that power its supercomputer, and in doing so, the company also avoided equipping the turbines with technology that would have reduced emissions. “xAI’s turbines are collectively one of the largest, or potentially the largest, industrial source of nitrogen oxides in Shelby County,” the lawsuit claims.
The SELC has additionally said that residents who live near the xAI facility already face cancer risks four times above the national average, and opponents have argued that xAI’s lack of urgency in responding to community concerns about the pollution is a case of “environmental racism.” In a statement Tuesday, xAI responded to the threat of a lawsuit by claiming the “temporary power generation units are operating in compliance with all applicable laws,” and said it intends to equip the turbines with the necessary technology to reduce emissions going forward.
Shares of several residential solar companies plummeted Tuesday after the Senate Finance Committee declined to preserve related Inflation Reduction Act investment tax credits. As my colleague Matthew Zeitlin reported, Sunrun shares fell 40%, “bringing the company’s market cap down by almost $900 million to $1.3 billion,” after a brief jump at the end of last week “due to optimism that the Senate Finance bill might include friendlier language for its business model.”
That never materialized. Instead, the Finance Committee’s draft proposed terminating the residential clean energy tax credit for any systems, including residential solar, six months after the bill is signed, as well as the investment and production tax credits for residential solar. SolarEdge and Enphase also suffered from the news, with shares down 33% and 24%, respectively. You can read Matthew’s full analysis here.
Chevron announced Tuesday that it has acquired 125,000 net acres of the Smackover Formation in southwest Arkansas and northeast Texas to get into domestic lithium extraction. Chevron’s acquisition follows an earlier move by Exxon Mobil to do the same, with lithium representing a key resource for the transition from fossil fuels to renewable energy sources “that would allow the company to pivot if oil and gas demands wane in the coming decades,” Bloomberg writes.
“Establishing domestic and resilient lithium supply chains is essential not only to maintaining U.S. energy leadership but also to meeting the growing demand from customers,” Jeff Gustavson, the president of Chevron New Energies, said in a Tuesday press release. The Liberty Owl project, which was part of Chevron’s acquisition from TerraVolta Resources, is “expected to have an initial production capacity of at least 25,000 tonnes of lithium carbonate per year, which is enough lithium to power about 500,000 electric vehicles annually,” Houston Business Journal reports.
The Federal Emergency Management Agency prepared a memo titled “Abolishing FEMA” at the direction of Homeland Security Secretary Kristi Noem, describing how its functions can be “drastically reformed, transferred to another agency, or abolished in their entirety” as soon as the end of 2025. While only Congress can technically eliminate the agency, the March memo, obtained and reviewed by Bloomberg, describes potential changes like “eliminating long-term housing assistance for disaster survivors, halting enrollments in the National Flood Insurance Program, and providing smaller amounts of aid for fewer incidents — moves that by design would dramatically limit the federal government’s role in disaster response.”
In May, FEMA’s acting administrator, Cameron Hamilton, was fired one day after defending the existence of the department he’d been appointed to oversee when testifying before the House Appropriations subcommittee. An internal FEMA memo from the same month described the agency’s “critical functions” as being at “high risk” of failure due to “significant personnel losses in advance of the 2025 Hurricane Season.” President Trump has, on several occasions, expressed a desire to eliminate FEMA, as recommended by the Project 2025 playbook from the Heritage Foundation. The March “Abolishing FEMA” memo “just means you should not expect to see FEMA on the ground unless it’s 9/11, Katrina, Superstorm Sandy,” Carrie Speranza, the president of the U.S. council of the International Association of Emergency Managers, told Bloomberg.
The Spanish government on Tuesday released its report on the causes of the April 28 blackout that left much of the nation, as well as parts of Portugal, without power for more than 12 hours. Ecological Transition Minister Sara Aagesen, who heads Spain’s energy policy, told reporters that a voltage surge in the south of Spain had triggered a “chain reaction of disconnections” that led to the widespread power loss, and blamed the nation’s state-owned grid operator Red Eléctrica for “poor planning” and failing to have enough thermal power stations online to control the dynamic voltage, the Associated Press reports. Additionally, Aagesen said that utilities had preventively shut off some power plants when the disruptions started, which could have helped the system stay online. “We have a solid narrative of events and a verified explanation that allows us to reflect and to act as we surely will,” Aagesen went on, responding to criticisms that Spain’s renewable-heavy energy mix was to blame for the blackout. “We believe in the energy transition and we know it’s not an ideological question but one of this country’s principal vectors of growth when it comes to re-industrialisation opportunities.”
Metrograph
“It seems that with the current political climate, with the removal of any reference to climate change on U.S. government websites, with the gutting of environmental laws, and the recent devastating fires in Los Angeles, this trilogy of films is still urgently relevant.” —Filmmaker Jennifer Baichwal on the upcoming screenings of the Anthropocene trilogy, co-created with Nicholas de Pencier and photographer Edward Burtynsky between 2006 and 2018, at the Metrograph in New York City.