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Why Spencer Gore decided it was time for Bedrock Materials to close up shop.
It wasn’t too long ago that the battery world was abuzz over sodium-ion batteries and their potential to be a cost-effective domestic competitor to the Chinese-dominated lithium-ion industry. The prevalence of sodium and the early-stage sodium-ion supply chain seemed to give the U.S. a shot at developing the next big battery for electric vehicles and energy storage systems.
But this past weekend, a promising sodium-ion startup called Bedrock Materials announced that it was shutting down and returning most of its $9 million seed funding to investors. The reason, according to CEO Spencer Gore? Its business model no longer made sense.
“We were responding to a very unique moment in the history of the battery industry,” Gore explained to me about his decision to start the company, which made cathode materials for sodium-ion batteries, in 2023. “Lithium prices had gone up about 10-fold, and so had other battery minerals by lesser degrees.” Experts predicted that the world was in for a long-term lithium shortage. Then the opposite happened: Lithium producers rapidly ramped up supply at the same time EV demand growth slowed, leading to oversupply and a 90% drop in price.
Before all of that happened, Bedrock saw the EV market as a good bet. Automakers were telling Gore that their first priority was lowering costs, and sodium-ion batteries seemed well positioned to help with that. The EV industry was also orders of magnitude larger than the battery storage market, and stood to benefit from the $7,500 consumer tax credit in the Inflation Reduction Act, which incentivizes the use of domestic minerals and battery components.
The election of Donald Trump threw the future of that tax credit into sudden doubt. The cratering raw minerals market, on the other hand, didn’t immediately translate into falling prices for lithium-iron-phosphate cathodes, the chemistry Gore saw as Bedrock’s main competitor, he told me. So long as this lasted, he thought, Bedrock’s business would be viable. But it didn’t.
“LFP prices have now crashed down to the point where it would almost be a viable business to extract the lithium from them and sell it on the open market,” Gore told me. “The active material producers are running single-digit margins. And so when that happened, it just became clear that the economic case for sodium had collapsed.”
Not everyone agrees that the domestic sodium-ion industry is doomed. Bay Area-based Peak Energy, for example, is still chugging away, and the company’s president and chief commercial officer, Cam Dales, told me he doesn’t expect to face the same headwinds as Bedrock. For one, Peak is targeting the sodium-ion energy storage market rather than the EV market, which means that energy density — sodium-ion’s weak point — is not as important a factor. Secondly, Peak is not in the business of producing battery materials, which Dales sees as an inherently risky and low-margin proposition. Rather, the company plans to produce battery cells domestically by 2028, while sourcing cathode and anode materials from other, ideally domestic, manufacturers.
So while the economic benefits of sodium-ion batteries have certainly diminished, Dales told me that the potential performance benefits — longer cycle life, greater efficiency, and ability to withstand high temperatures — are exceeding his initial expectations. Specifically, Peak is developing a cathode chemistry composed of sodium iron phosphate powder, which Dales claims will save customers money over the 20-year lifetime of a storage project, even if the upfront cost of sodium-ion battery cells is now higher than LFP. “System-level and project-level economics vastly outweigh smaller differences at the cell level,” Dales claimed.
The two industry leaders know each other well, as they used to work together at the lithium-ion battery manufacturer Enovix, where Dales was the chief commercial officer and Gore led the EV products team. Dales said he was bummed to learn of Bedrock’s closure, but not surprised. For domestic battery materials producers such as Bedrock to thrive, Dales told me, he thinks temporary policies that protect and nurture their growth will be necessary to ensure they’re not instantly outcompeted by Chinese incumbents.
“Absent that, it’s hard to see how you build a new materials company in the U.S. and compete against a fully scaled supply chain in China,” he told me.
Indeed, when I asked Gore if there was anything he wished he had done differently, he responded without hesitation, “I would have gone to China the very first day that I founded the company.” When he did visit months later, he said his main takeaway was that “most of the sodium-ion companies in China were producing material at scale, but losing money doing it,” even though they were “essentially producing sodium-ion materials on the exact same production lines that they had been using for lithium-ion materials.” The interchangeability of the two production processes made it crystal clear to Gore that Chinese battery giants such as CATL and BYD already had a tremendous advantage over the U.S., which doesn’t have scaled-up battery facilities.
This is why Gore now rejects the notion that the U.S. could win the race to scale up sodium-ion. “If you lost it for lithium-ion, you’ve already lost it for sodium. It’s the same thing, same equipment, same process.” Now he’s more interested in figuring out a way to facilitate a “once-in-a-generation” transfer of knowledge and technology between the U.S. and China. As it stands, he told me, “they’re 20 years ahead of the rest of the world, and we can’t even tie our own shoes.”
Ironically, bolstering domestic industry was the primary rationale behind Trump’s “Liberation Day” tariffs, which have since been put on pause for every nation except China, which will now be subject to 145% levies. And while Dales thinks tariffs would be a net-positive for his company, Gore told me he doesn’t expect them to help the domestic sodium-ion industry overall.
For one, tariffs will make the price of constructing domestic battery materials and cell facilities even more expensive than it already is relative to China. “So that’s one thing nudging us towards spreading out the factory costs over more energy dense cells,” Gore told me. Another incentive to optimize for energy density, tariffs or not, is the 45x tax credit, which gives cell manufacturers $35 per kilowatt-hour for domestically produced cells. “On a global basis, there’s a strong incentive for the most energy dense cells to be produced in the U.S.,” he argued.
While Peak will also have to contend with higher construction costs due to Trump’s tariffs as it builds out its sodium-ion cell production facility, the company’s customers are independent power producers and utilities that can pass cost increases onto ratepayers. This will mean higher electricity costs for Americans, which Dale acknowledged is not ideal, but he also told me, “I don’t think it actually affects our business that much.” While the company wouldn’t publicly disclose its partnerships, Dales said it’s “working with the majority of the large IPPs in the country,” as well as “a number of” utilities.
Gore thinks it’s possible that the sodium-ion performance advantages Peak is betting on will prove to be compelling for customers and investors in the energy storage space. It’s just not a bet he was willing to take. While Bedrock did explore pivoting into the energy storage market, Gore said he concluded that LFP batteries could likely be engineered to achieve the same cycle life, efficiency, and operating temperature benefits that Dales thinks makes sodium-ion stand out.
“Ultimately, we failed to find a niche where we thought that sodium was the best product,” Gore told me. Some investors were initially reluctant to accept that. They encouraged Bedrock to keep going, to pivot, to place a different bet. They had certainly never had a founder try and give back money before, Gore said. But to him, it just made good sense.
“It’s still possible that we would have succeeded,” he told me. “But I think that the likely size of the success and the likelihood of a success, given everything that we’ve now learned, is considerably smaller. The best expected value for us and for our investors was to simply return their money.”
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Empire Wind has been spared — but it may be one of the last of its kind in the U.S.
It’s been a week of whiplash for offshore wind.
On Monday, President Trump lifted his stop work order on Empire Wind, an 810-megawatt wind farm under construction south of Long Island that will deliver renewable power into New York’s grid. But by Thursday morning, Republicans in the House of Representatives had passed a budget bill that would scrap the subsidies that make projects like this possible.
The economics of building offshore wind in the U.S., at least during this nascent stage, are “entirely dependent” on tax credits, Marguerite Wells, the executive director of Alliance for Clean Energy New York, told me.
That being said, if the bill gets through the Senate and becomes law, Empire Wind may still be safe. The legislation would significantly narrow the window for projects to qualify for tax credits, requiring them to start construction by the end of this year and be operational by the end of 2028. Equinor, the company behind Empire Wind, maintains that it aims to reach commercial operations as soon as 2027. The four other offshore wind projects that are under construction in the U.S. — Sunrise Wind, also serving New York; Vineyard Wind, serving Massachusetts; Revolution Wind, serving Rhode Island and Connecticut; and Dominion Energy’s project in Virginia — are also expected to be completed before the cutoff.
Together, the five wind farms are expected to generate enough power for roughly 2.5 million homes and avoid more than 9 million tons of carbon emissions each year — similar to shutting down 23 natural gas-fired power plants.
Still, this would represent just a small fraction of the carbon-free energy eastern states are counting on offshore wind to provide. New York, for example, has a statutory goal of getting at least 9 gigawatts of power from the industry. Once Empire and Sunrise are completed, it will have just 1.7 gigawatts.
If the proposed changes to the tax credits are enacted, these five projects may be the last built in the U.S.
That’s not the case for solar farms or onshore wind, Oliver Metcalfe, head of wind research at BloombergNEF told me. They can still compete with fossil fuel generation — especially in the windiest and sunniest areas — without tax credits. That’s especially true in today’s environment of rising demand for power, since these projects have the additional benefit of being quick to build. The downside of losing the tax credits is, of course, that the power will cost marginally more than it otherwise would have.
For offshore wind farms to pencil out, however, states would have to pay a much higher price for the energy they produce. The tax credits knock off about a quarter of the price, Metcalfe said; without them, buyers will be back on the hook. “It’s likely that some either wouldn’t be willing to do that, or would dramatically decrease their ambition around the technology given the potential impacts it could have on ratepayers.”
Part of the reason offshore wind is so expensive is that the industry is still new in the U.S. We lack the supply chains, infrastructure, and experienced workforce built up over time in countries like China and the U.K. that have been able to bring costs down. That’s likely not going to change by the time these five projects are built, as they are all relying on European supply chains.
The Inflation Reduction Act spurred domestic manufacturers to begin developing supply chains to serve the next wave of projects, Wells told me. It gave renewable energy projects a 10-year runway to start construction to be eligible for the tax credits. “It was a long enough time window for companies to really invest, not just in the individual generation projects, but also manufacturing, supply chain, and labor chain,” she said.
Due to Trump’s attacks on the industry, the next wave of projects may not materialize, and those budding supply chains could go bust.
Trump put a freeze on offshore wind permitting and leasing on his first day in office, a move that 17 states are now challenging in court. A handful of projects are already fully permitted, but due to uncertainty around Trump’s tariffs — and now, around whether they’ll have access to the tax credits — they’re at a standstill.
“No one’s willing to back a new offshore wind project in today’s environment because there’s so much uncertainty around the future business case, the future subsidies, the future cost of equipment,” Metcalfe said.
The House budget bill may have kept the 45Q tax credit, but nixing transferability makes it decidedly less useful.
Very few of the Inflation Reduction Act’s tax credits made it through the House’s recently passed budget bill unscathed. One of the apparently lucky ones, however, was the 45Q credit for carbon capture projects. This provides up to $180 per metric ton for direct air capture and $85 for carbon captured from industrial or power facilities, depending on how the CO2 is subsequently sequestered or put to use in products such as low-carbon aviation fuels or building materials. The latest version of the bill doesn’t change that at all.
But while the preservation of 45Q is undoubtedly good news for the increasing number of projects in this space, carbon capture didn’t escape fully intact. One of the main ways the IRA supercharged tax credits was by making them transferable, turning them into an important financing tool for small or early-stage projects that might not make enough money to owe much — or even anything — in taxes. Being able to sell tax credits on the open market has often been the only way for smaller developers to take advantage of the credits. Now, the House bill will eliminate transferability for all projects that begin construction two years after the bill becomes law.
That’s going to make the economics of an already financially unsteady industry even more difficult. “Especially given the early stage of the direct air capture industry, transferability is really key,” Giana Amador, the executive director of an industry group called the Carbon Removal Alliance, told me. “Without transferability, most DAC companies won’t be able to fully capitalize upon 45Q — which, of course, threatens the viability of these projects.”
We’re not talking about just a few projects, either. We’re talking about the vast majority, Jessie Stolark, the executive director of another industry group, the Carbon Capture Coalition, told me. “The initial reaction is that this is really bad, and would actually cut off at the knees the utility of the 45Q tax credit,” Stolark said. Out of over 270 carbon capture projects announced as of today, Stolark estimates that fewer than 10 will be able to begin construction in the two years before transferability ends.
The alternative to easily transferable tax credits is a type of partnership between a project developer and a tax equity investor such as a bank. In this arrangement, investors give project developers cash in exchange for an equity stake in their project and their tax credit benefits. Deals like this are common in the renewable energy industry, but because they’re legally complicated and expensive, they’re not really viable for companies that aren’t bringing in a lot of revenue.
Because carbon capture is a much younger, and thus riskier technology than renewables, “tax equity markets typically require returns of 30% or greater from carbon capture and direct air capture project developers,” Stolark told me. That’s a much higher rate than tax equity partners typically require for wind or solar projects. “That out of the gate significantly diminishes the tax credit's value.” Taken together with inflation and high interest rates, all this means that “far fewer projects will proceed to construction,” Stolark said.
One DAC company I spoke with, Bay Area-based Noya, said that now that transferability is out, it has been exploring the possibility of forming tax equity partnerships. “We’ve definitely talked to banks that might be interested in getting involved in these kinds of things sooner than they would have otherwise gotten involved, due to the strategic nature of being partnered with companies that are growing fast,” Josh Santos, Noya’s CEO, told me.
It would certainly be a surprise to see banks — which are generally quite risk averse — lining up behind these kinds of new and unproven technologies, especially given that carbon capture doesn’t have much of a natural market. While CO2 can be used for some limited industrial purposes — beverage carbonation, sustainable fuels, low-carbon concrete — the only market for true carbon dioxide removal is the voluntary market, in which companies, governments, or individuals offset their own emissions by paying companies to remove carbon from the atmosphere. So if carbon capture is going to become a thriving, lucrative industry, it’s likely going to be heavily dependent on future government incentives, mandates, or purchasing commitments. And that doesn’t seem likely to happen in the U.S. anytime soon.
Noya, which is attempting to deploy its electrically-powered, modular direct air capture units beginning in 2027, is still planning on building domestically, though. As Santos told me, he’s eyeing California and Texas as promising sites for the company’s first projects. And while he said that the repeal of transferability will certainly “make things more complicated,” it is not enough of a setback for the company to look abroad.
“45Q is a big part of why we are focused on the U.S. mainly as our deployment site,” Santos explained. “We’ve looked at places like Iceland and the Middle East and Africa for potential deployment locations, and the tradeoff of losing 45Q in exchange for a cheaper something has to be significant enough for that to make sense,” he told me — something like more cost efficient electricity, permitting or installation costs. Preserving 45Q, he told me, means Noya’s long-term project economics are still “great for what we’re trying to build.”
But if companies can’t weather the short-term headwinds, they’ll never be able to reach the level of scale and profitability that would allow them to leverage the benefits of the 45Q credits directly. For many DAC companies such as Climeworks, which built the industry’s largest facility in Iceland, Amador and Stolark said that the domestic policy environment is causing hesitation around expanding in the U.S.
“We are very much at risk of losing our US leadership position in the industry,” Stolark told me. Meanwhile, she said that Canada, China, and the EU are developing policies that are making them increasingly attractive places to build.
As Amador put it, “I think no matter what these projects will be built, it’s just a question of whether the United States is the most favorable place for them to be deployed.”
House Republicans have bet that nothing bad will happen to America’s economic position or energy supply. The evidence suggests that’s a big risk.
When President Barack Obama signed the Budget Control Act in August of 2011, he did not do so happily. The bill averted the debt ceiling crisis that had threatened to derail his presidency, but it did so at a high cost: It forced Congress either to agree to big near-term deficit cuts, or to accept strict spending limits over the years to come.
It was, as Bloomberg commentator Conor Sen put it this week, the wrong bill for the wrong moment. It suppressed federal spending as America climbed out of the Great Recession, making the early 2010s economic recovery longer than it would have been otherwise. When Trump came into office, he ended the automatic spending limits — and helped to usher in the best labor market that America has seen since the 1990s.
On Thursday, the Republican majority in the House of Representatives passed their megabill — which is dubbed, for now, the “One Big, Beautiful Bill Act” — through the reconciliation process. They did so happily. But much like Obama’s sequestration, this bill is the wrong one for the wrong moment. It would add $3.3 trillion to the federal deficit over the next 10 years. The bill’s next stop is the Senate, where it could change significantly. But if this bill is enacted, it will jack up America’s energy and environmental risks — for relatively little benefit.
It has become somewhat passé for advocates to talk about climate change, as The New York Times observed this week. “We’re no longer talking about the environment,” Chad Farrell, the founder of Encore Renewable Energy, told the paper. “We’re talking dollars and cents.”
Maybe that’s because saying that something “is bad for the climate” only makes it a more appealing target for national Republicans at the moment, who are still reveling in the frisson of their post-Trump victory. But one day the environment will matter again to Americans — and this bill would, in fact, hurt the environment. It will mark a new chapter in American politics: Once, this country had a comprehensive climate law on the books. Then Trump and Republicans junked it.
The Republican megabill will make climate change worse. Within a year or two, the U.S. will be pumping out half a gigaton more carbon pollution per year than it would in a world where the IRA remains on the books, according to energy modelers at Princeton University. Within a decade, it will raise American carbon pollution by a gigaton each year. That is a significant increase. For comparison, the United States is responsible for about 5.2 gigatons of greenhouse gas pollution each year. No matter what happens, American emissions are likely to fall somewhat between now and 2035 — but, still, we are talking about adding at least an extra year’s worth of emissions over the next decade. (Full disclosure: I co-host a podcast, Shift Key, with Jesse Jenkins, the lead author of that Princeton study.)
What does America get for this increase in air pollution? After all, it’s possible to imagine situations where such a surge could bring economic benefits. In this case, though, we don’t get very much at all. Repealing the tax credits will slash $1 trillion from GDP over the next decade, according to the nonpartisan group Energy Innovation. Texas will be particularly hard hit — it could lose up to $100 billion in energy investment. Across the country, household energy costs will rise 2% to 7% by 2035, on top of any normal market-driven volatility, according to the energy research firm the Rhodium Group. The country will become more reliant on foreign oil imports, yet domestic oil production will budge up by less than 1%.
In other words, in exchange for more pollution, Americans will get less economic growth but higher energy costs. The country’s capital stock will be smaller than it would be otherwise, and Americans will work longer hours, according to the Tax Foundation.
But this numbers-driven approach actually understates the risk of repealing the IRA’s tax credits. The House megabill raises two big risks to the economy, as I see it — risks that are moresignificant than the result of any one energy or economic model.
The first is that this bill — its policy changes and its fiscal impact — will represent a double hit to the capacity of America’s energy system. The Inflation Reduction Act’s energy tax credits were designed to lower pollution and reduce energy costs by bringing more zero-carbon electricity supply onto the U.S. power grid. The law didn’t discriminate about what kind of energy it encouraged — it could be solar, geothermal, or nuclear — as long as it met certain emissions thresholds.
This turned out to be an accidentally well-timed intervention in the U.S. energy supply. The advent of artificial intelligence and a spurt of factory building has meant that, in the past few years, U.S. electricity demand has begun to rise for the first time since the 1990s. At the same time, the country’s ability to build new natural gas plants has come under increasing strain. The IRA’s energy tax credits have helped make this situation slightly less harrowing by providing more incentives to boost electricity supply.
Republicans are now trying to remove these tax bonuses in order to finance tax cuts for high-earning households. But removing the IRA alone won’t pay for the tax credits, so they will also have to borrow trillions of dollars. This is already straining bond markets, driving up interest rates for Americans. Indeed, a U.S. Treasury auction earlier this week saw weak demand for $16 billion in bonds, driving stocks and the dollar down while spiking treasury yields.
Higher interest rates will make it more expensive to build any kind of new power plant. At a moment of maximum stress on the grid, the U.S. is going to pull away tax bonuses for new electricity supply and make it more expensive to do any kind of investment in the power system. This will hit wind, solar, and batteries hard; because renewables don’t have to pay for fuel, their cost variability is largely driven by financing. But higher interest rates will also make it harder to build new natural gas plants. Trump’s trade barriers and tariff chaos will further drive up the cost of new energy investment.
Republicans aren’t totally oblivious to this hazard. The House Natural Resource Committee’s permitting reform proposal could reduce some costs of new energy development and encourage greater power capacity — assuming, that is, that the proposal survives the Senate’s byzantine reconciliation rules. But even then, significant risk exists for runaway energy cost chaos. Over the next three years, America’s liquified natural gas export capacity is set to more than double. Trump officials have assumed that America will simply be able to drill for more natural gas to offset a rise in exports, but what if higher interest rates and tariff charges forbid a rise in capacity? A power price shock is not off the table.
So that’s risk No. 1. The second risk is arguably of greater strategic import. As part of their megabill, House Republicans have stripped virtually every demand-side subsidy for electric vehicles from the bill, including a $7,500 tax credit for personal EV purchases. At the same time, Senate Republicans and the Trump administration have gutted state and federal rules meant to encourage electric vehicle sales.
Republicans have kept, for now, some of the supply-side subsidies for manufacturing EVs and batteries. But without the paired demand-side incentives, American EV sales will fall. (The Princeton energy team projects an up to 40% decline in EV sales nationwide.) This will reduce the economic rationale for much of the current buildout in electric vehicle manufacturing and capacity happening across the country — it could potentially put every new EV and battery factory meant to come online after this year out of the money.
This will weaken the country’s economic competitiveness. Batteries are a strategic energy technology, and they will undergird many of the most important general and military technologies of the next several decades. (If you can make an EV, you can make an autonomous drone.) The Trump administration has realized that the United States and its allies need a durable mineral supply chain that can at least parallel China’s. But they seem unwilling to help any of the industries that will actually usethose minerals.
Does this mean that Republicans will kill America’s electric vehicle industry? Not necessarily. But they will dent its growth, strength, and expansion. They will make it weaker and more vulnerable to external interference. And they will increase the risks that the United States simply gives up on ever understanding battery technology and doubles down on internal combustion vehicles — a technology that, like coal-powered naval ships, is destined to lose.
It is, in other words, risky. But that is par for the course for this bill. It is risky to make the power grid so exposed to natural gas price volatility. It is risky to jack up the federal deficit during peacetime for so little gain. It is risky to cede so much demand for U.S.-sourced critical minerals. It is risky to raise interest rates in an era of higher trade barriers, uncertain supply shocks, and geopolitical instability.
This is what worries me most about the Republican megabill: It takes America’s flawed but fixable energy policy and replaces it with, well, a longshot parlay bet that nothing particularly bad will happen anytime soon. Will the Senate take such a bet? Now we find out.
Editor’s note: This story has been updated to correct the units in the sixth paragraph from megatons to gigatons.