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Data is elusive — and expensive.
Today, if a company claims to run on “100% clean power,” that generally means it’s adding up its electricity use for the entire year, then offsetting any fossil fuel-generated electricity through the purchase of renewable energy certificates, a.k.a. RECs. So a New York-based firm using natural gas to power its data center at night can offset that dirty power by purchasing RECs generated by a California-based solar farm in the middle of the day, so long as energy production and procurement happen within the same year.
We call this system “annual matching,” and it may not be much longer for this world.
The U.S. Treasury Department announced in December that, to qualify for the most generous subsidies under the Inflation Reduction Act’s hydrogen production tax credit, clean hydrogen must be produced using a relatively new source of carbon-free electricity generated within the same hour it’s used and in roughly the same location. The hourly matching requirement, which will take effect in 2028, could compel utilities, grid operators, energy producers and consumers to adopt new systems for clean energy accounting, ultimately laying the groundwork for a 24/7 clean electricity market that extends far beyond the hydrogen sector.
Energy system experts generally hailed the move, and not just because without it, electricity-hungry hydrogen production could potentially do more harm to the climate than good. Annual matching, also, is no longer serving its original purpose of incentivizing the buildout of new renewables. When wind and solar were more expensive than fossil fuels, developers could make up the cost difference by selling annually-matched RECs. But today, wind and solar are often the cheapest energy options available.
That’s not to say everyone was in favor of hourly matching, however. Many of the companies that underpin the U.S.’s clean energy generation and accounting systems, some major hydrogen players, and even a number of Senate Democrats say that moving to hourly matching in the next four years could not only prove too logistically challenging, but also lead to infeasibly high costs for clean hydrogen that will hamper the growth of the emerging industry. More than a year of furious lobbying, public commenting, and punditry over the future of America’s nascent hydrogen industry hinges on this question: Can we pull off verifiable 24/7 clean energy?
There’s an emerging ecosystem of companies trying to help do just that. Granular Energy is a European startup creating software to help utilities and power suppliers move toward 24/7 energy matching by telling them where and when clean energy is most needed. “When you get down to the hourly level,” Natalie Valentin, Granular’s commercial lead for North America, told me, “it can help drive investment in the types of technologies — whether it’s battery storage, clean firm generation, or renewable generation.”
Utilities and power suppliers generally have hourly generation data on hand, Valentin said. It’s just that the energy attribution certificates they receive from tracking systems and registries for renewable energy credits don’t usually include this information. “This data is very readily available,” she told me. “What we’re helping to do is put it into a tool that creates transparency, it streamlines the operations, it has that audit trail that's preventing any double counting.”
Granular links the information from energy certificates with the utility or power provider’s internal metering data to provide an hour-by-hour snapshot of the supplier’s energy mix. That then gives energy suppliers the ability to offer hourly-matched green power programs to their customers.
All of this would be simpler if electricity customers had insight into their hourly electricity usage in the first place, or if the tracking systems provided suppliers with time-matched certificates upfront. But as it stands, most customers don’t have meters that provide this level of detail, making it difficult for them to understand where their energy is coming from. And out of the nation’s 10 renewable energy credit tracking systems and registries, seven don’t report hourly information.
The three that do include the nation’s largest grid operator, PJM, the nonprofit Midwest Renewable Energy Tracking System, and the North American Renewables Registry. Seattle-based LevelTen Energy will utilize the data from these three entities to create a new marketplace for buying, selling, and managing hourly-matched energy certificates, to be launched later this year in regions where hourly tracking exists. LevelTen is building this platform in partnership with the Intercontinental Exchange, a tech company that operates global financial exchanges. Other partners include Google and Microsoft, each of which has announced plans to move to hourly matching by 2030.
“We’re looking to provide an end-to-end experience so people can indicate, here's where we have demand,” explained Katie Soroye, a LevelTen executive. Crucially, the platform will also ensure that hourly matching certificates are retired once they’re purchased to prevent double-counting.
The hope is that the seven tracking systems that lack hourly matching capabilities will soon be either persuaded or mandated to develop them, leading to a country-wide granular certificate marketplace — something the clean hydrogen tax rules were designed to help expedite. Once the mandate is finalized, the Center for Resource Solutions found, most of the tracking systems could phase in hourly matching within two years.
That doesn’t mean they’re eager to make the change, with many citing cost, low demand, and in some cases lack of data availability and confusion over how to handle a more complex dataset as top concerns with hourly matching. Cost is also a major concern for the hydrogen industry overall.
“To the extent that 24/7 works, it has to increase hydrogen prices,” said Aaron Bergman, a fellow at the nonprofit research group Resources for the Future, although he acknowledged that hourly matching is also likely to reduce emissions. “Now, I think what’s challenging is, is that going to be enough to interfere with the ability to really start building out green hydrogen?”
The American Clean Power Association thinks so. Its members estimate “a 20-150% price premium for hourly matched hydrogen production” because electrolyzers, the devices used to make clean hydrogen, will only be able to operate when clean electricity is available. The trade group recommends waiting until 2032 to implement hourly matching, saying this will give the market more time to mature and lower prices through economies of scale.
The whole industry is hardly aligned on this question. Seven companies, including the world’s largest hydrogen producer, filed a joint letter with Treasury officials before the draft rules were released urging them to require 24/7 hourly matching by 2028. “Hourly matching will catalyze cutting-edge, flexible electrolyzer technologies and establish a flourishing and world-leading domestic U.S. advanced electrolyzer manufacturing base,” the letter said.
The rule-making process will continue with a public hearing scheduled for later this month. But assuming the hourly-matching requirement stays, it will certainly add momentum to what’s become a movement for 24/7 clean electricity. Even the U.S. federal government has committed to sourcing 100% of their facility’s electricity from carbon-free sources, half of which will be hourly matched by 2030.
“Time is ticking,” said Bergman. “It’s really standing up something that is relatively new in a relatively short period of time.” Some degree of delays and logistical roadblocks may prove inevitable. But, he said, “it certainly can be done.”
Editor’s note: This story has been updated to clarify that a new platform from LevelTen Energy is distinct from the Granular Certificate Trading Alliance.
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Current conditions: In the Atlantic, the tropical storm that could, as it develops, take the name Jerry is making its way westward toward the U.S. • In the Pacific, Hurricane Priscilla strengthened into a Category 2 storm en route to Arizona and the Southwest • China broke an October temperature record with thermometers surging near 104 degrees Fahrenheit in the southeastern province of Fujian.
The Department of Energy appears poised to revoke awards to two major Direct Air Capture Hubs funded by the Infrastructure Investment and Jobs Act in Louisiana and Texas, Heatmap’s Emily Pontecorvo reported Tuesday. She got her hands on an internal agency project list that designated nearly $24 billion worth of grants as “terminated,” including Occidental Petroleum’s South Texas DAC Hub and Louisiana's Project Cypress, a joint venture between the DAC startups Heirloom and Climeworks. An Energy Department spokesperson told Emily that he was “unable to verify” the list of canceled grants and said that “no further determinations have been made at this time other than those previously announced,”referring to the canceled grants the department announced last week. Christoph Gebald, the CEO of Climeworks, acknowledged “market rumors” in an email, but said that the company is “prepared for all scenarios.” Heirloom’s head of policy, Vikrum Aiyer, said the company wasn’t aware of any decision the Energy Department had yet made.
While the list floated last week showed the Trump administration’s plans to cancel the two regional hydrogen hubs on the West Coast, the new list indicated that the Energy Department planned to rescind grants for all seven hubs, Emily reported. “If the program is dismantled, it could undermine the development of the domestic hydrogen industry,” Rachel Starr, the senior U.S. policy manager for hydrogen and transportation at Clean Air Task Force told her. “The U.S. will risk its leadership position on the global stage, both in terms of exporting a variety of transportation fuels that rely on hydrogen as a feedstock and in terms of technological development as other countries continue to fund and make progress on a variety of hydrogen production pathways and end uses.”
Remember the Tesla announcement I teased in yesterday’s newsletter? The predictions proved half right: The electric automaker did, indeed, release a cheaper version of its midsize SUV, the Model Y, with a starting price just $10 shy of $40,000. Rather than a new Roadster or potential vacuum cleaner, as the cryptic videos the company posted on CEO Elon Musk’s social media site hinted, the second announcement was a cheaper version of the Model 3, already the lower-end sedan offering. Starting at $36,990, InsideEVs called it “one of the most affordable cars Tesla has ever sold, and the cheapest in 2025.” But it’s still a far cry from Musk’s erstwhile promise to roll out a Tesla for less than $30,000.
That may be part of why the company is losing market share. As Heatmap’s Matthew Zeitlin reported, Tesla’s slice of the U.S. electric vehicle sales sank to its lowest-ever level in August despite Americans’ record scramble to use the federal tax credits before the September 30 deadline President Donald Trump’s new tax law set. General Motors, which sold more electric vehicles in the third quarter of this year than in all of 2024, offers the cheapest battery-powered passenger vehicle on the market today, the Chevrolet Equinox, which starts at $35,100.
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Trump’s pledge to revive the United States’ declining coal industry was always a gamble — even though, as Matthew reported in July, global coal demand is rising. Three separate stories published Tuesday show just how stacked the odds are against a major resurgence:
As you may recall from two consecutive newsletters last month, Secretary of Energy Chris Wright said “permitting reform” was “the biggest remaining thing” in the administration’s agenda. Yet Republican leaders in Congress expressed skepticism about tacking energy policy into the next reconciliation bill. This week, however, Utah Senator Mike Lee, the chairman of the Senate Committee on Energy and Natural Resources, called for a legislative overhaul of the National Environmental Policy Act. On Monday, the pro-development social media account Yimbyland — short for Yes In My Back Yard — posted on X: “Reminder that we built the Golden Gate Bridge in 4.5 years. Today, we wouldn’t even be able to finish the environmental review in 4.5 years.” In response, Lee said: “It’s time for NEPA reform. And permitting reform more broadly.”
Last month, a bipartisan permitting reform bill got a hearing in the House of Representatives. But that was before the government shutdown. And sources familiar with Democrats’ thinking have in recent months suggested to me that the administration’s gutting of so many clean energy policies has left Republicans with little to bargain with ahead of next year’s midterm elections.
Soon-to-be Japanese prime minister Sanae Takaichi.Yuichi Yamazaki - Pool/Getty Images
On Saturday, Japan’s long-ruling Liberal Democratic Party elected its former economic minister, Sanae Takaichi, as its new leader, putting her one step away from becoming the country’s first woman prime minister. Under previous administrations, Japan was already on track to restart the reactors idled after the 2011 Fukushima disaster. But Takaichi, a hardline conservative and nationalist who also vowed to re-militarize the nation, has pushed to speed up deployment of new reactors and technologies such as fusion in hopes of making the country 100% self-sufficient on energy.
“She wants energy security over climate ambition, nuclear over renewables, and national industry over global corporations,” Mika Ohbayashi, director at the pro-clean-energy Renewable Energy Institute, told Bloomberg. Shares of nuclear reactor operators surged by nearly 7% on Monday on the Tokyo Stock Exchange, while renewable energy developers’ stock prices dropped by as much as 15%
Researchers at the United Arab Emirates’ University of Sharjah just outlined a new method to transform spent coffee grounds and a commonly used type of plastic used in packaging into a form of activated carbon that can be used for chemical engineering, food processing, and water and air treatments. By repurposing the waste, it avoids carbon emitting from landfills into the atmosphere and reduces the need for new sources of carbon for industrial processes. “What begins with a Starbucks coffee cup and a discarded plastic water bottle can become a powerful tool in the fight against climate change through the production of activated carbon,” Dr. Haif Aljomard, lead inventor of the newly patented technology, said in a press release.
Last week’s Energy Department grant cancellations included funding for a backup energy system at Valley Children’s Hospital in Madera, California
When the Department of Energy canceled more than 321 grants in an act of apparent retribution against Democrats over the government shutdown, Russ Vought, President Trump’s budget czar, declared that the money represented “Green New Scam funding to fuel the Left's climate agenda.”
At least one of the grants zeroed out last week, however, was supposed to help keep the lights on at a children’s hospital.
The $29 million grant was intended to build a 3.3-megawatt long-duration energy storage system at Valley Children’s Hospital, a large pediatric hospital in Madera, California. The system would “power critical hospital operations during outage events,” such as when the California grid shuts down to avoid starting wildfires, according to project documents.
“The U.S. Department of Energy’s cancellation of funding for [the] long-duration energy storage demonstration grant is disappointing,” Zara Arboleda, a spokesperson for the hospital, told me.
Valley Children’s Hospital is a 358-bed hospital that says it serves more than 1.3 million children across California’s Central Valley. It has 28 neonatal intensive care unit beds and nationally ranked specialties in pediatric neurology, orthopedics, and lung surgery, among others.
Energy Secretary Chris Wright has characterized the more than $7.5 billion in grants canceled last week as part of an ongoing review of financial awards made by the Biden administration. But the timing of the cancellations — and Vought’s gleeful tweets about them — suggests a more vindictive purpose. Republican lawmakers and President Trump himself threatened to unleash Vought as a kind of rogue budget cutter before the federal government shut down last week.
“We don’t control what he’s going to do,” Senator John Thune told Politico last week. “I have a meeting today with Russ Vought, he of PROJECT 2025 Fame, to determine which of the many Democrat Agencies, most of which are a political SCAM, he recommends to be cut,” Trump posted on the same day.
Up until this year, canceling funding that is already under contract with a private party would have been thought to be straightforwardly illegal under federal law. But the Supreme Court’s conservative majority has allowed the Trump administration to act with previously unimaginable freedom while it considers ruling on similar cases.
Faraday Microgrids, the contractor that was due to receive the funding, is already building a microgrid for the hospital. The proposed backup power system — which the grant stipulated should be “non-lithium-ion” — was supposed to be funded by the Energy Department’s Office of Clean Energy Demonstrations, with the goal of finding new ways of storing electricity without using lithium-ion batteries, and was meant to work in concert with that new microgrid and snap on in times of high stress.
That microgrid project is still moving forward, Arboleda, the hospital’s spokesperson, told me. “Valley Children’s Hospital continues to build and soon will operate its microgrid announced in 2023 to ensure our facilities have access to reliable and sustainable energy every minute of every day for our patients and our care providers,” she added. That grid will contain some storage, but not the long-term storage system discussed in the official plan.
Faraday Microgrids, formerly known as Charge Bliss, didn’t respond to a request for comment, but its website touts its ability to secure grants and other government funding for energy projects.
In a statement, a spokesman for the Energy Department said that the grant was canceled because the project wasn’t feasible. “Following an in-depth review of the financial award, it was determined, among other reasons, that the viability of the project was not adequate to warrant further disbursements,” Ben Dietderich, a spokesman for the Energy Department, told me.
The children’s hospital, at least, is in good company. On Tuesday, a Trump administration document obtained by Heatmap News suggested the Energy Department is moving to kill bipartisan-backed funding for two direct air capture hubs in Texas and Louisiana. And although California has lost the most grants of any state, the Energy Department has also sought to terminate funding for new factories and industrial facilities across Republican-governed states.
Rob and Jesse break down China’s electricity generation with UC San Diego’s Michael Davidson.
China announced a new climate commitment under the Paris Agreement at last month’s United Nations General Assembly meeting, pledging to cut its emissions by 7% to 10% by 2035. Many observers were disappointed by the promise, which may not go far enough to forestall 2 degrees Celsius of warming. But the pledge’s conservatism reveals the delicate and shifting politics of China’s grid — and how the country’s central government and its provinces fight over keeping the lights on.
On this week’s episode of Shift Key, Rob and Jesse talk to Michael Davidson, an expert on Chinese electricity and climate policy. He is a professor at the University of California, San Diego, where he holds a joint faculty appointment at the School of Global Policy and Strategy and the Jacobs School of Engineering. He is also a senior associate at the Center for Strategic and International Studies, and he was previously the U.S.-China policy coordinator for the Natural Resources Defense Council.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University.
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Here is an excerpt from our conversation:
Robinson Meyer: Your research and other people’s research has revealed that basically, when China started making capacity payments to coal plants, in some cases, it didn’t have the effect on the bottom line of these plants that was hoped for, and also we didn’t really see coal generation go down or change in the year that it happened. It wasn’t like they were paying these plants to stick around and not run. They were basically paying these plants, it seems like, to do the exact same thing they did the year before, but now they also got paid. And maybe that was needed for their economics, we can talk about it.
Why did coal get those payments and not, say, batteries or other sources of spare capacity, like pumped hydro storage, like nuclear? Why did coal, specifically, get payments for capacity? And does it have to do with spinning reserve? Or does it have to do with the political economy of coal in China?
Michael Davidson: When it came out, we said exactly the same thing. We said, okay, this should be a technology neutral payment scheme, and it should be a market, not a payment, right? But China’s building these things up little by little. Over time we’ve seen, historically, actually, a number of systems internationally started with payments before they move to markets because they realize that you could get a lot more competitive pressure with markets.
The capacity payment scheme for coal is extremely simple, right? It says, okay, for each province, we’re going to say what percentage of our benchmark coal investment costs are we going to subsidize. It’s extremely simple. It does not account for how much you’re using it at a plant by plant level. It does not account for other factors, renewables, etc. It’s a very coarse metric. But I wouldn’t say that it had had some, you know, perverse negative effect on the outcome of what coal generation is. Probably more likely is that these payments were seen, for some, as extra support. But then for some that are really hurting, they’re saying, okay, well then we will maybe put up less obstacles to market reforms.
But then on top of that, you have to put in the hourly energy demand growth story and say, okay, well you have all these renewables, but you don’t have enough storage to shift to evening peaks. You are going to rely on coal to meet that given the current rigid dispatch system. And so you’re dispatching them kind of regardless of whether or not you have the payment schemes.
I will say that I was a skeptic, right? Because when people told me that China should put in place a capacity market, I said, China has overcapacity. So if you have an overcapacity situation, you put in place a market, the prices should be zero. So what’s the point? But actually, when you’re looking out ahead with all of this surplus coal capacity that you’re trying to push down, you’re trying to push those capacity factors of those coal plans from 50%, 60%, down to 20% or even lower, they need to have other revenue schemes if you’re not going to dramatically open up your spot markets, which China is very hesitant to do — very risk averse when it comes to the openness of spot markets, in terms of price gaps. So that’s a necessary part of this transition. But it can be done more efficiently, and it should done technology neutral.
And by the way that is happening in certain places. That’s a national scheme, but we actually see that the implementation — for example, Shaanxi province, we have a technology neutral scheme that would include other resources, not just coal.
Mentioned:
China’s new pledge to cut its emissions by 2035
What an ‘ambitious’ 2035 electricity target looks like for China
China’s Clean Energy Pledge is Clouded by Coal, The Wire China
Jesse’s upshift; Rob’s upshift.
This episode of Shift Key is sponsored by …
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A warmer world is here. Now what? Listen to Shocked, from the University of Chicago’s Institute for Climate and Sustainable Growth, and hear journalist Amy Harder and economist Michael Greenstone share new ways of thinking about climate change and cutting-edge solutions. Find it here.
Music for Shift Key is by Adam Kromelow.