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Here are three more questions to ask after a weird few weeks of policymaking.
Let’s start with a quick recap: In late-January, the Biden administration turned the energy world on its ear by announcing that it would pause approvals of new export facilities for liquified natural gas — a decision greeted with joy by activists and indignation by lawmakers. A few weeks later, The New York Timesreported that the administration was planning to ease up on planned regulations on car tailpipe emissions that would have pushed U.S. vehicle sales to become mostly battery-electric by 2030.
Then, on Thursday, the Environmental Protection Agency announced that it planned to delay its proposed regulations to rein in emissions from the country’s existing fleet of natural gas power plants. The administration still plans to finalize the tailpipe regulations, along with new, more stringent rules for existing coal plants and new natural gas plants on its original timeline, likely in the next few weeks. Oh, and it also launched a war on Chinese EVs.
This has left many with an understandable sense of whiplash. As the Times’ Lisa Friedman put it, “The weakening of the Biden administration’s two most ambitious climate rules would call into question the ability of the United States to meet the president’s goal of cutting United States emissions roughly in half by the end of this decade.” But … does it? There’s a lot we still don’t know about the administration’s plans, including what the new tailpipe rule will say and how the EPA will approach revising those gas plant regulations.
Here are a few more questions to consider.
Climate advocates were dissatisfied with the EPA’s original proposal for existing natural gas plants. The Natural Resources Defense Council estimated, based on EPA’s analysis, that the rules for existing plants accounted for only about 20% of the proposal’s overall emission reductions. Along with groups like Clean Air Task Force and Evergreen Action, the NRDC was concerned that the majority of gas plants weren’t covered by the rule, and that the compliance timeline was too slow. Others, including the Center for Biological Diversity and Earthjustice, were concerned about the rule’s reliance on carbon capture and the lack of restrictions on other emissions of concern from gas plants, like methane and nitrous oxide.
Industry, for its part, also didn’t like it. The Edison Electric Group, the main trade group for electric utilities, argued that the technological fixes the EPA was proposing to reduce emissions from existing plants — either carbon capture or a blend of clean hydrogen and natural gas — were not mature enough and therefore that the rule was not achievable.
In justifying the decision to delay, EPA administrator Michael Regan sent mixed signals. In an interview with Bloomberg, Regan said it was a way to achieve both “more flexibilities” and “more pollution reduction.” The first reads as an appeal to industry, the second to environmentalists.
Groups from both sectors claimed the news as a victory. The American Petroleum Institute’s president of policy, economics and regulatory affairs, Dustin Meyer, welcomed the delay, stressing the gas fleet’s importance to grid reliability as electricity demand grows. Emily Sanford Fisher, executive vice president for clean energy at the Edison Electric Institute, told the Washington Post, “we appreciate that EPA has acknowledged our concerns.” Meanwhile, Earthjustice seemed to take to heart the EPA’s pledge to make the rule tougher on toxic, non-carbon pollutants like formaldehyde. The group’s president, Abigail Dillen, called it a “more ambitious strategy.”
It’s hard to imagine how the EPA could make the rule tougher on pollution while also making it more flexible. In reality, what the delay could achieve is no rule at all.
Not all environmental groups are optimistic. The Sunrise Movement accused Biden of “caving to pressure from the gas lobby” and said the delay leaves the fate of power plant regulations up to the results of the upcoming election. Frank Sturges, an attorney at Clean Air Task Force, said in a press release that he was “extremely disappointed” by the news. The group estimates that the share of power plant emissions from gas plants will nearly double by 2040 without the regulations. “The shot clock is winding down for reducing power plant emissions, and rather than taking the shot to eliminate emissions from existing gas plants, EPA has chosen to sit on the bench,” Sturges said. — Emily Pontecorvo
It’s easy to forget about the non-presidential races during a presidential election year. But it is House and Senate elections in states like Ohio, Montana, Arizona, West Virginia, and Maine that might actually be the best predictors for how the country moves forward — or doesn’t — in the green energy transition.
The EPA’s decision to delay some of its power plant regulations appears to be at least partially a concession to these imperiled Democrats, even as the Biden administration has tried to play up its climate bona fides to general election voters. In December, five senators — Ohio’s Sherrod Brown, West Virginia’s Joe Manchin, Arizona’s Mark Kelly and Kyrsten Sinema (an Independent who caucuses with the Dems), and Montana’s Jon Tester — signed a letter opposing the EPA’s power plant emission rule, calling it a threat to jobs as well as the price and reliability of electricity, concerns that are common among centrist voters.
The letter isn’t just grumbling among the ranks; these are critical stakes. Intelligencer has described the 2024 Senate race as “the best for the GOP in living memory,” in part thanks to Manchin's impending retirement. If Democrats only lost the West Virginia seat and Trump won the election, the GOP would win the Senate majority with a vice-president-tie-breaking 50-50 split.
And that’s the best case scenario for climate policy in the event of a Biden loss. Democrats are defending three total seats in states that Trump carried in 2020 (Ohio, West Virginia, and Montana, which he won by 16 points) plus five others in states that Biden won, but barely (like Arizona, where Sinema has yet to commit to running for reelection). Meanwhile, Brown, Tester, and possibly Sinema are all running in “toss-up” elections that could break either way. Shoring up support for them in states where the economy will likely play better than the environment among voters is good politics, even if it’s questionable climate policy.
The same dilemma exists in the House, even if seizing control of the lower chamber looks more promising for the left. Sure enough, several Democratic Representatives also sent a letter opposing the EPA rules after their Senate colleagues did, with North Carolina’s Donald Davis and Maine’s Jared Golden among the electorally threatened signatories. Marie Gluesenkamp Perez, who represents the rural southwest corner of Washington state, also faces an uphill race and has expressed disapproval of the regulations; Ohio’s Marcy Kaptur, in a Republican-leaning district, has likewise spoken publicly against them.
It was because of the 2020 Democratic trifecta that Biden was able to pass the Inflation Reduction Act and the bipartisan infrastructure bill, and it’s partially because of the 2022 flip of the House and the current 50-50 Senate that progress has ground to a halt. What happens to the climate agenda in 2026 and beyond will depend on a Biden win — but not just. — Jeva Lange
One other wildcard is what weakening the rules could mean for union support. Biden has staked his presidency on transitioning to a zero-carbon energy system — and also on meeting union demands and creating a more fair economy. While both ideas are broadly appealing to Biden’s coalition (and especially to young voters), they can sometimes come into conflict on the specifics.
Shawn Fain, the popular leader of the United Auto Workers, has repeatedly expressed concern about Biden’s support for a rapid EV transition, fearing that it will set back the legacy American automakers. That is one reason Fain initially withheld the union’s endorsement of Biden’s reelection bid.
According to the Times, Fain has also repeatedly raised the proposed rules’ stringency with White House officials. In comments filed with the EPA, the union asked that the final rule ramp up its carbon requirements at a slower rate than initially proposed.
The power plant rules could also attract some skepticism from labor. Although the International Brotherhood of Electrical Workers endorsed Biden nearly a year ago, it fought an earlier version of the EPA’s power plant rules in 2014.
Changing how labor unions feel about the rules isn’t only important to Biden’s ability to sell the rules politically; it may also help him in court. The EPA and Biden administration would much rather have the unions on their side when GOP-led states sue over the regulations, as they almost certainly will. — Robinson Meyer
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The foreign entities of concern rules in the One Big Beautiful Bill would place gigantic new burdens on developers.
Trump campaigned on cutting red tape for energy development. At the start of his second term, he signed an executive order titled, “Unleashing Prosperity Through Deregulation,” promising to kill 10 regulations for each new one he enacted.
The order deems federal regulations an “ever-expanding morass” that “imposes massive costs on the lives of millions of Americans, creates a substantial restraint on our economic growth and ability to build and innovate, and hampers our global competitiveness.” It goes on to say that these regulations “are often difficult for the average person or business to understand,” that they are so complicated that they ultimately increase the cost of compliance, as well as the risks of non-compliance.
Reading this now, the passage echoes the comments I’ve heard from industry groups and tax law experts describing the incredibly complex foreign entities of concern rules that Congress — with the full-throated backing of the Trump administration — is about to impose on clean energy projects and manufacturers. Under the One Big Beautiful Bill Act, wind and solar, as well as utility-scale energy storage, geothermal, nuclear, and all kinds of manufacturing projects will have to abide by restrictions on their Chinese material inputs and contractual or financial ties with Chinese entities in order to qualify for tax credits.
“Foreign entity of concern” is a U.S. government term referring to entities that are “owned by, controlled by, or subject to the jurisdiction or direction of” any of four countries — Russia, Iran, North Korea, and most importantly for clean energy technology, China.
Trump’s tax bill requires companies to meet increasingly strict limits on the amount of material from China they use in their projects and products. A battery factory starting production next year, for example, would have to ensure that 60% of the value of the materials that make up its products have no connection to China. By 2030, the threshold would rise to 85%. The bill lays out similar benchmarks and timelines for clean electricity projects, as well as other kinds of manufacturing.
But how companies should calculate these percentages is not self-evident. The bill also forbids companies from collecting the tax credits if they have business relationships with “specified foreign entities” or “foreign-influenced entities,” terms with complicated definitions that will likely require guidance from the Treasury for companies to be sure they pass the test.
Regulatory uncertainty could stifle development until further guidance is released, but how long that takes will depend on if and when the Trump administration prioritizes getting it done. The One Big Beautiful Bill Act contains a lot of other new tax-related provisions that were central to the Trump campaign, including a tax exemption for tips, which are likely much higher on the department’s to-do list.
Tax credit implementation was a top priority for the Biden administration, and even with much higher staffing levels than the department currently has, it took the Treasury 18 months to publish initial guidance on foreign entities of concern rules for the Inflation Reduction Act’s electric vehicle tax credit. “These things are so unbelievably complicated,” Rachel McCleery, a former senior advisor at the Treasury under Biden, told me.
McCleery questioned whether larger, publicly-owned companies would be able to proceed with major investments in things like battery manufacturing plants until that guidance is out. She gave the example of a company planning to pump out 100,000 batteries per year and claim the per-kilowatt-hour advanced manufacturing tax credit. “That’s going to look like a pretty big number in claims, so you have to be able to confidently and assuredly tell your shareholder, Yep, we’re good, we qualify, and that requires a certification” by a tax counsel, she said. To McCleery, there’s an open question as to whether any tax counsel “would even provide a tax opinion for publicly-traded companies to claim credits of this size without guidance.”
John Cornwell, the director of policy at the Good Energy Collective, which conducts research and advocacy for nuclear power, echoed McCleery’s concerns. “Without very clear guidelines from the Treasury and IRS, until those guidelines are in place, that is going to restrict financing and investment,” Cornwell told me.
Understanding what the law requires will be the first challenge. But following it will involve tracking down supply chain data that may not exist, finding alternative suppliers that may not be able to fill the demand, and establishing extensive documentation of the origins of components sourced through webs of suppliers, sub-suppliers, and materials processors.
The Good Energy Collective put out an issue brief this week describing the myriad hurdles nuclear developers will face in trying to adhere to the tax credit rules. Nuclear plants contain thousands of components, and documenting the origin of everything from “steam generators to smaller items like specialized fasteners, gaskets, and electronic components will introduce substantial and costly administrative burdens,” it says. Additionally the critical minerals used in nuclear projects “often pass through multiple processing stages across different countries before final assembly,” and there are no established industry standards for supply chain documentation.
Beyond the documentation headache, even just finding the materials could be an issue. China dominates the market for specialized nuclear-grade materials manufacturing and precision component fabrication, the report says, and alternative suppliers are likely to charge premiums. Establishing new supply chains will take years, but Trump’s bill will begin enforcing the sourcing rules in 2026. The rules will prove even more difficult for companies trying to build first-of-a-kind advanced nuclear projects, as those rely on more highly specialized supply chains dominated by China.
These challenges may be surmountable, but that will depend, again, on what the Treasury decides, and when. The Department’s guidance could limit the types of components companies have to account for and simplify the documentation process, or it could not. But while companies wait for certainty, they may also be racking up interest. “The longer there are delays, that can have a substantial risk of project success,” Cornwell said.
And companies don’t have forever. Each of the credits comes with a phase-out schedule. Wind manufacturers can only claim the credits until 2028. Other manufacturers have until 2030. Credits for clean power projects will start to phase down in 2034. “Given the fact that a lot of these credits start lapsing in the next few years, there’s a very good chance that, because guidance has not yet come out, you’re actually looking at a much smaller time frame than than what is listed in the bill,” Skip Estes, the government affairs director for Securing America’s Energy Future, or SAFE, told me.
Another issue SAFE has raised is that the way these rules are set up, the foreign sourcing requirements will get more expensive and difficult to comply with as the value of the tax credits goes down. “Our concern is that that’s going to encourage companies to forego the credit altogether and just continue buying from the lowest common denominator, which is typically a Chinese state-owned or -influenced monopoly,” Estes said.
McCleery had another prediction — the regulations will be so burdensome that companies will simply set up shop elsewhere. “I think every industry will certainly be rethinking their future U.S. investments, right? They’ll go overseas, they’ll go to Canada, which dumped a ton of carrots and sticks into industry after we passed the IRA,” she said.
“The irony is that Republicans have historically been the party of deregulation, creating business friendly environments. This is completely opposite, right?”
On the budget debate, MethaneSAT’s untimely demise, and Nvidia
Current conditions: The northwestern U.S. faces “above average significant wildfire potential” for July • A month’s worth of rain fell over just 12 hours in China’s Hubei province, forcing evacuations • The top floor of the Eiffel Tower is closed today due to extreme heat.
The Senate finally passed its version of Trump’s One Big Beautiful Bill Act Tuesday morning, sending the tax package back to the House in hopes of delivering it to Trump by the July 4 holiday. The excise tax on renewables that had been stuffed into the bill over the weekend was removed after Senator Lisa Murkowski of Alaska struck a deal with the Senate leadership designed to secure her vote. In her piece examining exactly what’s in the bill, Heatmap’s Emily Pontecorvo explains that even without the excise tax, the bill would “gum up the works for clean energy projects across the spectrum due to new phase-out schedules for tax credits and fast-approaching deadlines to meet complex foreign sourcing rules.” Debate on the legislation begins on the House floor today. House Speaker Mike Johnson has said he doesn’t like the legislation, and a handful of other Republicans have already signaled they won’t vote for it.
The Environmental Protection Agency this week sent the White House a proposal that is expected to severely weaken the federal government’s ability to rein in planet-warming pollution. Details of the proposal, titled “Greenhouse Gas Endangerment Finding and Motor Vehicle Reconsideration,” aren’t clear yet, but EPA Administrator Lee Zeldin has reportedly been urging the Trump administration to repeal the 2009 “endangerment finding,” which explicitly identified greenhouse gases as a public health threat and gave the EPA the authority to regulate them. Striking down that finding would “free EPA from the legal obligation to regulate climate pollution from most sources, including power plants, cars and trucks, and virtually any other source,” wrote Alex Guillén at Politico. The title of the proposal suggests it aims to roll back EPA tailpipe emissions standards, as well.
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So long, MethaneSAT, we hardly knew ye. The Environmental Defense Fund said Tuesday that it had lost contact with its $88 million methane-detecting satellite, and that the spacecraft was “likely not recoverable.” The team is still trying to figure out exactly what happened. MethaneSAT launched into orbit last March and was collecting data about methane pollution from global fossil fuel infrastructure. “Thanks to MethaneSAT, we have gained critical insight about the distribution and volume of methane being released from oil and gas production areas,” EDF said. “We have also developed an unprecedented capability to interpret the measurements from space and translate them into volumes of methane released. This capacity will be valuable to other missions.“ The good news is that MethaneSAT was far from the only methane-tracking satellite in orbit.
Nvidia is backing a D.C.-based startup called Emerald AI that “enables AI data centers to flexibly adjust their power consumption from the electricity grid on demand.” Its goal is to make the grid more reliable while still meeting the growing energy demands of AI computing. The startup emerged from stealth this week with a $24.5 million seed round led by Radical Ventures and including funding from Nvidia. Emerald AI’s platform “acts as a smart mediator between the grid and a data center,” Nvidia explains. A field test of the software during a grid stress event in Phoenix, Arizona, demonstrated a 25% reduction in the energy consumption of AI workloads over three hours. “Renewable energy, which is intermittent and variable, is easier to add to a grid if that grid has lots of shock absorbers that can shift with changes in power supply,” said Ayse Coskun, Emerald AI’s chief scientist and a professor at Boston University. “Data centers can become some of those shock absorbers.”
In case you missed it: California Governor Gavin Newsom on Monday rolled back the state’s landmark Environmental Quality Act. The law, which had been in place since 1970, required environmental reviews for construction projects and had become a target for those looking to alleviate the state’s housing crisis. The change “means most urban developers will no longer have to study, predict, and mitigate the ways that new housing might affect local traffic, air pollution, flora and fauna, noise levels, groundwater quality, and objects of historic or archeological significance,” explainedCal Matters. On the other hand, it could also mean that much-needed housing projects get approved more quickly.
Tesla is expected to report its Q2 deliveries today, and analysts are projecting a year-over-year drop somewhere from 11% to 13%.
Jesse teaches Rob the basics of energy, power, and what it all has to do with the grid.
What is the difference between energy and power? How does the power grid work? And what’s the difference between a megawatt and a megawatt-hour?
On this week’s episode, we answer those questions and many, many more. This is the start of a new series: Shift Key Summer School. It’s a series of introductory “lecture conversations” meant to cover the basics of energy and the power grid for listeners of every experience level and background. In less than an hour, we try to get you up to speed on how to think about energy, power, horsepower, volts, amps, and what uses (approximately) 1 watt-hour, 1 kilowatt-hour, 1 megawatt-hour, and 1 gigawatt-hour.
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:
Jesse Jenkins: Let’s start with the joule. The joule is the SI unit for both work and energy. And the basic definition of energy is the ability to do work — not work in a job, but like work in the physics sense, meaning we are moving or displacing an object around. So a joule is defined as 1 newton-meter, among other things. It has an electrical equivalent, too. A newton is a unit of force, and force is accelerating a mass, from basic physics, over some distance in this case. So 1 meter of distance.
So we can break that down further, right? And we can describe the newton as 1 kilogram accelerated at 1 meter per second, squared. And then the work part is over a distance of one meter. So that kind of gives us a sense of something you feel. A kilogram, right, that’s 2.2 pounds. I don’t know, it’s like … I’m trying to think of something in my life that weighs a kilogram. Rob, can you think of something? A couple pounds of food, I guess. A liter of water weighs a kilogram by definition, as well. So if you’ve got like a liter bottle of soda, there’s your kilogram.
Then I want to move it over a meter. So I have a distance I’m displacing it. And then the question is, how fast do I want to do that? How quickly do I want to accelerate that movement? And that’s the acceleration part. And so from there, you kind of get a physical sense of this. If something requires more energy, if I’m moving more mass around, or if I’m moving that mass over a longer distance — 1 meter versus 100 meters versus a kilometer, right? — or if I want to accelerate that mass faster over that distance, so zero to 60 in three seconds versus zero to 60 in 10 seconds in your car, that’s going to take more energy.
Robinson Meyer: I am looking up what weighs … Oh, here we go: A 13-inch MacBook Air weighs about, a little more than a kilogram.
Jenkins: So your laptop. If you want to throw your laptop over a meter, accelerating at a pace of 1 meter per second, squared …
Meyer: That’s about a joule.
Jenkins: … that’s about a joule.
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Music for Shift Key is by Adam Kromelow.