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On the emergency in California, clean energy tax credits, and Exxon Mobil

Current conditions: It is 27 degrees Fahrenheit in Dallas, Texas, and snow is expected • The whole of England is under a cold weather health warning until Sunday • A water boil advisory is in effect for Richmond, Virginia, after a winter storm cut power to the city’s water treatment plant.
At least three wildfires are raging in Los Angeles, fanned by strong Santa Ana winds, warm weather, and exceptionally dry conditions. The largest blaze, the Palisades fire, has consumed some 3,000 acres in the Pacific Palisades area since it ignited yesterday and remains uncontained. More than 30,000 people have been told to evacuate. Two other blazes – the Eaton fire in Altadena and the Hurst fire near San Fernando – have also forced people to flee. Gov. Gavin Newsom declared a state of emergency yesterday. Wind gusts in some areas are near 100 mph. The National Weather Service warned the windstorm is likely to be the most destructive in over a decade.


Southern California usually gets some rain over the colder months, but just 0.29 inches of rain has fallen in L.A. since May of last year. On top of that, the area saw record-breaking heat over the summer, so conditions are exceptionally dry. “Locally record hot summer followed by a near-record dry fall followed by the strongest wind event in 14 years,” said Anthony Edwards, a meteorologist at the San Francisco Chronicle. “Energized power lines strung across a landscape that is home to tens of millions of people. Disaster recipe.” Some firefighters reported hydrants were not supplying water. The NWS issued a warning for extremely critical fire weather for Wednesday. Some 200,000 people are without power. “Hell of a way to start a new year,” Gov. Newsom said.
President-elect Donald Trump held a lengthy press conference at Mar-a-Lago yesterday, repeating some familiar climate and energy falsehoods and trotting out a few new ones. Trump threatened again to reverse President Biden’s newly-announced offshore drilling ban and the non-existent EV “mandate,” and also hinted at trying to ban the construction of new wind turbines. He took the opportunity to lament electric heaters because he said they make you “scratch and itch,” as well as low-flow shower heads because “no water comes out.” There is no time like the present to peruse Heatmap’s extensive fact-check of Trump’s climate and energy claims.
The Biden administration rolled out the pièce de résistance of its Inflation Reduction Act tax credits yesterday, publishing the final rules for its overhaul of the clean energy subsidies at the heart of both the bill and United States alternative energy policy going back decades. The final rules define what sources of energy are eligible for production and investment tax credits (known as 45Y and 48E) by lumping together all zero-emissions energy sources into one big group of winners and then letting developers choose which credit they want to use.
The tax credits cover “wind, solar, hydropower, marine and hydrokinetic, geothermal, nuclear,” according to a Treasury Department release, as well as “certain waste energy recovery property” (heat from buildings), and sets out a process for determining how combustion-dependent sources such as biogas, biomass, and natural gas derived from sources like cow manure could qualify. And unlike the tax credits they replaced, which had fixed time periods they were in effect, the tech neutral credits either begin phasing out in 2032 or when electricity sector greenhouse gas emissions are a quarter of their 2022 level, whichever comes second. “With Trump set to take office again in less than two weeks, these rules will be cast into doubt almost as soon as they’re rolled out,” wrote Heatmap’s Matthew Zeitlin. “So the administration is trying to cast the tax credits as a money-saving proposition for energy consumers — especially households — and a spur for investment across the country.”
Fossil fuel giant Exxon Mobil is suing California Attorney General Rob Bonta and some environmental groups, alleging they participated in a conspiracy to defame the firm and hurt its business. In recent lawsuits against Exxon, Bonta and the groups – including the Sierra Club – have accused the oil company of lying to the public about the recyclability of plastic (which, if you didn’t know, is mostly made from fossil fuels). Exxon now says those accusations were false and defamatory. “This is another attempt from Exxon Mobil to deflect attention from its own unlawful deception,” a spokesperson for the California Department of Justice told Grist. “The attorney general is proud to advance his lawsuit against Exxon Mobil and looks forward to vigorously litigating this case in court.” The Sierra Club called the lawsuit a “shameless attempt at intimidation.”
Car manufacturers in Europe are looking to “pool” their emissions and buy credits from major electric vehicle companies as a workaround to comply with the EU’s new emissions rules, Reuters reported. Companies including Ford, Toyota, Stellantis, and Subaru are looking to pool their emissions, and then buy surplus carbon credits from Tesla; Mercedes is eyeing a similar initiative with Polestar. The EU’s new rules, which came into effect on January 1, mean carmakers have to reduce emissions by 15% compared to 2021, or face steep fines. Many manufacturers called for the rules to be eased or delayed due to sluggish EV demand.
A recent report from the Department of Energy found that about 90% of wind turbine parts and “wind systems” can be recycled.
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Current conditions: The southwest monsoon known as “hagabat” has started in the Philippines, dumping up to 4 inches of rain on the archipelago • A strong geomagnetic storm, ranked just two levels below the most powerful type of event of this kind, is underway, threatening radio signals, GPS, and other human instruments that are sensitive to shifts in the Earth’s magnetic fields • San Antonio, where the glorious New York Knicks defeated the Spurs last night, is bracing for rain through the weekend.
To put it in terms a movie lover could understand, President Donald Trump’s Iran War is drinking the U.S. government’s milkshake. Federal stocks of oil have dropped to their lowest level since 2004. Commercial crude stocks fell by 8 million barrels to 433.7 million last week, according to The Wall Street Journal. Unless the Strait of Hormuz reopens soon — which looks less likely now that Iran has called off negotiations with the U.S. and Israel — prices could hit $200 per barrel by summer, said Bob McNally, president of the Rapidan Energy Group consultancy and a former White House adviser. “You start to raise the risk of spillover into other sectors, the economy and financial system … it detonates fragilities in the broader economy and financial system,” he told the Financial Times.
Oklahoma Attorney General Gentner Drummond has filed a lawsuit to block construction of the United States’ first new aluminum smelter in half a century over concerns about the project’s ties to the United Arab Emirates and risks it poses to the state’s cattle industry. Century Aluminum had planned to build the smelter with $500 million from the Biden administration. But in January, as I told you at the time, the company overhauled the deal to partner instead with the Abu Dhabi-based Emirates Global Aluminum, which said it became interested in the project after Trump slapped 50% tariffs on the metal. The move comes after Trump endorsed Drummond’s opponent in this year’s Republican primary for Oklahoma governor.
In the 12-page litigation, the state’s top cop alleged that the smelter, planned for a site 30 miles east of Tulsa, would “leach air and water pollutants that would injure the health, comfort, repose, and safety of the people in the region,” Mining.com reported. “A primary aluminum smelter does not belong in a community’s backyard and its emissions do not respect property lines,” Drummond wrote in the lawsuit, which asks the court to block the project. His lawsuit also refers to the UAE, a close ally of the U.S. and by far the most liberal of the Gulf Arab kingdoms, as an “Islamic foreign monarchy.”
The Electric Reliability Council of Texas, the state’s grid operator, approved what E&E News called two “landmark sets of rules of rules” this week that would “shape the future of data centers in the state if finalized.” One package sets up new criteria and processes for bringing big electricity users onto the grid by reviewing them in batches. The other requires data centers and crypto mining operations to remain online during brief grid disruptions in a bid to avoid the cascading outages that downed the electrical system during 2021’s deadly Winter Storm Uri.
The changes come as opposition to data centers reaches critical new heights. Seven in 10 Americans now oppose server facilities built near their homes, according to a new Heatmap Pro released a poll this week that my colleague Robinson Meyer wrote up here. The backlash has grown so severe that former Representative Ben McAdams, a Republican from Utah, is facing serious pushback from his Democratic opponent for the state’s new 1st Congressional District over his small stake in the renewable energy component of a proposed data center in the area, according to the Salt Lake Tribune.
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Taiwan, if you’ll forgive the pun, is in dire straits. The self-governing republic that has functioned as an independent country since the losing side of the Chinese Civil War fled there in 1949, is almost entirely reliant on imported fossil fuels to keep the lights on and semiconductor fabricators churning out the hardware that makes the island so valuable to the global economy. That reliance only grew last year when the ruling Democratic Progressive Party, which has opposed atomic energy since its founding in the 1980s, completed the country’s nuclear phaseout, shutting the last of the island’s three functioning plants. The government in Taipei is now considering starting back up at least one of the old nuclear plants. But, as I told you earlier this year, it’s also looking to geothermal to make up the difference. On Wednesday, the Ministry of Economic Affairs announced the first government-led tender for geothermal, Think Geoenergy reported. The six-month process is meant to develop geothermal zones in Taitung County, on the island’s southeast coast.
The Iran War isn’t just draining America’s crude stockpiles. It’s also spiking gas prices — and spurring a hybrid boom. Sales of hybrid vehicles revved 33% in May compared to the same month last year, according to a Wall Street Journal analysis of Motor Intelligence data. “The hybrids have been a godsend,” Mark Politte, the dealer principal at Stanley Subaru in Ellsworth, Maine, told the newspaper. They are “hotter than the non-hybrids.” While new vehicle sales are down 4.4% overall this year through May, hybrid sales are up 17% compared with 2025.
Meanwhile, autonomous electric vehicle company Waymo announced a deal on Thursday to recycle batteries from its nearly 4,000 operating robotaxis into battery storage for electric grids in California and Texas. Waymo’s fleet is made up mostly of Jaguar I-Pace EVs, which have 90-kilowatt-hour batteries. “Put a little haircut on that in terms of degradation and the effective capacity that would be left in those batteries when they’re suitable for repurposing, and we’re still talking about pretty significant capacity per battery,” Freeman Hall, CEO of B2U Storage Solutions, Waymo’s partner in the project, told Ars Technica.

The U.S. may be depleting its oil stockpiles, but it has increased its storage capacity for natural gas in the future. Underground storage capacity in the Lower 48 states increased slightly in 2025, growing mostly in the South Central and Mountain West regions, according to new data from the Energy Information Administration. “Underground natural gas storage provides a source of energy when demand increases, balancing U.S. energy needs,” analyst Jose Villar wrote. “We calculate natural gas storage capacity in two ways: demonstrated peak capacity and working gas design capacity. Both increased in 2025.”
Notes from Heatmap’s second Energy Entrepreneurship Summit.
I’m writing from Washington, D.C., today, after having the privilege of watching (and moderating) Heatmap’s second Energy Entrepreneurship Summit this morning. We heard from folks leading in a variety of technologies — geothermal, batteries, fusion, conventional nuclear — but I was struck by a few common themes.
The first was the new wave of excitement about fusion energy and how, in some ways, the artificial intelligence boom has reinvigorated the fusion conversation. Much like fusion, AI was a long-prophesied technology that made steady, iterative improvements over time — and then, one day, delivered a transformative product in the form of ChatGPT. I’m not sure if fusion has yet had a raw technological improvement on par with the transformer, the neural network innovation that preceded today’s AI chatbots and agents, but fusion startups have reported significant improvements in recent years. The industry believes — as do some fusion-pilled policymakers — that they will have commercial reactors on the grid by the mid-2030s.
The second is the degree to which surging electricity demand is pushing forward clean energy across the board. Although many (but not all) hyperscalers prefer to buy clean energy, the raw demand for power is fueling confidence among energy developers and technologists of all stripes. It’s great to make a commodity whose price is rising. At some point, this link between AI and electricity may become turbulent for developers — but we’re not there yet.
The final note is the degree to which U.S.-China competition now dominates conversations around the energy industry and the economy more broadly. I can remember a time when it was somewhat peculiar to point out that some forms of energy prowess strengthened the country’s national security — and that if the U.S. did not work those muscles, then China would. There was little overlap between the clean energy and security conversations. Now, the rise of globally competitive Chinese “electrotech” firms such as BYD, Xiaomi, and CATL has almost united the two discourses.
There is a growing recognition, too, that America will have to reindustrialize to compete. Policymakers sometimes talk about how the U.S. should use its (for now) still strong R&D apparatus to develop “leapfrog” technologies that can surpass Chinese products. But as America has by now repeatedly discovered, simply inventing a new technology is not enough. Creating an export industry — not to mention a business — actually requires commercializing that technology and scaling it. And that will entail the rudiments of an advanced industrial economy: more hardware factories, a larger grid, more manufacturing and process engineers.
These concerns over basic competitiveness colored discussions of even the most advanced technologies. Jackie Siebens, a vice president at the fusion startup Helion, said she was worried that fusion is going to “follow a story we’ve seen before,” where the United States demonstrates fusion first, “but China scales much more broadly.” Representative Don Beyer, a Democrat from Virginia who champions fusion, brought up a more fundamental concern: China is graduating hundreds of nuclear PhD engineers every year, he said, while America is only graduating a few dozen.
If affordability makes up one half of our new energy era, then these questions around competitiveness might be the other half. We’ll explore them, I’m sure, in the future. For now, thanks, as always, for reading.
Our latest Heatmap Pro poll found one big reason why public support for data centers has plummeted.
Americans’ support for data centers cratered over the past nine months. Rising electricity prices are a big part of the reason.
A Heatmap Pro poll conducted in May found that seven in 10 Americans would oppose a data center being built near where they live, up from four in 10 when we asked the same question in August 2025. We also polled people on mounting electricity costs, providing them with about a dozen potential explanations for the surge in prices and asking whether they blame each one “a lot,” “a little,” or “not at all.”
Here, too, the shift in sentiment was definitive. More than half of respondents blamed the construction of new data centers “a lot,” up from just 28% in August, making it the top concern on the list. In the earlier poll, “more demand for electricity overall” — a related issue — received the most blame, while construction of new data centers specifically sat near the bottom of the list.
Whether data centers deserve all this blame is complicated. Electricity prices were already rising before the race to power artificial intelligence began in earnest. According to Heatmap and MIT’s Electricity Price Hub, the national average price rose 21% from November 2020 to November 2022, when ChatGPT was first released to the public. Utilities have been raising rates to cover the cost of maintaining and upgrading the aging power grid, but the drivers are also region-specific. In the West, rates are rising because of wildfire insurance and mitigation efforts such as burying powerlines. (Interestingly, Americans blamed rising costs less on extreme weather, such as wildfires and heat waves, in our latest poll than they did last summer.)
As for what Americans think is driving those costs, our polling results were fairly consistent across regions. Construction of new data centers topped the list everywhere except in the West, where “the oil and gas industry” received one percentage point more blame, while the oil and gas industry came in a close second in the Midwest and Northeast. In the South, the war in Iran ranked second in respondents’ minds. We did, however, see a divide between urban and rural respondents, with slightly more urban residents who considered “the Trump administration and Republicans,” “the oil and gas industry,” and “the war in Iran” to be the major drivers of power prices than data centers.
Though data centers are not the only culprit, they have contributed to higher prices in a few areas, most notably in the PJM electricity market. Market experts warn that this trend will become widespread as the buildout progresses unless lawmakers and regulators make changes to protect residential customers.
“The projected growth in data center demand is beyond anything (short of wartime industries) ever asked of the American power sector,” Travis Kavulla, the head of policy at Base Power Company, wrote in a recent essay for American Affairs. That requires a new market structure, he argued at a Heatmap News event on Wednesday. Rather than the first-come-first served interconnection queue, he advocated for an “open season” model. “It’s a process whereby the incremental cost of building out the grid is mechanically assigned to the incremental load growth,” he explained, “whereas otherwise it might be socialized broadly across consumers — and in a time of increasing inflationary prices, that would lead to a lot of cross-subsidization. It’s both a speed to power thing and a customer affordability thing.”
As my colleague Jael Holzman has reported, state leaders have generally been more inclined to explore regulatory fixes to the problem of rising electricity prices than to enact moratoria on new data center construction, the preferred path for many grassroots activists who oppose data centers. States such as Oregon and Vermont have already passed rules that aim to protect ratepayers from data center expansion, and many more states have introduced bills to do the same.
“The public isn’t opposed to data centers, they’re opposed to paying for them on their power bill,” Sarah Hunt, the president and CEO of the right-leaning Rainey Center, told Jael in a separate story about how data centers are splintering the Republican Party. The Rainey Center’s own polling found that telling voters about policies such as President Trump’s Ratepayer Protection Pledge, a voluntary pact signed by big tech companies that agree to pay the full cost of connecting data centers to the grid, made them more likely overall to support AI data centers.
Heatmap’s polling found that blame toward data centers is escalating at about the same rate among all political parties, roughly doubling across the board. Among Republicans, 40% of those who identify as MAGA blamed data centers “a lot,” while 45% of those who identify as non-MAGA did. Democrats were generally more fervent, with 62% assigning major responsibility to data centers.
One other consistent feature in our polling is that both opposition to and blame for data centers is strongest among young people aged 18-34. Blame for data centers declined as respondents got older, with 67% of the youngest cohort pointing the finger most strongly at data centers compared to 44% of those over 65. (Aging Americans’ primary culprit for higher prices? An aging electrical grid.)
The Heatmap Pro poll of 4,118 American registered voters was conducted by Embold Research via text-to-web responses from May 15 to 28, 2026. The survey included interviews with Americans in all 50 states and Washington, D.C. The margin of sampling error is plus or minus 1.6 percentage points.