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What’s a big multinational like Microsoft to do when it wants to build with clean concrete?
Imagine you’re a corporate sustainability exec and your company is planning to build a new data center. You’ve managed to convince the higher-ups to pay extra to use low-carbon building materials, lest the project blow up your brand’s emissions goals. But when you meet with the general contractor hired for the job, they don’t actually know of any low-carbon concrete purveyors in the area. Concrete is a hyper-local industry by necessity — you can’t hold the stuff for more than 90 minutes or so before it hardens and becomes unusable.
So here you are, one of the few people with the power and budget to pay a premium for zero-emissions concrete — a product that must become the standard if we are to stop climate change — and you can’t even get your hands on it.
This is, more or less, the situation Microsoft has found itself in. Last year, the company’s indirect emissions rose 31%, primarily due to the construction of new data centers. Cement, the main ingredient in concrete, is one of the most carbon-intensive materials on the planet, responsible for 6% of global emissions, according to Rhodium Group’s estimate. Low-carbon cement exists and is starting to be manufactured at a small scale, but first movers with deep pockets like Microsoft can’t necessarily access it.
To solve this and help clean cement startups access a bigger pool of buyers, Microsoft is leading the development of a new market for low-carbon cement — what climate finance experts call a “book and claim” market.
The tech giant has signed a memorandum of understanding with Sublime Systems, a Massachusetts-based cement startup, saying that it will buy “environmental attribute certificates” from Sublime’s first commercial cement plants. Microsoft will “book” the environmental attributes — the greenness, for lack of a better word — of Sublime’s cement, and “claim” those attributes in its own emissions accounting.
Let’s get a collective groan out of the way. Yes, once again, the business community is proposing a sort of carbon credit system as the best way — possibly the only way — to scale climate solutions. These certificates, however, have at least one notable difference from the beleaguered carbon offsets you’ve likely heard so much about: They are tied to a physical product. Microsoft won’t be buying one ton of CO2 avoided or removed from the atmosphere and then subtracting that from its overall emissions ledger. It will be buying the rights to say that it used one ton of cement with a carbon intensity of zero (or whatever the carbon intensity of Sublime’s product ends up being). Instead of neutralizing its cement-related emissions by paying someone to plant trees, it’s doing so by enabling Sublime to sell its clean cement to local buyers at a competitive price.
“It tremendously simplifies our logistics,” Leah Ellis, the CEO and founder of Sublime Systems told me, by solving the unavoidable problem that at this early point in the company’s development, it would be impossible to deliver its cement to all the early adopters willing to pay extra for it. “We end up doing death by 1,000 pilots if we have to pilot here, there, everywhere. Being able to use the cement locally and have the carbon attribute be counted against Microsoft's Scope 3 emissions is a really innovative way to unstick this whole problem.”
That’s key. Scope 3 is a category of emissions that encompasses all the carbon that is related to a business but not directly produced by it. When Microsoft builds a data center, it has no direct control over the process used to make the cement that goes into the building. In theory, it does have the ability to say, “We want to use clean stuff, not dirty stuff.” But in reality, companies are struggling to effect change within their supply chains.
“The thing to understand right out the gate is that basically no major consumer-facing company that uses things like steel or aluminum or cement knows where their stuff actually comes from,” Stephen Lezak, a researcher focused on carbon markets at the University of California, Berkeley, as well as at Oxford University, told me. He thinks that’s going to change, and hopes that in 15 years we all look back on this fact in horror. But in the meantime, “the urgency of the climate crisis requires using high integrity tools that aren't ideal, but still preserve fundamental integrity from a carbon accounting perspective,” he said.
Microsoft, for its part, told me it sees this transaction as a near-term solution and “prioritizes buying and installing physical product first” i.e., before buying certificates, “where technical, geographical, and supply chain considerations align.”
Sublime is currently building its first commercial plant in Holyoke, Massachusetts, which will use its unique zero-emissions process to produce 30,000 tons of cement per year. The Department of Energy awarded the company an $87 million grant to fund the project earlier this year. Holcim and CRH, two of the largest building materials companies in the world, have also invested in Sublime and agreed to purchase a large portion of the volume produced by the first plant.
Ellis hopes the deal with Microsoft will help attract additional investment and get the company through its “awkward teenage years.” Sublime needs to show investors that “people want this material, people will pay that green premium so that we can drive up the volume so that that premium goes away,” she said.
As with carbon offsets, there are still ways to game the system. Microsoft recently co-authored a report with the clean energy think tank RMI describing what a larger book and claim market for clean cement might look like and what questions need to be answered to ensure the market is credible. Until clean cement is just as cheap or cheaper than conventional cement, it’s pretty clear this kind of market will help reduce emissions. But should the environmental attributes be tied to cement, or to concrete? How should the carbon intensity be calculated? How will emissions be tracked and traced from the producer to the contractor to the building itself?
Perhaps the most critical question is how to avoid double-counting. If Microsoft is buying the right to say it used clean cement, what can the company that bought the actual cement say? Will it be able to brag that its building is green?
When I posed this question to Ellis, and Ben Skinner, a manager at RMI and one of the authors of the report, each gave me a version of the same answer: Yes and no.
Ellis launched into a passionate monologue about the concrete companies and contractors and structural engineers who should be celebrated for taking the risk of using a new material. “This problem of cement emissions is so intractable,” she said. “We need to make cement more visible. We need to talk about this more. We need more people to care. And so that physical embodiment, having it stamped ‘Sublime cement,’ and having a plaque that shows the public, hey, these are the emissions reduced by this thing you see here, you want to celebrate that physical embodiment.” At the end of all this, she added, “And by no means am I saying that you should double count.”
The suggestion is that it should be possible to separate carbon accounting and green marketing. If Microsoft has booked the green attributes of a delivery of cement, the contractors or building owners who used the physical stuff should not be able to claim they used clean cement on their emissions balance sheets, Skinner said. (What number they should use is a tricky question that will have to be solved.) But perhaps they still deserve some kind of recognition.
What kind of recognition, Lezak told me, is a gray area. “There's a really difficult part of this whole conversation, where you start anchored in material science and climate science and everything is really rigorous,” he said. “And at some point, the train sort of moves on to the political economy track, and it's really tough because you look for the same sort of black and white answers to these questions and they just don't show up.”
The details of the Microsoft deal and who can claim what are still being negotiated. At the same time, RMI and a new nonprofit called the Center for Green Market Activation have started work to stand up a larger book and claim market for cement. Their goal is to develop standards for how these certificates should be created, traded, and used so that companies that do not have the expertise or budget or resources that Microsoft has can access them. “We do think that it's possible to create a really high integrity system,” Skinner, told me.
Whether you like this idea or hate it, get ready to hear a lot more about it. The Center for Green Market Activation, which launched in June, is working to develop book and claim markets across a range of carbon intensive industries, including aviation, trucking, maritime shipping, and chemicals. There is one clear alternative to these paper-trading schemes — regulations that require companies to use more green materials over time. But proponents don’t see that happening anytime soon.
Lezak, though initially skeptical of these markets, has grown to support the idea. “There are people out there arguing that if you want to claim the emissions reduction in green steel, you need to make sure that the green steel actually shows up on your factory floor,” he said. “That's a beautiful idea, but you're talking about potentially pulling out the rug from billions of dollars of high integrity carbon finance.”
Editor’s note: This article has been updated to reflect the correct portion of the output from Sublime’s first plant Holcim and CRH have agreed to purchase.
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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 Institute 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.