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From the source to the registers.
The term “heat pump” refers to any system that can extract heat from a colder space and transfer it to a warmer one. For example, refrigerators use heat pumps to remove heat from inside the fridge and expel it into your kitchen. Air conditioners use heat pumps to remove heat from inside the house and dump it outside. In this guide, the phrase “heat pump” refers specifically to HVAC equipment that is capable of both heating
and cooling the air inside a home. In other words, we’re talking about air conditioners that can also run in reverse, pulling heat from outside on a winter day and pumping it inside.
We’ve created this guide because when it comes to getting off fossil fuels, it does matter what you replace them with. Climate advocates tout electric heat pumps because they can create two to three times more heat per unit of energy than other heating equipment. Electric resistance heating, by contrast, is extremely wasteful, and if people start installing those systems en masse, that could actually increase emissions in the near term and make it more difficult to decarbonize the economy in the long term. By getting a heat pump, you won’t just be cutting emissions, you’ll be reducing the cost of cleaning up the electric grid because we’ll need less electricity overall.
That said, a poorly designed or installed system can negate many of the benefits that heat pumps have to offer. Whether you’re reading because you want to cut emissions, or save money on energy, or take advantage of the steady, quiet comfort heat pumps provide, it’s essential to do your homework and find a good contractor to work with. In this guide, we’ll cover how to know when it’s the right time to get heat pumps, the basics of understanding what your options are, common misconceptions about heat pumps, how to find and vet contractors, and more.
Larry Waters is the founder and president of Electrify My Home, a heating and air conditioning contractor in Northern California that specializes in heat pumps. Waters has worked in the HVAC industry for more than 40 years.
D.R. Richardson is the co-founder of Elephant Energy, a Boulder, Colorado-based startup that helps homeowners in Colorado and Massachusetts electrify by using building science and proprietary software to ensure good system design, and by managing all aspects of the project.
Jake Marinis the senior emerging opportunities manager for VEIC, a clean energy nonprofit that administers Vermont and D.C.’s energy efficiency programs among other decarbonization work across the country. Marin ran VEIC’s HVAC program for nearly 8 years and was recently given a “Champion of Energy Efficiency” award for his pioneering work bringing heat pumps to Vermont.
There are many, many kinds of electric heat pumps used for space heating and cooling. At a high level, there are two main categories that homeowners can typically choose from:
Within each of these are a handful of installation options:
The above designs aren’t mutually exclusive. You can install a system that’s fully ducted, fully ductless, or a combination of both. You can also combine a heat pump system with a fuel-burning furnace or boiler, known as a dual-fuel system. If aesthetics are important to you, there are also companies like Quilt that offer versions that can better integrate into the look of your home.
“Ductwork in unfinished space is easy. Ductwork in finished space is so expensive and hard that we typically don't recommend it,” said Richardson.
Heat pumps also come in models with different “speeds” or “stages”:
There are also some technical specifications to be aware of, such as seasonal efficiency ratings:
The highest rated SEER2 device may have a lower HSPF2 rating, while the highest rated HSPF2 device may have a lower SEER2 rating.
Finally, heat pumps also come in many different sizes. Having a properly sized system is one of the most important factors for ensuring your heat pumps run efficiently and last a long time.
A good contractor will be able to walk you through different system designs and equipment options to find the answer that’s best suited to your house, your goals, and your budget.
“There’s a lot of companies out there that offer just what they have in the catalog and their salespeople can’t sell anything outside of that,” Waters told me. “That means the customer is going to get matched with that cookie cutter option if they go with that company. So how to choose a contractor is one of the most important things.”
Many people are used to setting their HVAC systems to different temperatures at different times of day — one temp for the morning and evening, another for when they leave for work, and another for bedtime. This makes sense with many furnaces and air conditioners because they’re usually designed to cycle on, blast hot or cold air at full capacity until they achieve the temperature you want, and then turn off, so turning down the system when you’re not home can save a lot of energy. But the most efficient “variable speed” heat pumps work differently — they use a lot of energy to reach a certain temperature, but once they hit it, they sip small amounts of energy to maintain it. Experts say a “set it and forget it” approach will give you the most efficient performance and the most consistent energy bills.
“Don’t worry about the number,” says Marin. “Just find your comfortable temperature, and then leave it alone, forget it’s even there.”
This topic can be divisive among HVAC experts, but in most of the continental U.S., you should be able to find a heat pump solution that will heat your home efficiently on the coldest winter days. The key is that the system has to be sized correctly. Richardson’s company, Elephant Energy, works in Colorado, where he says they’ve had two years in a row with days that got down to -13 degrees Fahrenheit, “and our fleet of hundreds of heat pumps have cranked out heat to keep homes nice and warm on those coldest days.”
There still may be scenarios where you
want to keep your furnace as a back-up, even if it’s not strictly necessary.
If you’re switching from fuel oil, propane, or electric resistance heating, you’re pretty much guaranteed to save money on your bills with heat pumps. But if you’re switching from natural gas, it really depends on where you live.
Richardson says that for a lot of his customers in Colorado, making the switch from gas to inverter heat pumps is cost neutral — they end up paying a bit more for heating in the winter but less for cooling in the summer, since the heat pump is often more efficient than whatever air conditioning they were replacing. At the same time, those who don't have air conditioning to start with could end up paying a bit more year-round.
Do you…
Short answer: Hold off on a heat pump, invest in weatherization.
Long answer: You may have arrived at this guide because you’re interested in decarbonizing your home, but if you have a relatively new heating and/or cooling system, it could actually be worse, emissions-wise, to replace it, due to the embedded carbon that went into manufacturing that equipment. Unless you’re really desperate to replace your existing system for comfort or financial reasons (if you have electric resistance heaters, for example, switching to heat pumps could save you a lot of money, since they use about a third of the electricity), we recommend getting a bit more life out of it first.
In the meantime, put your enthusiasm for decarbonization into making your home more efficient. Insulating and air sealing your home before you get heat pumps will help you save money in the near term and get you the best results from heat pumps later on.
Short answer: Consider a dual fuel system
Long answer: If you really need a new air conditioning system but your heater still has a lot of life left in it, consider installing a heat pump to work alongside your existing furnace or boiler. That way, you’ll get efficient cooling capacity that will save you money in the summer, and you’ll also be able to cut down on your fossil fuel consumption in the winter. You can set the heat pump to warm your home until it gets down to a certain temperature outside, at which point your furnace or boiler will kick in. (Many heat pump models can operate in very cold temperatures, so having a backup heating system like this is not necessary, but it may be a good intermediate step in certain cases.)
Short answer: It’s the perfect time to think about heat pumps!
Long answer: HVAC equipment typically lasts for 15 to 20 years, so 10 years is probably the earliest you would want to start thinking about a replacement. It’s probably safe to wait a few years longer, but you definitely don’t want to wait until your existing system breaks to start your heat pump journey. A heat pump retrofit can be a months-long process, from finding contractors, to evaluating quotes, to refining your plan, to getting permits and scheduling the work. If you’re in an emergency situation where your boiler broke and you really need heat, you could be forced to settle for a less-than-ideal solution. At the very least, start your research now and consider weatherization upgrades.
Short answer: Get a mini-split!
Long answer: Ductless mini-split heat pumps are a no-brainer to provide heating and cooling to a single room or zone. They can be very affordable — and in some cases free — with rebates and tax credits. If you want to retrofit the rest of your home to use heat pumps down the line, this will help you get familiar with the technology and will not preclude you from adding more later — though it is helpful to tell your contractor that now so they can take it into account.
Heat pumps can be a major investment. If you just want to add heating or cooling capacity to one or two rooms, it can cost $5,000 to $7,000 per room, on average, before incentives, Richardson told me. A whole-home solution averages $20,000 to $30,000 before incentives, but depending on the home and the system design can go much higher.
Do you have some rooms that are hotter in the summer or colder in the winter than others and you want to make your home more comfortable overall? Or is your goal to get better air filtration and ventilation? Or do you simply want to get off fossil fuels? It will be helpful to think through what you want to achieve and communicate that to your contractor so they can take that into account when they design your system.
The federal government offers a 30% tax credit for heat pumps, up to $2,000, not including labor, for certain energy efficient models. (Note that you can only get the full tax credit if you have $2,000 or more in tax liability the year you install the heat pumps.) The credit can’t be rolled over to the next tax year, but you can claim it in multiple years. Your state energy office, city, or utility may offer additional tax credits or rebates.
It’s important to learn about what’s available in your area before reaching out to contractors because some rebate programs require you to work only with approved partners. Also, the contractors you reach out to might not always be up to date on the latest incentive programs, so it’s a good idea to do some independent research and make sure you find someone who knows how to help you take advantage. There is, unfortunately, not yet any single directory where you can enter your zip code and find out about every possible rebate opportunity everywhere in the country, so it’s best to check multiple sources of information:
As with all home renovation projects, we strongly recommend getting at least threequotes from different contractors.
Heat pumps are common in some parts of the country, but in others it might be difficult to find a contractor who really knows their stuff. Dip your toes in a heat pump Reddit forum and you’ll find scores of homeowners asking what to do after a contractor told them that heat pumps don’t work and they should just stick with gas. Here are a few strategies for finding high quality heat pump contractors, in order of what we recommend:
Finding the right contractor is probably the most important decision you’ll make in this entire process, and it’s not uncommon to get quotes with wildly different recommendations. Here are some questions you can ask to help you get a sense of who really knows what they are talking about and is willing to go the whole nine yards to make sure you get a properly designed system:
Manual J is a formula that helps a contractor identify the right size HVAC system for your home. It requires taking detailed measurements throughout the building, inspecting your home’s insulation and other elements that will affect airflow and heat retention, and performing tests such as the “blower door” to assess how leaky your building’s envelope is. If you’re interested in using your ductwork or installing new ductwork, they should also perform a “Manual D” calculation. Waters told me that despite these calculations being industry standards, very few contractors actually go through the trouble of doing them. “What this does, it tells us exactly what size system I need for heating and cooling, and exactly how much air goes into each room,” he said.
Richards agreed, adding that you may want to ask what technology they use to size the system. “You need somebody who has a technology-driven tool that can actually measure the heating and cooling requirements of your home,” he says. “Are you doing a true Manual J, or are you sort of sticking your finger up in the air?”
If your contractor only works with one brand of equipment, you’re more likely to get a solution that’s convenient for them rather than one that’s custom designed for you.
Waters told me the registers — the vents that release air into a given room — are critical for occupant comfort. If your existing ductwork is designed to distribute air from a furnace, your registers may be designed to push air into the middle of the room. But with heat pumps, you want the air either pushed up toward the ceiling if the vents are down low or across the ceiling if they are up high, so that the house doesn’t feel drafty and you get proper circulation.
If you’re starting with heat pumps but you eventually want to electrify your stove, your clothes dryer, or your car, your home may need an electric panel upgrade or an electric service upgrade from the utility. What you don’t want is to put in heat pumps that eat up the rest of your home’s capacity and then have to deal with pricey upgrades down the line.
The Building Performance Institute and North American Technician Excellence are two organizations that train and certify contractors, auditors, and technicians in the latest building science and best practices. A certification doesn’t guarantee you’ve found the right contractor — it could mean they know a lot about installing heat pumps but still don’t know much about the models that work in the coldest climates, for instance. But it’s a helpful data point that shows they are investing in training.
After you’ve found a contractor or company to work with, settled on a system design, and secured financing, your installer is going to need to secure permits for the work. Then you’ll need to schedule the installation, which, depending on how busy your contractor is, can take several weeks to several months. The actual work should take one to three days, depending on how complicated it is.
Also — talk to your contractor about maintenance. Be sure to clean the filters regularly and do anything else they recommend to get the best performance and longest life out of your equipment.
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The Ways and Means Committee released its proposed budget language, and it’s not pretty for clean energy.
The House Ways and Means Committee, which oversees tax policy, released its initial proposal to overhaul the nation’s clean energy tax credits on Monday afternoon. These are separate and in addition to the extensive cuts to Inflation Reduction Act grant programs proposed by the Energy and Commerce Committee, Transportation Committee, and Natural Resources Committee in the past few weeks.
Here’s a rundown of the tax credit proposal, which, at first glance, appears to amount to a back-door full repeal of the climate law. There’s a lot that could change before we get to a final budget, let alone have a text head to the Senate. We’ll have more analysis on what these changes would mean in the days and weeks to come.
The text proposes ending the tax credit for new EVs (that is, 30D) on December 31, 2025 — with one exception. The credit would remain in effect for one year, through the end of 2026, for vehicles produced by automakers that have sold fewer than 200,000 tax credit-qualified cars between 2010 and the end of this year. That means that no Teslas would qualify for the tax credit next year, as the company has sold far more than 200,000 tax credit-eligible vehicles. A new entrant to EVs, like Honda with its Prologue model, will likely still qualify.
The committee also proposes ending the tax credit for used EVs (25E) and commercial EVs (45W) by the end of this year. This would effectively end the “leasing loophole” that allowed Americans to redeem the tax credit on vehicles that didn’t qualify for 30D because they didn’t meet domestic content requirements, meaning consumers could get discounts on leases of a wide range of makes and models.
Lastly, the draft proposes terminating the tax credit for residential EV chargers (30C) at the end of this year.
The GOP has proposed an early phase-out of the technology-neutral production and investment tax credits, which subsidize zero-emissions power generation projects including wind, solar, energy storage, advanced nuclear, and geothermal. It also proposed significant changes for the years they remain in effect.
Currently, new clean electricity projects can earn a 2.75 cents for every kilowatt-hour they produce for the first 10 years under section 45Y of the tax code. Alternatively, project developers can get a 30% investment tax credit (48E) on new projects. The Inflation Reduction Act scheduled both of these programs to phase out beginning in 2032, and expire at the end of 2035. It included a major caveat, however: that this phase-out would only happen if greenhouse gas emissions from U.S. power generation fell below 25% of 2022 levels. Otherwise, the tax credits would be maintained at their initial amounts until this target was met.
Under the GOP proposal, both credits would start to phase down in 2029, and new projects would no longer be eligible for either credit beginning in 2032. The proposal also cuts out a key provision that would have grandfathered many more projects into the tax credit. Under current law, a project only has to start construction within a certain year to qualify for that year’s tax credit amount. The draft text changes this, requiring a project to be “placed in service” before 2032 in order to qualify.
A separate tax credit for existing nuclear power generation (45U) would also phase down on the same timeline, despite Trump and other Republicans’ interest in boosting nuclear energy.
“Transferability” supercharged the nation’s clean energy tax credits by allowing project developers with low tax liability to sell their credits to another entity that stood to benefit from them. Previously, developers could only monetize their unusable tax credits through complicated tax equity deals.
Recipients of a wide range of tax credits, including those for clean manufacturing, clean fuels, carbon capture, nuclear power, and hydrogen, can all take advantage of transferability. The provision channeled new capital into the climate economy as corporations looking to reduce their tax liability began scooping up tax credits, indirectly helping to finance clean energy projects. It also helped lower the cost of wind and solar, as developers could earn a premium on tax credits compared to what they got for tax equity transfers, because the whole transaction was cheaper to do.
The proposal would get rid of this option across all of the tax credits beginning in 2028.
The proposal would also impose new sourcing requirements across all of the tax credits, prohibiting developers from using components, subcomponents, or critical minerals sourced from “foreign entities of concern,” a term that applies to companies based in China, Russia, North Korea, or Iran. The consequences would be huge, as China dominates global markets for refined lithium, cobalt, graphite, and rare earths — key materials used in clean energy technologies.
The draft text would also terminate the clean manufacturing credit (45X) in 2032 — one year earlier than under existing law. Wind energy components such as blades, towers, and gearboxes would lose their eligibility sooner, in 2028.
The text proposes repealing three tax credits for residential energy efficiency improvements at the end of 2025. Starting next year, homeowners would no longer be able to claim the Energy Efficiency Home Improvement Credit (25C), which provides up to $3,200 per year for home energy audits, energy-saving windows and doors, air sealing and insulation, heat pumps, and new electrical panels.
It also proposes killing the Residential Clean Energy Credit (25D), which offered homeowners 30% off the cost of solar panels and battery systems to store energy from those solar panels. This credit also subsidizes geothermal home heating systems.
Both of these tax credits have existed in some form since the Energy Policy Act of 2005.
The third credit that would end this year is an up to $5,000 subsidy for contractors who construct new, energy efficient homes (45L).
The proposal would not repeal the energy efficiency tax deduction for improvements made to commercial buildings (179D).
The Inflation Reduction Act created a technology-neutral tax credit for low-carbon transportation fuels, like sustainable aviation fuel and biodiesel (45Z). It operates on a sliding scale, depending on how carbon-intensive the fuel is. The credit is set to expire after 2027, however the GOP proposal would extend it for four years, through the end of 2031.
That said, it would also make a significant change to how the credit is calculated, making it much easier for projects with questionable emissions benefits to qualify. Under the Biden administration, the Treasury Department issued rules that said producers had to account for the emissions tied to indirect land use changes resulting from fuel production. That meant that corn ethanol producers, for example, had to account for the expansion of croplands resulting from the increase of biofuel production and use — which would, in most cases, disqualify corn ethanol from claiming the tax credit. But under the GOP proposal, producers would explicitly not have to account for indirect land use changes.
The GOP proposal would deal a rapid and ruthless death blow to the 45V clean hydrogen production tax credit, requiring developers to begin construction before the end of this year if they want to claim it.
Other than ending transferability, the text makes no changes to the 45Q carbon capture and sequestration tax credit.
Most of the tax credits have provisions that allow project developers to qualify for higher amounts if they pay prevailing wages, hire apprentices, build in a qualified “energy community” or a low-income community, or use a certain percentage of domestically-produced materials. This initial draft from the GOP would not change any of those provisions.
The Energy and Commerce Committee dropped its budget proposal Sunday night.
Republicans on the House Committee on Energy and Commerce unveiled their draft budget proposal Sunday night, which features widespread cuts to the Inflation Reduction Act and other clean energy and environment programs.
The legislative language is part of the House’s reconciliation package, an emerging tax and spending bill that will seek to extend much of the 2017 Tax Cuts and Jobs Act, with reduced spending on the IRA and Medicaid helping to balance the budgetary scales.
The Energy and Commerce committee covers energy and environmental programs, while the Ways and Means Committee has jurisdiction over the core tax credits of the IRA that power much of America’s non-carbon power generation. Ways and Means has yet to release its draft budget proposal, which will be another major shoe to drop.
The core way the Energy and Commerce proposal generates budgetary savings is by proposing “rescissions” to existing programs, whereby unspent money would be yanked away.
The language also includes provisions to auction electromagnetic spectrum, as well as changes to Medicaid.Overall, the Congressional Budget Office told the committee, the recommendations would “reduce deficits by more than $880 billion” from 2025 to 2034, which was the target the committee was instructed to hit. The Sierra Club estimated that the cuts specifically to programs designed to help decarbonize heavy industry would add up to $1.6 billion.
The proposed rescissions would affect a number of energy financing and grant programs, including:
And that’s just the “energy” cuts. The language also includes a number of cuts to environmental programs, including:
Lastly, the proposal would also repeal federal tailpipe emission standards starting in the 2027 model year. These rules, which were finalized just last year, would have provided a major boost to the electric vehicle industry, perhaps pushing EV sales to over half of all new car sales by the beginning of the next decade. The language also repeals the latest gas-mileage standards, which were released last year and would have applied to the 2027 through 2031 model years, eventually bumping up miles-per-gallon industry-wide to over 50 by the 2031 model year.
What the Council on Foreign Relations’ new climate program gets drastically wrong.
Let’s start with two basic facts.
First, the climate crisis is here now, killing people, devastating communities, and destroying infrastructure in Los Angeles and Asheville and Spain and Pakistan and China. And it will get worse.
Second, Donald Trump is the President of the United States. He began the process to withdraw the United States from the Paris Agreement on January 20, 2025, his first day in office in his second term. (He, of course, did this in his first term as well.) He illegally froze funding for climate programs that had passed and became law during the Biden administration, and his administration continues to ignore court orders to unfreeze these monies. He has signed numerous executive orders, including onreinvigorating clean [sic] coal,reversing state-level climate policies, “Zero-based regulatory budgeting to unleash American energy,” and “unleashing” American energy, the last of which revoked more than a dozen Biden era executive orders.
How do we address a world that is increasingly shaped by these two facts?
One attempt can be seen in the Council on Foreign Relations’s new “Climate Realism Initiative.” Its statement of purpose attempts to make climate action palatable to MAGA world by securitizing it, framing climate change as a foreign threat to Fortress America. It calls for investing in next-generation technologies and geoengineering in the hopes of leapfrogging the Chinese-led clean energy revolution that is beginning to decarbonize the world today is the best realistic way forward.
This attempt is doomed to failure. Real climate realism for the United States is to stop the destruction of American state capacity, and then to reflect and build on areas of core strength including finance and software.
CRI’s launch document does not call for the U.S. to reduce its own emissions. I’ll say that again: There is no call for the U.S. to reduce its own emissions in the essay establishing the mission and objectives of the Climate Realism Initiative. Written by Varun Sivaram, formerly chief strategy and innovation officer at wind energy developer Orsted and now the leader of the initiative, the essay proposes that four dug-in “fallacies” are getting in the way of effective policy-making: that climate change “poses a manageable risk” to the U.S.; that “the world’s climate targets are achievable;” that the clean energy transition is a “win-in for U.S. interests and climate action;” and that “reducing U.S. domestic greenhouse gas emissions can make a meaningful difference.” For Sivaram, the problem is always other places and their emissions.
He then goes on to propose three “pillars” of climate realism: the need for America to prepare for a world “blowing through climate targets;” to “invest in globally competitive clean technology industries;” and to “lead international efforts to avert truly catastrophic climate change.” How an America that does not commit to reduce its own emissions will have any credibility or standing to lead international efforts is left unstated.
Sivaram attempts to trick the reader into overlooking America’s emissions by ignoring the facts of the past and focusing instead on guesses about the future. It’s true that in 2023, China produced more than a quarter of new global carbon pollution — more than the United States, Europe, and India combined. But no country has contributed more to the blanket of pollution that traps additional heat in our atmosphere than the United States, which has emitted over 430 billion tons of CO2, or 23% of the world’s total historical emissions. Even in 2023, the U.S. remained the world’s number two carbon polluter.
Sivaram goes further than merely minimizing the U.S. role in creating our current climate problems. Indeed, he sets up climate change as a problem that foreign countries are imposing on Americans. “Foreign emissions,” he writes, “are endangering the American homeland,” and the effects of climate disasters “resemble those if China or Indonesia were to launch missiles at the United States.” There is something to this rhetoric that is powerful — we should think about climate-induced disasters as serious threats and respond to them with the kind of resources that we lavish on the military industrial complex. But the idea that it is foreign emissions that are the primary source of this danger is almost Trumpian.
The initiatives proposed in the Climate Realism launch are the initiatives of giving up. Investing in resilience and adaptation is needed in any scenario, but tying this spending on adaptation to Trumpian notions of protecting our borders reeks of discredited lifeboat ethics, which only cares to save ourselves and leaves others to suffer for our sins. And while supporting next-generation technologies is an appropriate piece of the policy puzzle, they should be like the broccoli at a steakhouse: off to the side and mostly superfluous compared with the meat and potatoes of deployment and mitigation to decarbonize today.
Sivaram may argue that there’s no point in trying to compete against China in the technologies of today when Chinese firms are so dominant and apparently willing to make these products while earning minimal profits. And from a parochial profit-maximizing perspective, there is a business case that firms should not be building lots of new solar cell manufacturing facilities given global manufacturing capacity.
But if American automotive firms simply ignore the coming EV wave and hope against hope that some breakthrough in solid state batteries will allow them to leapfrog over the firms vying today, they are fooling themselves. Electric vehicle giant BYD and world-leading battery manufacturer CATL have both announced batteries that can charge a car in five minutes. Both are also moving in the solid state space, and CATL is pushing into sodium ion batteries.
The notion that U.S. firms ought to sit out this fight for strategic reasons also ignores how China has come to dominate these sectors — by investing in today’s state of the art and pushing it forward through incremental process improvements at scale. The Thielian notion that “competition is for losers” leads to an immense amount of waste as wannabe founders search for unbreakable technological advantages. If venture capitalists want to fund such bets, I’m not going to stop them. But as a policy prescription for climate realism, it fails.
The final gambit of the essay is to advocate for America-controlled geoengineering. This, too, is an area where research may be needed. But regardless, it is the kind of emergency backup plan that you hope that you never need to use, rather than something that should be central to anyone’s policy strategy. Trump is currently decimating American capacity to research hard problems, whether they be cancer or vaccines or social science or anything else, so it is difficult to imagine that this administration is likely to spend real resources to investigate geoengineering.
The Climate Realism Initiative pitches itself as “bipartisan.” But where is the MAGA coalition that supports this? Even simple spending on adaptation and resilience seems unlikely to find much of a political home given the Trump administration’s drastic cuts in weather and disaster forecasting. Sivaram even mentions the need to balance the budget as part of climate realism, which must be a sick joke. For all of the fanfare over cuts to the federal government under Trump, the budget deficit is the last thing that they care about. Tax cuts remain the coin of the realm, with the House budgetary guidelines expanding the deficit by $2.8 trillion. Elon Musk’s Department of Government Efficiency, similarly, has a distorted notion of government efficiency, ignoring the returns to government investments and gutting the tax collection capacity of the IRS.
The Biden administration had plans — “all of the above” energy among them — that were coherent, if not necessarily the most appealing to the world. They were based on the idea that a resilient climate coalition in the U.S. required more than just deploying Chinese-made products.
CRI seems to want to engage instead in a fantasy conversation where anti-Chinese nationalism can unite Americans to fight climate change — an all-form, no-content negative sum realpolitik that does little to address the real, compelling, and deeply political questions that the climate crisis poses.
Alternative visions are possible. The American economy is services based. Americans and American firms will inevitably make some of the hardware components of the energy transition, but the opportunities that play to our strengths are mostly on the software side.
It is critical to remember that the clean technologies that power the energy transition are categorically different from the fossil fuels that the world burned (and still burns) for energy. We do not require a constant stream of these technologies to operate our economy. The solar panels on your roof or in the field outside of town still generate electricity even if you can’t buy new ones because of a trade war. Same with wind turbines. In fact, renewables are a source of energy security because the generation happens from domestic natural resources — the sun and wind. Yet smart thinkers like Jake Sullivan fall into the trap of treating “dependence” on Chinese renewable technologies as analogous to European dependence on Russian natural gas.
Even China’s ban on U.S.-bound rare earth exports won’t make much of a dent. Despite the name, rare earths aren’t that rare, and while China does dominate their processing, it’s a tiny industry; in making fun of the “critical” nature of rare earths, Bloomberg opinion writer Javier Blas noted that the total imports of rare earths from China to the U.S. in 2024 was $170 million, or about 0.03% of U.S.-China trade. That being said, the major concern is if supplies fall to zero then major processes that require tiny amounts of rare earths (like Yttria and turbine construction) could be completely halted with serious fallout.
The American government should carefully choose what industries it would like to support. Commodity factories that have little-to-no profits, like solar cells, seem unattractive. There are many more jobs in installing solar than there are in manufacturing it, after all.
On the other hand, sectors with a much larger existing domestic industry, such as wind turbines and especially automobiles, should not be left to wither. But rather than a tariff wall to protect them, the U.S. auto firms should be encouraged to partner with the leading firms — even if those firms are Chinese — to build joint ventures in the American heartland, so that they and the American people can participate in the EV shift.
But the core of real climate realism for the United States is not about new factories. It’s about playing to our strengths. The United States has the best finance and technology sectors in the world, and these should be used to help decarbonize at home and around the world. This climate realism agenda can come in left- and right-wing flavors. A leftist vision is likely state-led with designs, guides, and plans, while the right-wing vision relies on markets.
Take Texas. On May 7, 2020, the Texas grid set a record with 21.4 gigawatts of renewable electricity generation. Just five years later, that figure hit 41.9 gigawatts. Solar and batteries have exploded on the grid, with capacity hitting 30 gigawatts and 10 gigawatts respectively. They have grown so rapidly because of the state’s market-based system, with its low barriers to interconnection and competitive dynamics.
Of course, not every location is blessed with as much wind, sun, and open space as Texas. But there’s no reason why its market systems can’t be a template for other states and countries. This, too, is industrial policy — not just the factory workers building the technologies or even the installers deploying them. There is lots of work for the lawyers and power systems engineers and advertisers and policy analysts and bankers and consultants, as well.
Yet instead of seizing these real chances to push climate action forward at home and abroad, the Trump administration is eviscerating American state capacity, the rule of law, and global trust in the government. The whipsawing of Trump’s tariffs generates uncertainty that undercuts investment. The destruction of government support for scientific exploration hits at the next-generation moonshots that Sivaram is so enamored of, as well as the institutions that educate our citizens and train our workforce. Trump’s blatant disregard for court orders and his regime’s cronyism undercut belief in the rule of law, and that investments will rise and fall based on their economics rather than how close they are to the President.
But it’s not just Trump. Texas legislators are on the verge of destroying the golden goose of cheap electricity through rapid renewables deployment out of a desire to own the libs. Despite the huge economic returns to rural communities that have seen so much utility-scale expansion in the state, some Republican legislators are pushing bills that would stick their fingers into the electricity market pie, undercutting the renewable expansion and mandating expensive gas expansion.
The Trump business coalition, which was mostly vibes in the first place, is fracturing. There are conflicting interests between those who want to fight inflation and those who see low oil prices as a problem. Pushing down oil prices by pressuring OPEC+ to pump more crude and depressing global economic outlooks with the trade war (Degrowth Donald!) has hurt the frackers in Texas. Ironically, one way to lower their costs is to electrify operations, so they don’t have to rely on expensive diesel.
Climate change is here, but so is Donald Trump. Ignoring either one is a recipe for disaster as they both create destructive whirlwinds and traffic in uncertainty. The real solution to both is mitigation — doing everything possible today to stop as much of the damage as possible before it happens.