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How Republicans and Democrats came together to seed new industries in specific places
The Biden administration announced on Friday that it would spend up to $7 billion to create seven new “hydrogen hubs” across the country. These hubs will house large-scale industrial facilities specializing in producing, moving, and using hydrogen, a potent gas that could play a range of roles in a climate-friendly economy. Hydrogen, which does not emit carbon pollution when burned, could decarbonize long-distance trucking, energy storage, chemical making, and heavy industry.
These hubs will, as my colleague Emily Pontecorvo writes, become important public-private laboratories for the use of clean hydrogen. They will complement tens of billions of dollars in tax credits that could soon support a clean hydrogen industry.
Although these hubs are a key part of the president’s climate strategy, they are not created by his signature climate law, the Inflation Reduction Act. They were funded, instead, by the bipartisan infrastructure law, which passed in December 2021.
That same legislation also spent $3.5 billion to create new direct air capture hubs, big regional facilities that will deploy technology capable of sucking carbon dioxide from the ambient air. In August, the Energy Department awarded the first of those hubs to Texas and Louisiana.
It matters that these two “hub”-based programs command some measure of bipartisan support. It signals, first, that these programs are likely to endure even if the GOP takes the White House next year. It shows, too, that Republicans in Congress — and especially in the Senate, where 19 Republicans voted for the infrastructure law — can back climate policy under some conditions. (Even if those conditions might involve having to negotiate with a Democratic president.)
It certainly helps, too, that hydrogen and direct air capture are two potentially climate-friendly industries where the fossil fuel industry could play the largest role. The chief executive of Occidental Petroleum, a fossil-fuel company that is building one of the first air-capture hubs, has even argued that carbon removal technology could allow the oil and gas industry to operate for decades to come.
But the bipartisan support for these programs reveal something else, too — a deeper change in how America’s leaders think about governing and growing the economy. Most coverage of the hubs has elided the fact that they’re called “hubs,” almost treating the word “hub” as a synonym for “big new economic thing.” But the hubs are called “hubs” for a reason; don’t snub the hubness of the hubs. The hubs are meant to do more than create new experimental industrial facilities at taxpayer expense. They are meant to seed specific industries in specific places, creating new centers of gravity that will allow new regional economies to form.
The idea behind the hubs goes back more than a decade. In 2010, a team of researchers at the Massachusetts Institute of Technology looked around the U.S. economy and realized something strange: Although many of the world’s most innovative and profitable companies did their R&D, design, and distribution in America, very few of them made their products here. Think of Apple, for instance, whose iPhones then bore the inscription: “Designed in California. Assembled in China.”
Why was that?, the team asked. That arrangement distorted the economy, depriving working-class people of the benefits of new industries. It also seemed unsustainable. “Without production capabilities in the U.S., can we generate new growth and jobs?” asked Suzanne Berger, a political science professor who led the project. “Can we even sustain innovation without manufacturing capabilities in the U.S.?”
The U.S. could not go on like this forever, they concluded, because innovation in design was inseparable from innovation in production. Many industries — including biotech, material science, and clean energy — required engineers to constantly flit back and forth from the factory floor to the lab, bringing problems encountered by assembly technicians back to the design engineers.
But this tight circuit of design, production, and design again didn’t just happen within influential companies, like Ford, AT&T, and 3M. One takeaway from their report, Making in America, is that innovation emerges from skilled communities of practice located in specific places. When a big company opens a factory or R&D lab somewhere, an ecosystem grows up around it. Small- and medium-sized manufacturers with their own expertise cluster around that big firm, because they can make a living by selling their own goods and services to that firm (or its competitors).
Speaking to a Senate committee in 2013, Berger described what happened when her team visited the laboratory of Tonio Buonassisi, a mechanical engineer then building a new type of solar cell. Buonassisi’s lab in Cambridge, Massachusetts, was full of cutting-edge equipment that had been made by an instrument company located only a couple hours away.
“Much of [that] machinery had been made in close collaboration between the lab and the instrument companies as they handed ideas and components and prototypes back and forth,” Berger said. “Used for the first time in the lab, these tools were now being marketed to commercial solar companies.”
At the time, the domestic solar industry was collapsing, and it worried Buonassisi. If American solar-cell makers went out of business, then it would put his specialty toolmaker out of business, too — and slow down or possibly end his own research agenda. “Even in a fragmented global economy with instant connection over the Internet to anywhere in the world,” Berger said, the close geographic ties “that connect research in its earliest stages to production in its final phases remain vital.”
When you start looking, you see endless evidence of these ecologies of production, these skilled communities of practice, everywhere. Silicon Valley once earned its name because it housed a booming semiconductor manufacturing industry nurtured by the Defense Department. A chip conductor at Intel could access a specialty lens maker, or metallurgist, or chemicals maker only a short drive away; even outside of work, these people met at bars and socialized in the same places. Soon, that semiconductor ecosystem gave rise to other adjacent businesses: a software industry that could write code for those semiconductors, and a personal computing industry that could make semiconductors useful to mass-market consumers; those industries gave rise to today’s tech industry.
Nor was that region’s power solely rooted in its technicians. The banks near Silicon Valley grew so familiar with the hardware and software industries that they could finance companies there more easily and cheaply than other financial institutions. One of those institutions even named itself after Silicon Valley.
Today, America has relatively few of these innovative clusters left. The point of the hub-based strategy is to build them back. The idea of the hubs isn’t only that America will get seven new large-scale facilities that produce or process hydrogen, or four new facilities that suck carbon out of the air. The object is that these big facilities will anchor new skilled communities of practice, the same way that, say, a deep-sea volcanic vent gives rise to an entire colorful food chain. President Biden might be announcing a new Philadelphia-based hydrogen hub today, but we won’t know if that hub will be a success until it’s scuttling with metallurgists and chemists and financiers and specialty electricians in 10 years.
The hydrogen and direct air capture facilities, in other words, are meant to grow into true hubs — hubs of engineering, hubs of finance, hubs of innovation. The government, having recognized that new industries and industrial centers will not form naturally, is now trying to seed them intentionally.
That is far from the laissez faire approach to innovation once embraced by policymakers. And it matters that Democrats and Republicans alike have embraced it in the infrastructure law: It reveals the growing belief that free markets alone will not keep America at the top of the global economy. Today’s announcement might be the first time you hear about a new federally supported “hub.” It probably won’t be the last.
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Reading between the lines of Governor Kathy Hochul’s big nuclear announcement.
With New York City temperatures reaching well into the 90s, the state grid running on almost two-thirds fossil fuels, and the man who was instrumental in shutting down one of the state’s largest sources of carbon-free power vying for a political comeback on Tuesday, New York Governor Kathy Hochul announced on Monday that she wants to bring new, public nuclear power back to the state.
Specifically, Hochul directed the New York Power Authority, the state power agency, to develop at least 1 gigawatt of new nuclear capacity upstate. While the New York City region hasn’t had a nuclear power plant since then-Governor Andrew Cuomo shut down Indian Point in 2021, there are three nuclear power plants currently operating closer to the 49th Parallel: Ginna, FitzPatrick, and Nine Mile Point, which together have almost 3.5 gigawatts of capacity and provide about a fifth of the state’s electric power,according to the nuclear advocacy group Nuclear New York. All three are now owned and operated by Constellation Energy, though FitzPatrick was previously owned by NYPA.
Hochul’s announcement did not specify a design or even a location for the new plant, but there were some hints. The press release describes “at least one new nuclear energy facility with no less than one gigawatt of electricity.” While 1 gigawatt is the capacity of a Westinghouse AP1000, the large, light-water reactor built at Plant Vogtle in Georgia, the explanation seems to leave room for the possibility of multiple, smaller plants.
Then there was where Hochul chose to make the announcement, in front of the monumental Robert Moses Niagara Power Plant, which, when it was built in 1961, was the largest hydropower plant in the western hemisphere. The release includes an intriguing reference to the country just on the other side of the river, saying that the plan “will allow for future collaboration with other states and Ontario, building on regional momentum to strengthen nuclear supply chains, share best practices, and support the responsible deployment of advanced nuclear technologies.”
To me at least, all this points to the possibility that we could actually be talking about a small modular reactor, specifically GE Hitachi’s BWRX-300, one of a handful of SMR designs vying for both regulatory approval and commercial viability in the U.S. Canada’s Ontario Power Generation recently approved a plan to build one, with the idea to eventually build three more for a total 1.2 gigawatts of generating capacity, i.e. roughly the amount Hochul’s targeting. The Tennessee Valley Authority, America’s largest public power provider, is also looking at building a BWRX-300. Whichever is completed first will become the first operating SMR in North America. (A NYPA spokesperson told me there has been “no determination on technology yet,” nor on location.)
There are a few policy conclusions we can draw from the announcement, as well, one being that Hochul has determined New York’s energy needs do not match up with its current, renewables-heavy energy roadmap set out more than five years ago. The 2019 Climate Leadership and Community Protection Act (signed by Cuomo) set out a goal for New York to supply 70% of its electricity with renewables by 2030; about a year ago, the Hochul administration said that it would likely not meet that target, which has only slipped farther from view under the Trump administration’s assault on the offshore wind industry, which was supposed to anchor the state’s renewables supply — especially near New York City, where land is scarce but shoreline is plentiful.
The new nuclear plan also has a distinctively upstate appeal, which is not surprising considering Hochul’s Buffalo roots. (She said during the announcement that she had visited the Niagara plant, which is just outside Buffalo, “so many times.”) The upstate power grid is less carbon intensive than the downstate grid and is due to receive much of the wind and solar development necessary to meet New York’s climate goals. But the northern reaches of the state are also more politically conservative and more rural, making it both an inviting target for renewables development and a potential wellspring of opposition.
“The fundamental challenge of wind, solar, and storage across upstate is that it’s subject to a lot of local opposition,” Ben Furnas, who served as director of the Mayor’s Office of Climate and Sustainability in New York City, told me. “Something that’s remarkable about nuclear power is that the land footprint is more modest.” (The NYPA spokesperson said that NYPA’s own plans for renewable development were not being altered.)
Nuclear power plants can also be economic lifelines — especially in rural areas — due to the permanent, high-paying jobs they support and direct economic benefits to the surrounding communities.
“There’s a lot of real win-win deals to be struck,” Furnas said. “It’s not an unknown, radical, alien notion. Plenty of people work in those plants and live near them. It’s a very different politics than what was happening in Hudson Valley around Indian Point,” where environmental groups like Riverkeeper (long associated with former Cuomo associate and current Secretary of Health and Human Services Robert F. Kennedy, Jr.), had worked for years to shut down the plant.
Monday’s nuclear announcement included supportive quotes not just from the usual suspects of state energy and environmental officials and union leaders, but also from the chief executive of Micron, which is set to start working on a semiconductor fabrication facility in the central part of the state. “A critical factor in the success of the semiconductor ecosystem is access to affordable, reliable energy. We commend New York State for advancing an all-of-the-above energy strategy — including nuclear power,” Micron CEO Sanjay Mehrotra said in a statement.
“To power this one facility, Micron is going to need so much power — so much incredible power — and there’s only one commercially viable option that can deliver that much clean, renewable, reliable power, and that’s what’s been operating in New York for decades: nuclear energy,” Hochul said Monday. “Harnessing the power of the atom is the best way to generate steady zero-emission electricity, and to help this transition.”
The mainstream environmental groups that supported the renewables-focused 2019 law (many of which either oppose nuclear power or are at best neutral towards it) were nowhere to be found during today’s announcement, however, and the plan has already drawn skepticism from some progressives.
Liz Krueger, a Manhattan Democrat who chairs the New York state senate’s finance committee, said in a statement that she had “significant concerns” about the nuclear plan, including its cost effectiveness, how to dispose of nuclear waste, the time required to site and build the project, whether other renewable options could fill the gap instead, and whether it has the “full informed consent from impacted communities.”
“I have yet to see any real-world examples of new nuclear development” that have met all these concerns, Krueger said. New York has a checkered history of nuclear development: Long Island ratepayers spent decadespaying for the completed but never operational Shoreham nuclear plant, whose costs ballooned by billions of dollars as construction dragged on from 1973 to 1984.
But the announcement comes at a time when the federal regulatory and tax balance is tipping toward nuclear regardless. The Trump administration issued a fleet of executive orders looking to speed up nuclear construction and regulatory approvals, and Senate Republicans’ version of the mega budget reconciliation bill includes far more generous treatment of nuclear development compared to wind and solar.
Public Power NY, an advocacy group that supports renewables development by NYPA, expressed skepticism about the nuclear plan in spite of these supportive signs.
“Hochul’s decision to step in based on promises from Donald Trump shows just how unserious she is about New Yorker’s energy bills and climate future. NYPA should be laser focused on rapidly scaling up their buildout of affordable solar and wind which is the only way to meet the state’s science-based climate goals and lower energy bills,” the group said in a statement.
For his part, Furnas was more pragmatic. “It’s really good that Governor Hochul is putting everything on the table when it comes to ensuring reliable generation for New York State and to meet clean air and carbon emission goals,” he said. “It would be foolish and unfortunate to not look at everything she can.”
Hochul herself appears determined to push through.
During the announcement, referring to the buzzing power plant behind her, Hochul said that “belief in sometimes impossible ideas” can bring people together. The power plant currently standing on that site was built in less than three years after an earlier plant on the Niagara collapsed. New nuclear power in New York may have seemed impossible, but it might still happen.
Even as Iran retaliated against U.S. airstrikes, prices have stayed calm.
Oil prices have stayed stable so far following the U.S. strikes on Iranian nuclear facilities over the weekend, and President Donald Trump wants to keep it that way.
In two consecutive posts on Truth Social Monday morning, the president wrote “To The Department of Energy: DRILL, BABY, DRILL!!! And I mean NOW!!!” and “EVERYONE, KEEP OIL PRICES DOWN. I’M WATCHING! YOU’RE PLAYING RIGHT INTO THE HANDS OF THE ENEMY. DON’T DO IT!”
While Iran, of course, does not yet have an actual nuclear weapon, it does have a kind of “nuclear option” to retaliate: closing off the Strait of Hormuz, which separates the oil-rich countries like Qatar, Bahrain, Kuwait, and Iraq (and Iran’s own largest ports) from the Indian Ocean, and by extension all of global shipping. Iran’s parliament approved closing off the strait, but any real effort to do so would have to come from Iran’s most senior leadership, which has not so far seemed inclined to torpedo its own economy.
Markets, at least so far, do not see much more risk today than they did before the U.S. airstrikes. West Texas Intermediate oil price benchmark sat at just over $74 a barrel Monday morning, up substantially from its low of just over $57 in early May, but up only mildly from its $68 a barrel level on June 12, the day before Israel began bombing Iran. Prices are basically flat since Friday, even after Iran said it had launched a strike on an American base in Qatar.
“Multiple oil tankers crossing the Strait of Hormuz this morning, both in and outbound,” Bloomberg’s Javier Blas wrote on X Monday morning. “No[t] even a hint of disruption. Oil loading across multiple ports in the Persian Gulf appears normal. If anything, export rates over the last week are higher than earlier in June.”
As Greg Brew, an analyst at the Eurasia Group, told me, “The Hormuz risk is generally overstated. The Iranian threats are mostly rhetoric and meant for domestic political consumption. Hardliners in particular will use threats to close the strait as a means of letting off steam following the U.S. bombing of Fordow.”
“In reality,” he went on, “Iran faces a massive disparity in forces in the Gulf. A move to close Hormuz would be near suicidal as it would expand the scope of the war, drag in the Gulf states as well as the U.S., and imperil Iran’'s own energy exports at a time when the regime will need every financial and economic lifeline it can get.”
Inasmuch as oil prices have moved in the past few weeks, it’s been in response to the perceived increased risk of some kind of cataclysm to the world oil trade — even if the actual chances of the strait being entirely closed to tanker traffic remains low.
“Prices remain elevated on account of the regional risk, and are likely to remain in the $70s or low $80s until we see a pathway toward broader de-escalation,” Brew said.
For the American oil industry, however, a more nervous market might be a more profitable one.
Aniket Shah, an analyst at Jefferies, wrote a note to clients over the weekend attributing the increase since May to “rising tensions around the Strait of Hormuz, which channels ~20% of global oil shipments.”
“While the US imports less Middle Eastern oil than in past decades, global price shocks still drive up domestic fuel and transport costs,” he wrote.
In the months running up to the recent oil price increase, American drillers were facing an unpleasant combination of tariffs, increased production overseas (encouraged by Trump), and low prices at home, which wrecked their capital planning. Some domestic oil and gas drillers like Matador in April and Diamondback in May told their investors they planned to decrease their planned capital expenditures; over the past two months, drillers have been slowly but steadily taking rigs offline, according to the widely watched Baker Hughes rig count.
Conflict in the Middle East could therefore provide some relief (at least for the oil and gas industry) at home. “U.S. producers are among the winners here,” Brew told me. “A few months of higher prices will offer a nice hedge for shale drillers and ease their plans to reduce expenditure and output for the year.”
But higher profits for oil drillers will not necessarily translate into increased production, as Trump has commanded. “Since this is all based on risk premium and does not reflect a change in fundamentals, shale drillers are likely to deliver the gains to shareholders rather than pumping the money back into production,” Brew explained. “An overall drop in U.S. onshore output in 2025 is probably still in the cards.”
In that scenario, oil company profits would rise while production would fall year-over-year. And that would likely mean an even more infuriated Trump, who has also recently reignited his campaign to push Federal Reserve Chair Jerome Powell to cut interest rates, citing several months of low inflation.
“Elevated oil prices risk stalling recent disinflation trends and complicates the Fed’s path to rate cuts,” Shah wrote.
Even if the strait remains open, if oil prices don’t fall, expect more Truths.
On record-breaking temperatures, oil prices, and Tesla Robotaxis
Current conditions: Wildfires are raging on the Greek island of Chios • Forecasters are monitoring a low-pressure system in the Atlantic that could become a tropical storm sometime today • Residents in eastern North Dakota are cleaning up after tornadoes ripped through the area over the weekend, killing at least three people.
A dangerous heat wave moves from the Midwest toward the East Coast this week, and is expected to challenge long-standing heat records. In many places, temperatures could hit 100 degrees Fahrenheit and feel even warmer when humidity is factored in. “High overnight temperatures will create a lack of overnight cooling, significantly increasing the danger,” according to the National Weather Service. Extreme heat warnings and advisories are in effect from Maine through the Carolinas, across the Ohio Valley and down into southern states like Mississippi and Louisiana. “It’s basically everywhere east of the Rockies,” National Weather Service meteorologist Mark Gehring told The Associated Press. “That is unusual, to have this massive area of high dew points and heat.”
AccuWeather
Regional grid operator PJM Interconnection, which covers 13 states, issued an energy emergency alert for today. The alert urges power transmission and generation owners to delay any planned maintenance so that no grid sources are out of commission as temperatures soar. A heat wave of this nature is rare this early in the summer. The last time temperatures hit 100 degrees in June in New York City, for example, was in 1995, according to AccuWeather. Heat waves are becoming more frequent and more intense as the climate warms. Here’s a look at how these events have changed over the past 60 years or so:
Oil markets are jittery this morning after Iran’s parliament endorsed a measure to block the Strait of Hormuz in response to U.S. strikes on Iranian nuclear facilities. About 20% of the world’s oil and liquified natural gas shipments travel through the shipping route, and as The Wall Street Journalexplains, the supplies “dictate prices paid by U.S. drivers and air travelers.” Oil prices rose to five-month highs this morning on the news. Tehran has long threatened to close the strait, but such a move is seen as unlikely because it would disrupt Iran’s own energy exports, which are its “sole global energy revenue stream,” one analyst told the Journal.
A handful of climate-related provisions in the GOP’s reconciliation bill are in limbo after the Senate parliamentarian advised that the policies violated the “Byrd Rule,” i.e. were deemed extraneous to budgetary matters, and thus were subject to a 60-vote threshold instead of the simple majority allowed for reconciliation. The provisions include:
The Senate Finance Committee is set to meet with the parliamentarian today.
In case you missed it: The Supreme Court on Friday gave the green light for fuel producers to challenge a Clean Air Act waiver issued by the EPA that lets California set tougher vehicle emissions standards than those at the federal level. A lower court rejected the lawsuit from Diamond Alternative Energy and other challengers last year, but as Justice Brett Kavanaugh wrote for the majority, California’s ambitious Zero-Emission Vehicle Program is hurting fuel producers, so they have standing to sue. The vote was 7 to 2, with Justices Sonia Sotomayor and Ketanji Brown Jackson dissenting.
As Heatmap’s Katie Brigham has explained, if the EPA waiver is eliminated, Tesla could take a big financial hit. That’s because the zero-emissions vehicle program lets automakers earn credits based on the number and type of ZEVs they produce, and since Tesla is a pure-play EV company, it has always generated more credits than it needs. “The sale of all regulatory credits combined earned the company a total of $595 million in the first quarter [of 2025] on a net income of just $409 million,” Brigham reported. “That is, they represented its entire margin of profitability. On the whole, credits represented 38% of Tesla’s net income last year.”
Tesla launched its Robotaxi service in Austin, Texas, over the weekend. A small number of rides were doled out to hand-picked influencers and retail investors, and a Tesla employee sat in the front passenger seat of each autonomous Model Y to monitor safety. The rollout was “uncharacteristically low-key,” Bloombergreported, but CEO Elon Musk said the company is being “super paranoid about safety.” San Francisco, Los Angeles, and San Antonio are rumored to be the next cities slated for Robotaxi service. “Tesla is still behind Waymo, by several years,” wrote Jameson Dow at Electrek. “But Waymo has also not been scaling particularly quickly, and certainly both are slower than a lot of techno-optimists would have liked. So we’ll have to see which tortoise wins this race.” The stakes are pretty high: Investment management firm ARK Invest projected that Robotaxis could bring in $951 billion for Tesla by 2029 and make up 90% of the company’s earnings.
A new report from energy think tank Ember concludes that in the world’s sunniest cities, it’s now possible (and economically viable) to get at least 90% of the way to constant solar electricity output for every hour of the day, 365 days a year.