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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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It’s the Obama playbook, but different.
It was — against all odds — an energy debate.
Just look at the statistics. The word “fracking” was mentioned 10 times. “Oil” came up seven times. Even “climate change,” which Donald Trump was not very eager to talk about, was mentioned four times. And while that may not seem like a lot for such a vast and globe-spanning problem, climate change came up only three times in all of 2016’s debates combined.
Even more than when talking about trade or inflation, Vice President Kamala Harris and former President Donald Trump used energy to make their economic vision concrete and meaningful to Americans. For Harris, that meant recognizing the scale of the country’s fossil fuel resources today while gesturing toward a cleaner and lower-carbon future that will produce (in theory, at least) lots of high-wage manufacturing jobs for America’s middle class. For Trump, the energy industry — and, really, the fossil fuel industry — is central to his fleshy, authoritarian vision of American strength. Seemingly any attempt to replace hydrocarbons with something cleaner or less polluting arises from nothing less than an elite conspiracy to weaken the country and sell out its people.
For such a stark contrast — and for such an outlandish contrast, to be clear — it was a surprisingly substantive debate. Which isn’t to say we learned much, especially about Trump. The Republican nominee was the same man we’ve seen for the past nine years, the same politician who has defined the extreme GOP position on global warming. Over the past near-decade, Trump has called climate change a “hoax” and has seemed to revel in emissions-increasing policies. That isn’t changing. Asked directly what he would do about climate change on Tuesday night, he did not address the question at all. Instead, he talked about how car factories are getting built in Mexico, and he claimed in a difficult-to-follow rant that Joe Biden is getting paid off by China.
About Harris, we learned far more. Harris struck a careful, moderate tone during the debate between the need for climate action and the ongoing importance of fossil fuel extraction. She spoke about the Inflation Reduction Act, the Biden administration’s signature climate policy, but also discussed how it increased federal leasing for oil and gas. She spoke about climate change in terms of its higher everyday costs for Americans, and not — as Biden did — as an existential threat to the country.
“What we know is that [climate change] is very real,” she said. “You ask anyone who lives in a state who has experienced these extreme weather occurrences, who now is either being denied home insurance or [it] is being jacked up.”
She bragged about the Biden administration’s oil and gas record in the same breath as she discussed its enormous investments in clean energy. American oil and gas production is at an all-time high — it is higher, in fact, than Saudi Arabia’s — but I can’t remember hearing a Biden administration official bragging about that.
“I am proud that as vice president over the last four years, we have invested a trillion dollars in a clean energy economy while we have also increased domestic gas production to historic levels,” she said.
In a way, Harris has essentially returned to Obama’s 2012 “all of the above” energy policy. That approach remains unpopular with climate activists, who think it did too much for the oil and gas industry; personally, I think it’s an open question whether Obama actually believed in the “all of the above” approach or was subtly trying to help renewables all along. But more importantly, the underlying policy context is totally different now than it was 12 years ago: With the Inflation Reduction Act in place, the government can more easily bless all forms of energy development because it is, in fact, helping clean energy take root.
What’s most important, though — and what I hope climate advocates do not overlook — is that Harris’s tack here reflects the broad state of American public opinion. While most Americans want to reduce greenhouse gas emissions, they do not seem to want an energy revolution: More than two-thirds of Americans believe the country should use a mix of renewables and fossil fuels, according to the Pew Research Center, and less than a third believe the country should rely “entirely” on renewables. In the same poll, most Americans said they oppose federal rules that would aim to make electric vehicles half of all new cars sold by 2032.
This is not to say that Americans are big oil lovers. Most Americans think the country should prioritize various forms of zero-carbon energy development over fossil fuels. And while Republican support for renewables has dropped over the past few years — and has fallen furtherover the past few months, as my colleague Matthew Zeitlin wrote recently — a generation gap has emerged wherein younger Republicans are much more likely to champion solar and wind than older party members.
Even among seemingly environmental-aligned demographics, greater support exists for fossil fuels than one might expect. Most Democrats say they would not “favor” expanding fracking or offshore drilling — but about a quarterof Democratswould favor more fossil fuel drilling. So would roughly 45% of independents and, of course, a large majority of Republicans, according to Pew.
Of course, these facts of public opinion sit uneasily with what we know about climate change, which is that greenhouse gas emissions — and fossil fuel development with it — should plan to scale down soon. The International Energy Association has said that the most likely pathway for keeping global warming to 1.5 degrees Celsius requires the development of “no new long lead-time upstream oil or gas projects.” This observation provides less guidance for American policy makers than it might initially seem, because it is really focused on the opening of new, massive oil fields like Guyana’s. (The IEA also says, in almost the same breath, that “continued investment is required in some existing oil and gas projects,” which could possibly justify ongoing extraction from Texas’s well-established oil and gas fields.)
But even then, the non-negotiable fact would remain: The world must move away from fossil fuels. And the American people are not generally ready to do that today. The country wants something closer to an “all of the above” strategy than it wants a Green New Deal.
That strategy brings climate policy out of the ideological realm and into the pragmatic. Americans, polling suggests, like renewables in part because they will let the United States reduce its dependence on foreign oil, a popular idea in and of itself and talking point of both parties going back decades.
When Heatmap polled more than 5,000 Americans last month, more than half said that a “strong benefit” of a given clean energy project would be its ability to reduce the country’s dependence on foreign oil and natural gas. Among respondents, those putative energy independence benefits were the No. 2 most popular reason to support clean energy; the only more popular rationale for backing a project was that it would cut utility bills.
Harris directly echoed that appeal on Tuesday. “My position is that we have got to invest in diverse sources of energy so we reduce our reliance on foreign oil,” she said. “We have had the largest increase in domestic oil production in history because of an approach that recognizes that we cannot over rely on foreign oil.”
I can’t remember Biden making an appeal like this. When he talks about clean energy or the IRA, he tends to focus on its potential to grow the economy. Harris did some of that on Tuesday, bragging about the 800,000 new manufacturing jobs created during her vice presidency. But her focus on the national interest — and on the Biden administration’s appreciation of the ongoing fossil boom — was new.
Such an approach is unlikely to help her appeal to climate activists and advocates, who want the government to affirmatively begin to shutter fossil capacity. The Sunrise Movement, a climate activist group, criticized Harris on Tuesday for spending “more time promoting fracking than laying out a bold vision for a clean energy future.”
What I’d advise those advocates to keep in mind is that their views are legitimately not very popular, and Harris is trying to win a very close election in a race that her team believes has potentially existential stakes for American democracy. She also remembers the 2020 primary, when she tacked left on virtually every issue — she promised to ban fracking, for instance — and still lost. (If that’s because many of the groups wound up backing Bernie Sanders in that primary, that only reinforces the view that she can’t win over those voters in the first place.)
Harris isn’t defying the left on every issue — she has resisted neoliberal dogma and pandered to the public’s views on price gouging, for instance, putting her more in line with the Democratic Party’s Elizabeth Warren wing. But unlike Biden, she refuses to pay an electoral price for backing left-wing policies. Indeed, she seems to believe that she cannot pay such a price and still win. If Harris is now bragging about her administration’s support for fossil fuels, if she is casting the Inflation Reduction Act as a law that helped fracking, that means climate activists have much more work to do to persuade the public on what they believe. The Democratic Party’s candidate will not do that persuasion for them. And in any case, activists are not going to convince the public to believe something in the next 54 days that they’ve failed to do in the past five years.
Elgin Energy Center is back from the dead.
At least one natural gas plant in America’s biggest energy market that was scheduled to shut down is staying open. Elgin Energy Center, an approximately 500 megawatt plant in Illinois approximately 40 miles northwest of downtown Chicago was scheduled to shut down next June, according to filings with the Federal Energy Regulatory Commission and officials from PJM Interconnection, the country’s largest regional transmission organization, which governs the relevant portion of the U.S. grid. Elgin’s parent company “no longer intends to deactivate and retire all four units ... at the Elgin Energy Center,” according to a letter dated September 4 and posted to PJM’s website Wednesday.
The Illinois plant is something of a poster child for PJM’s past few years. In 2022, it was one of many natural gas plants to shut down during Winter Storm Elliott as the natural gas distribution seized up. Its then-parent company, Lincoln Power — owned by Cogentrix, the Carlyle Group’s vehicle for its power business — filed for bankruptcy the following year, after PJM assessed almost $40 million in penalties for failing to operate during the storm. In June, a bankruptcy court approved the acquisition of the Elgin plant, along with one other, by Middle River Power, a generation business backed by Avenue Capital, a $12 billion investment firm, in a deal that was closed in December.
The decision to continue operating the plant past its planned deactivation comes as PJM set a new price record at its capacity auction in July, during which generators submitted bids for power that can be deployed when the grid is under stress due to high demand. The $14.7 billion auction was a massive jump from the previous one, which finished at just over $2 billion. Ironically, one reason the most recent auction was so expensive is that PJM gave less credit to natural gas generators for their capacity following Winter Storm Elliott, which then drove up auction prices, leading to large payouts for gas plants. PJM said the high auction prices were “caused primarily by a large number of generator retirements.”
In a bankruptcy court filing in 2023, Lincoln Power’s chief restructuring officer said that the company “was experiencing a liquidity crunch” due to low prices in past capacity auction, which meant that it had “received significantly less revenues for the capacity they sold in those Capacity Auctions as compared to previous Capacity Auctions.” With higher capacity revenues in PJM, presumably Elgin's business has improved.
Many analysts are skeptical that PJM can quickly get new load onto the system to bring prices down meaningfully in subsequent auctions — the next one is in December — and the PJM queue for new projects is absurdly clogged. This only juices the incentives for older fossil plants to stay open.
“This shortage of capacity is happening immediately,” Nicholas Freschi, senior associate at Gabel Associates, told me last week. “There might be more resources, and PJM might be able to coerce some retiring or not participating plants to make up for the shortfall. It’s an immediate problem.”
Neither Middle River nor its attorney representing the company before FERC returned requests for comment.
On the presidential debate, California’s wildfires, and the nuclear workforce
Current conditions: Hurricane Francine is approaching Louisiana as a Category 1 storm • The streets of Vietnam’s capital of Hanoi are flooded after Typhoon Yagi, and the death toll has reached 143 • Residents of Nigeria’s northern Borno state are urged to watch out for crocodiles and snakes that escaped from a zoo due to flooding.
Former President Trump and Vice President Kamala Harris squared off on the debate stage in Philadelphia last night. Here are some important climate and energy highlights from the evening:
Three large wildfires – the Line fire, the Bridge fire, and the Airport fire – are burning in Southern California, fueled by intense heat and thick, dry vegetation. Already more than 100,000 acres have been scorched. The Line fire is closing in on the popular vacation destination Big Bear, and is threatening some 65,000 structures. Los Angeles County Fire Chief Anthony Marrone said the scale of the emergencies is straining firefighting resources, and FEMA is sending financial aid to the state. In neighboring Nevada, the Davis Fire has grown to nearly 6,000 acres and is burning toward ski resorts in Tahoe. Temperatures in the region started to cool yesterday after a long and brutal heat wave. The weather shift could help firefighters bring the blazes under control.
The White House is launching an American Climate Corps national tour this fall to highlight the work being carried out by corps members in different communities and showcase important projects. The events will feature remarks from the administration and other officials, roundtable talks with ACC members, and swearing-in ceremonies. The tour began in Maine this week with a focus on climate resilience and urban forestry, and heads to Arizona next week. The rest of the schedule is as follows, with more dates to come:
The number of students studying to become nuclear engineers is declining as demand for carbon-free nuclear energy is on the rise, according toThe Wall Street Journal. Citing data from the Oak Ridge Institute for Science and Education, the Journal reported that just 454 students in the U.S. graduated with a degree in the field in 2022, down 25% from a decade earlier. Meanwhile, the industry’s workforce is aging. “We need nuclear expertise in order to combat climate change,” said Sara Pozzi, professor of nuclear engineering and radiological sciences at the University of Michigan. “We are at a crucial point where we need to produce the new generation of nuclear experts so that they can work with the older generation and learn from them.” The drop in new recruits comes down to nuclear’s image problem thanks to public disasters like Chernobyl and Fukushima, the Journal speculated.
Critical metal refining company Nth Cycle announced this week it has become the first company to produce nickel and cobalt mixed hydroxide precipitate (MHP) in the U.S. following the opening of its commercial-scale facility in Ohio. The company’s “Oyster” technology uses electricity to turn recyclable industrial scrap and mined ore into MHP, a key component in clean-energy technologies like batteries. “This revolutionary innovation replaces pyrometallurgy with one of the cleanest technologies in the world, and accelerates the net zero targets of the public and private sector,” the company said in a press release. It claims the Ohio unit can produce 900 metric tons of MHP per year, which would be enough to supply batteries for 22 million cell phones. The company says its process reduces emissions by 90% compared to traditional mining methods and can help EV manufacturers meet the IRA’s sourcing requirements.
A new nationwide poll of 1,000 registered U.S. voters found that 90% of respondents support President Biden’s federal clean energy incentives in the Inflation Reduction Act, including 78% of respondents who said they were Trump voters.