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Renewable energy isn’t the only big beneficiary of Biden’s announcement in Pennsylvania.
Seven regions of the country are about to become laboratories for a whole new system of producing and using energy. If all goes according to the Biden administration’s plans, by the end of the decade, clean hydrogen, which can be produced and used without greenhouse gas emissions, will replace fossil fuels across a variety of industries that can’t easily run on renewable energy.
President Biden announced the seven regions that will be eligible for up to $7 billion to build “hydrogen hubs” while visiting Pennsylvania on Friday. The selected hubs are made up of coalitions of governments, companies, labor groups, and universities that will use a combination of private and public funding to build new infrastructure to test the production, transport, and use of hydrogen.
The hubs have not yet been awarded any funding and will now move into a negotiation phase where they will refine their community benefits plans and other aspects of their proposals before being awarded an initial grant to move forward. In the coming weeks, the Department of Energy will begin hosting virtual community briefings with the project teams and local stakeholders in their regions, which may be used to inform the negotiation process.
Friday’s announcement included the names of the seven hubs that are eligible for funding and a few paragraphs explaining the general outline of what they plan to do. The Department of Energy provided the following map which offers a rough sense of the number of projects within each hub and where they will be located. But there’s still very little information about what these projects are.
U.S. Department of Energy
Based on what we do know, here are three big takeaways from the announcement today.
At least some of the dots on that map will be production facilities. The main benefit of hydrogen is that it doesn’t release emissions when burned, but the challenge is that it isn’t readily available in the environment like coal or gas or renewable energy. It has to be produced. And it will only help tackle climate change if it can be produced without emissions.
Three of the hubs — in California, the Pacific Northwest, and the Mid-Atlantic — plan to make hydrogen using only renewable energy, nuclear power, or biomass. But at least three of the hubs — in the Gulf Coast, Appalachia, and the Midwest — plan to make it from natural gas and capture the carbon released in the process. (The Department of Energy did not specify what resources the Heartland hub plans to use.)
A lot of climate advocates and researchers are skeptical if not outright against schemes to make hydrogen from natural gas with carbon capture. One risk is that not all of the carbon will be captured. Another is that it takes additional natural gas to run the capture equipment, so the overall effect could be increased natural gas production. That could perpetuate pollution in communities living near wells and processing facilities. Depending on how much methane leaks from natural gas infrastructure, it could also cancel out any benefits from using hydrogen.
The scale of these risks will become clearer after the projects move to the awards phase, at which point they will have to “submit detailed risk assessments and risk management plans outlining potential risks and impacts, and how they will mitigate those impacts.”
Hydrogen has the potential to be used in basically any application that we use fossil fuels in today. But because it takes so much energy to make, it won’t necessarily make sense to use it everywhere. One of the main purposes of the hydrogen hubs program is to determine the cases where hydrogen will be an efficient, economical way to cut emissions.
The hubs outline a variety of ways they will use hydrogen, from steelmaking to fertilizer production to power generation. But there’s one area that at least six out of the seven hubs all see a future in: heavy duty transportation. All of the regions except the Heartland hub describe building networks of hydrogen fueling stations for long-haul trucks, buses, municipal waste, drayage, and other heavy duty vehicles.
Truck manufacturers are mixed on whether hydrogen will ultimately be the best solution to replace diesel. Equipping trucks with rechargeable batteries could turn out to be cheaper. But powering trucks with hydrogen fuel cells may be a lighter, space-saving option, and offer the ability to refuel more quickly. If the hubs program establishes a national network of hydrogen fueling stations, that could help tip the scales in favor of fuel cell trucks. The question is whether it will be built in time to beat the pace of battery innovation.
However, there are two other types of transport where many experts agree hydrogen will be useful: aviation and shipping. The Midwest and Pacific hubs also plan to produce aviation fuel, and the Gulf Coast aims to produce fuel for ships.
While hydrogen hubs certainly come with risks, they also have the potential to deliver big economic benefits to communities. The research firm Rhodium Group estimates that a commercial-scale hydrogen production facility that uses electricity is associated with an average of 330 jobs during the construction phase and 45 permanent jobs when the plant becomes operational.
The hubs are expected to create more than 200,000 jobs during the construction phase, and more than 100,000 permanent jobs. The question, as always, is whether these will be “good” jobs. But at least three of the hubs — in California, the Mid-Atlantic, and the Pacific Northwest — say they will require labor agreements for all projects connected to their hubs. If the job estimates provided by the hubs are accurate, some 86% of the permanent positions created by the hubs will be in these three regions.
By definition, these kinds of deals are hashed out between developers and local unions prior to any hiring and establish wages and benefits for the workers involved in a project. They don’t guarantee that union workers will be hired, but they do level the playing field for union contractors to compete with non-union shops — and set clear standards for whoever is ultimately hired.
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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.
A conversation with Mary King, a vice president handling venture strategy at Aligned Capital
Today’s conversation is with Mary King, a vice president handling venture strategy at Aligned Capital, which has invested in developers like Summit Ridge and Brightnight. I reached out to Mary as a part of the broader range of conversations I’ve had with industry professionals since it has become clear Republicans in Congress will be taking a chainsaw to the Inflation Reduction Act. I wanted to ask her about investment philosophies in this trying time and how the landscape for putting capital into renewable energy has shifted. But Mary’s quite open with her view: these technologies aren’t going anywhere.
The following conversation has been lightly edited and abridged for clarity.
How do you approach working in this field given all the macro uncertainties?
It’s a really fair question. One, macro uncertainties aside, when you look at the levelized cost of energy report Lazard releases it is clear that there are forms of clean energy that are by far the cheapest to deploy. There are all kinds of reasons to do decarbonizing projects that aren’t clean energy generation: storage, resiliency, energy efficiency – this is massively cost saving. Like, a lot of the methane industry [exists] because there’s value in not leaking methane. There’s all sorts of stuff you can do that you don’t need policy incentives for.
That said, the policy questions are unavoidable. You can’t really ignore them and I don’t want to say they don’t matter to the industry – they do. It’s just, my belief in this being an investable asset class and incredibly important from a humanity perspective is unwavering. That’s the perspective I’ve been taking. This maybe isn’t going to be the most fun market, investing in decarbonizing things, but the sense of purpose and the belief in the underlying drivers of the industry outweigh that.
With respect to clean energy development, and the investment class working in development, how have things changed since January and the introduction of these bills that would pare back the IRA?
Both investors and companies are worried. There’s a lot more political and policy engagement. We’re seeing a lot of firms and organizations getting involved. I think companies are really trying to find ways to structure around the incentives. Companies and developers, I think everybody is trying to – for lack of a better term – future-proof themselves against the worst eventuality.
One of the things I’ve been personally thinking about is that the way developers generally make money is, you have a financier that’s going to buy a project from them, and the financier is going to have a certain investment rate of return, or IRR. So ITC [investment tax credit] or no ITC, that IRR is going to be the same. And the developer captures the difference.
My guess – and I’m not incredibly confident yet – but I think the industry just focuses on being less ITC dependent. Finding the projects that are juicier regardless of the ITC.
The other thing is that as drafts come out for what we’re expecting to see, it’s gone from bad to terrible to a little bit better. We’ll see what else happens as we see other iterations.
How are you evaluating companies and projects differently today, compared to how you were maybe before it was clear the IRA would be targeted?
Let’s say that we’re looking at a project developer and they have a series of projects. Right now we’re thinking about a few things. First, what assets are these? It’s not all ITC and PTC. A lot of it is other credits. Going through and asking, how at risk are these credits? And then, once we know how at risk those credits are we apply it at a project level.
This also raises a question of whether you’re going to be able to find as many projects. Is there going to be as much demand if you’re not able to get to an IRR? Is the industry going to pay that?
What gives you optimism in this moment?
I’ll just look at the levelized cost of energy and looking at the unsubsidized tables say these are the projects that make sense and will still get built. Utility-scale solar? Really attractive. Some of these next-gen geothermal projects, I think those are going to be cost effective.
The other thing is that the cost of battery storage is just declining so rapidly and it’s continuing to decline. We are as a country expected to compare the current price of these technologies in perpetuity to the current price of oil and gas, which is challenging and where the technologies have not changed materially. So we’re not going to see the cost decline we’re going to see in renewables.