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In aligning with fossil fuel companies, the administration is deepening skepticism of carbon removal.

For as long as people have been talking about building machines that suck carbon dioxide from the atmosphere, the concept has sparked fierce debate. Would such a tool be used the way that scientists envision — alongside aggressive emission cuts? Or would it be co-opted to prolong dependence on fossil fuels?
Suddenly these questions have become less theoretical. Last month, Carbon Engineering, one of the first companies to actually build a “direct air capture” machine, was acquired by Occidental Petroleum, a fossil fuel company that plans to use the technology to market “net-zero oil.” The Biden administration has also selected Occidental as a potential recipient of one of two major grants, worth up to $600 million each, to build a “DAC hub” in South Texas near Corpus Christi. As part of the same announcement, the Department of Energy gave funding to oil and gas companies in California, Alaska, and Alabama for the early planning stages of additional hubs.
“Cutting back on our carbon emissions alone won’t reverse the growing impacts of climate change," Energy Secretary Jennifer Granholm said in a press release for the DAC hub awards. "We also need to remove the CO2 that we’ve already put in the atmosphere,”
She’s right. The UN’s Intergovernmental Panel on Climate Change says pursuing carbon removal is “unavoidable” if the world hopes to limit warming to safer temperatures — but it will only work if we stop burning so much oil and gas. In handing the reins of this new industry to fossil fuel companies, the administration has confused the message, stoking the mistrust of those already skeptical of the technology, and giving carbon removal projects with no fossil fuel connections a steeper hill to climb to earn support.
It hasn’t helped that Occidental’s CEO, Vicki Hollub, has described DAC as a “license to continue to operate.” Shortly after the Biden administration’s announcement, she told NPR that thanks to this technology, “there’s no reason not to produce oil and gas forever.” When I reached out to Occidental for clarification, a spokesperson denied that the company will use the technology to pump more oil than it otherwise would. He pointed me to another statement from Hollub in 2022 where she said producing net-zero oil was about “just meeting demand,” and that as long as there was demand for oil, it was better to meet it with a lower-carbon product.
But the aforementioned events have invited fierce blowback. On Wednesday, 17 climate and environmental justice organizations sent a letter to Secretary Granholm calling on the DOE to revoke its funding offers to fossil fuel companies. “There may be paths forward for equitable, climate-positive DAC, but they do not look like the one we’re on now,” they wrote.
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Climate advocates and community groups are not just concerned about giving fossil fuel companies a license to keep producing. Their objection is tied to where these projects are being deployed. The DAC hubs are almost all being planned in economically distressed areas that have hosted fossil fuel production for decades. The bipartisan infrastructure law, which funded the hubs, requires that at least two meet those characteristics.
This makes some economic and political sense. If you need to build pipelines to transport CO2 or drill into the ground to store it, this is where the knowhow resides. The requirement is also intended as a way to create new jobs and transition workers in places that might otherwise be devastated by the decline of the oil and gas industry. But since fossil fuel companies have a track record of polluting these areas with cancerous chemicals and fighting regulations, locals worry about the risks of putting new technology into their hands.
These fears are not unfounded. There are different types of direct air capture technology, but many require energy or heat to separate and compress the CO2 after it is collected, which could create additional pollution depending on how it is generated. The compressed carbon may then have to be transported, via pipeline, to its final destination. While CO2 pipelines have a good safety record, a highly publicized accident in Mississippi that hospitalized 45 people has fanned fears of ruptures.
Perhaps the biggest worry is around what happens next. Some companies, including Occidental, inject CO2 into depleted oil fields in an effort to squeeze the last drops out. But DOE-funded hubs will not be permitted to do this. Instead, the compressed CO2 will likely be injected into a saline aquifer, a layer of permeable rock thousands of feet underground, which is capped by an impermeable layer that prevents the CO2 from leaking out.
Some geological storage wells have been storing carbon successfully for decades, but there are only a handful of such sites operating around the world. A recent report to Congress detailing U.S. experience with CO2 injection summarized several potential risks to human health associated with it, including drinking water contamination, leaks, effects on soil health, and earthquakes. However, it also noted that CO2 injection wells have more stringent construction, testing, and monitoring regulations than other types.
In Kern County, California, where three DAC hubs have been proposed, all of this invokes deja vu. Juan Flores, an organizer for the Center on Race, Poverty and the Environment, one of the signatories to Wednesday’s letter, told me it reminds people of fracking, which brought increased risk of respiratory problems, cancer, preterm birth, and psychological stress to the area. “They experimented with our communities, they denied the new dangers for many years,” he said. “Now our community members are saying, ‘this again?’”
The DOE hubs program required companies to submit a plan for providing community benefits when they applied for funding. But in Kern County, oil and gas companies have squandered their goodwill, Dan Ress, a staff attorney at the Center told me. For example, the California Resources Corporation, an oil and gas company that won an $11 million DOE grant to do an engineering study for a hub in Kern County, recently supported a multi-million dollar campaign to repeal hard-won regulations banning oil drilling next to homes and schools. “This is the same company saying, oh yeah, we want to be good neighbors and do great community benefits? Absolutely not, get out of here,” said Ress.
The feeling of being the unwitting subjects of an experiment also came up in my conversation with Roishetta Ozane, a community organizer in Lake Charles, Louisiana. That’s where another DAC hub called Project Cypress, which could receive up to $600 million from the DOE, is under development. “We don't want to be guinea pigs for something that's never been tried and tested before on this scale,” Ozane told me.
Ozane is the director of the Vessel Project, a grassroots group supporting the needs of black, indigenous, people of color, and low income people in an industrial city where petrochemical production has dramatically expanded over the past decade. (The group was not a signatory on the letter.) She said Lakes Charles is overburdened with pollution and still recovering from a spate of destructive hurricanes in 2020. “We're saying, hey, you might be right. These DAC hubs might work. But why are you testing it in our community?”
There are no fossil fuel companies involved in Project Cypress. But that does not give Ozane any peace of mind. She worries it would “open the floodgates” for companies to keep releasing toxic emissions into the area, as long as they pay someone to pull carbon out of the air afterward.
Multiple people I spoke with in Louisiana and Texas also brought up a history of local officials giving heavy industry a free pass on pollution and major tax breaks. Why should they believe that the DAC hubs will be any better regulated or bring in much-needed revenue?
But local attitudes along the Gulf Coast are varied and complex. Prior to the hubs announcement, Data for Progress, a polling and research non-profit that spearheaded Wednesday’s letter, held a series of focus groups about DAC in Louisiana and Texas. One key finding, Celina Scott-Buechler, a senior fellow who led the research, told me, was that there was a tension between concerns like Ozane’s, and an awareness that fossil fuel companies historically have been the primary sources of good jobs in these communities.
“I think people make a calculated risk decision,” one focus group participant in Lake Charles said. “They're like, oh, so I could be around these chemicals that could have a long-term effect. I may not see them for the next 20, 30 years, but if it's going to take care of my family and give my family a nice home and a good vehicle to drive, then I'll work tirelessly to provide that for my family. But I may die at 65.”
Another stressed that there was a “big need for jobs” and that “sometimes people's need for employment overshadows whether it's good for the environment or not.”
Patrick Nye, who lives in the Corpus Christi area near where Occidental is building its South Texas hub, embodies this tension. Nye owns an energy company that produces oil and generates wind power, but he also runs an environmental group that’s fighting the local expansion of liquified natural gas export facilities and proposed seawater desalination projects. When I asked about his oil business, he said he didn’t have the heart to let his employees go and puts his profits toward his activism.
Nye is skeptical that direct air capture will work, but he thinks it’s worth trying. “If this works, this may help save the planet,” he said. He also sees a lot of potential opportunities flowing to the local university and its graduates. And he thinks the hub will be far enough away from where people live that if things go wrong, few will be impacted. Occidental is building its hub in a largely undeveloped area about 45 miles south of Corpus Christi on King Ranch, the largest private ranch in the country.
At the same time, he’s worried local officials will just rubber stamp the project without proper study. “King Ranch is really well known, they're very politically positioned,” he said. “They have a lot of clout to get this thing done, and it has to be looked at with a very fine tooth comb.”
In addition to requesting DOE withdraw grants for fossil fuel companies, the letter sent Wednesday makes a pitch for how the agency can roll out the DAC hubs program more equitably. The authors propose that projects in areas with extractive industries be co-created or co-owned by communities, actively work to reduce local pollution, have rigorous data transparency, and that locals should have the right to refuse them. They also want community benefits plans to be legally binding, with consequences if companies fail to comply.
All these requirements might sound unfair to companies who are just trying to tackle climate change and make a better world, Scott-Buechler acknowledged. “The question that I ask is, a better world for whom?”
I asked her what it would look like in practice for a community to co-own a DAC hub, considering these are first-of-a-kind projects that are incredibly expensive and financially risky. Would communities be taking on those risks?
This was something that Data for Progress and other groups were still studying, she said, looking at possibilities like having the project held in public trust, or replicating the solar cooperative model. She recognizes that not all communities will be interested in ownership, but thinks it should be an option.
When I asked the DOE how it defends the choice to support fossil fuel company-led projects, a spokesperson told me the agency is “leveraging these companies' significant expertise in managing large energy infrastructure projects and applying this experience to developing DAC projects that are cost-effective, efficient, equitable, and environmentally responsible.”
She also emphasized that Occidental and Project Cypress have only been selected for “award negotiation” and not “officially” awarded yet. “If projects are awarded, DOE and the awardee will have frequent, meaningful engagement with the impacted local community and impacted workers throughout the lifecycle of the project,” she said.
Meanwhile, the agency has also launched a public process to develop a set of safety, environmental stewardship, accountability, and community engagement guidelines for all carbon management projects that it will encourage project developers to (voluntarily) abide by.
But the Biden administration seems eager to support Occidental in its pursuit of direct air capture and encourage more oil and gas companies to follow its lead. During a carbon capture conference last year, Secretary Granholm applauded Oxy’s CEO Vicki Hollub for investing in carbon removal, saying this reflects “exactly the kind of bold thinking we need more of.” Earlier this year, she told a room of oil and gas executives, “We need the energy sector stepping up … few are better positioned to crack open cost-effective carbon management.”
The debate over whether direct air capture is a moral hazard is likely to rage on long after these projects are up and running. But the money is going out the door now. “This is something that is not just coming anymore, it's here,” said Scott Buechler. “Is there a collective vision for what might be able to come next?”
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The seminal global climate agreement changed the world, just not in the way we thought it would.
Ten years ago today, the world’s countries adopted the Paris Agreement, the first global treaty to combat climate change. For the first time ever, and after decades of failure, the world’s countries agreed to a single international climate treaty — one that applied to developed and developing countries alike.
Since then, international climate diplomacy has played out on what is, more or less, the Paris Agreement’s calendar. The quasi-quinquennial rhythm of countries setting goals, reviewing them, and then making new ones has held since 2015. A global pandemic has killed millions of people; Russia has invaded Ukraine; coups and revolutions have begun and ended — and the United States has joined and left and rejoined the treaty, then left again — yet its basic framework has remained.
Perhaps you can tell: I am not among those who believe that the treaty has been a failure, although it would be difficult — in this politically arid moment — to call it a complete success. Yet the ensuing decade has seen real progress in limiting global temperature rise. When negotiators gathered to finalize the agreement, it seemed likely that global average temperatures could rise by 4 degrees Celsius by 2100, as compared to their pre-industrial level. Today, a rise from 2.5 to 3 degrees Celsius seems more likely.
And for a document that is often described as non-binding, or even as hortatory, Paris has had a surprisingly material influence on global politics in the ensuing years. During the negotiations, the small-island states — the three dozen or so countries most affected by near-term sea-level rise — successfully got the final text to recognize a “stretch goal” of limiting warming to just 1.5 degrees above pre-industrial levels. They also tasked the United Nations’ advisory scientific body to prepare a special report on the virtues of avoiding 1.5 degrees of warming. When that report was released in 2018, it catalyzed a new wave of global climate action, spawning the European Green Deal — and eventually the U.S. Inflation Reduction Act.
Yet there is at least one way that Paris did not go as imagined.
Cast your mind back to Paris 10 years ago, right as diplomats filed in and began to applaud the final text’s completion. “This is a tremendous victory for all of our citizens — not for any one country or any one bloc, but for everybody here who has worked so hard to bring us across the finish line,” John Kerry, then the U.S. secretary of state, declared to his fellow diplomats.
It was a strange kind of victory. After decades in which western liberals had attempted to secure a globally binding climate treaty — an agreement that would limit each country’s greenhouse gas emissions — the world finally won a non-binding alternative. Under the Paris Agreement, each country would pledge to cut its emissions by as much as it could manage. Countries would then meet regularly to review these pledges, encourage each other to get more ambitious, and gradually ratchet the world into a lower-carbon future.
Kerry was reasonably direct about how such a mechanism would work: capital markets. “We are sending literally a critical message to the global marketplace,” he said. “Many of us here know that it won’t be governments that actually make the decision or find the product, the new technology, the saving grace of this challenge. It will be the genius of the American spirit.”
He was right, in a way: The Paris Agreement did send a signal to the global marketplace— and it did so in part because governments did shape policy and investment outcomes, not because they resisted doing so. But it did not reveal the genius of the American spirit, per se.
In the years running up to and following the Paris Agreement, China rolled out a series of important policies to boost its new energy sectors — a roadmap encouraging “new energy vehicle” sales in 2012, billions of consumer subsidies beginning in 2014, and a domestic content mandate for electric-vehicle batteries in 2015. These programs — along with canny decisions made by Chinese entrepreneurs and engineers, and no small amount of demand pull from companies and policies in the West — have transformed the world’s approach to decarbonization. They have begun to change even what decarbonization means — in the United States, in the western democracies, and around the world.
Ten years ago, Kerry could assume that any eventual solution to climate change would be geopolitically neutral, if not advantageous to the United States. But in 2025, to a degree that commentators still hesitate to describe, the climate story has become the China story. Across a range of sectors, how a country approaches its near-term decarbonization goals depends on how it understands and relates to the Chinese government and Chinese companies.
Consider the power sector, which generates just under a third of all greenhouse gas emissions globally. For many countries, the best way to cut carbon pollution — and to add more power generation to the grid — will be to build new utility-scale solar and battery projects. That will all but require working with Chinese firms, which dominate 80% of the solar supply chain. (They command up to 98% market share for some pieces of equipment, according to the International Energy Agency.)
It is much the same story in the grid-scale battery industry. China produces more than three-quarters of the world’s batteries, and it refines most of the minerals that go into those batteries. Its batteries are at least 20% cheaper than those made in Europe or North America. Most of the world’s top battery firms are Chinese — in part because they have more experience than anyone else; the country’s firms have manufactured 70% of all lithium-ion batteries ever produced. Nearly two dozen countries have bought at least $500 million in Chinese-made batteries this year, according to the think tank Ember.
What if a country wants to build wind turbines, not batteries? Even then, it will have to work to buy non-Chinese products. Although European and American firms have long led among turbine makers, six of the top 10 wind turbine manufacturers are now in mainland China, according to BloombergNEF. And for the first time since analysts’ rankings began in 2013, none of the world’s top three turbine makers are North American or European.
Transportation generates another 13% of global climate emissions. If a country wants to tackle that sector, then it will find itself (again) working with China — which made more than 70% of the world’s EVs in 2024. Thanks to the country’s sprawling battery and electronics-making ecosystem, its home-grown automakers — BYD, Geely, Xiaomi, and others — can produce more affordable, innovative, and desirable EVs at greater scale and at lower cost than automakers anywhere else. “The competitive reality is that the Chinese are the 700-pound gorilla in the EV industry,” Jim Farley, the CEO of Ford, said recently. As the scholar Ilaria Mazzocco put it in a recent report: “Chinese companies are ubiquitous in the value chain for EVs and battery components, meaning that for most countries, climate policy is now at least in part linked to policy toward China, and more specifically trade with China.”
That insight — that climate policy is now linked to policy toward China — will apply more and more, even when countries wish to tackle the remaining third of emissions that come from energy-related sources. Earlier this year, China approved a plan to build roughly 100 low-carbon industrial parks by 2030, where its firms will develop new ways to capture carbon, make steel, and refine chemicals without carbon pollution. (The Trump administration revoked funding for similar low-carbon projects in the U.S. earlier this year.) At the same time, China is building more conventional nuclear reactors than the rest of the world combined, and it may be pulling ahead of the United States in the race to develop commercial fusion.
This wasn’t inevitable. It happened because Chinese politicians, executives, and engineers decided to make it happen — choices owing as much to the government’s focus on energy security as to its concern for the global environmental commons. But it was also the result of American business leaders and politicians squandering this country’s leadership in climate technologies — and especially the result of choices made by Trump administration officials, who at nearly every opportunity have regarded batteries and electric vehicles as a technological sideshow to the more profitable oil and gas sector.
It was the Trump administration, after all, that licensed and then eventually gave U.S.-funded research on flow batteries to a Chinese company in 2017. It was the Trump administration that gutted fuel economy and clean car rules in 2018 and 2019, setting the American car industry back compared to its Chinese and European competitors. And it was the Trump administration and congressional Republicans that killed electric vehicle tax credits earlier this year, further choking off investment.
For progressives, this all might suggest a pleasant parable: China embraced the energy transition, and America didn’t, and now America is paying for it. Nowadays, commentators often invoke China’s clean energy dominance to inspire awe at its accomplishments. And how can you not, in truth, be impressed? China’s industrial miracle — its move to the frontier of global technological development — is the most important story of the past quarter century. The scale of the Chinese consumer market and the success of Chinese industrial policy (or, at least, its success so far) has wrenched world history in new directions. And Chinese companies have done humanity a great service by bringing down the cost of solar panels, batteries, and EVs on the supply side, even if they did so at first with demand-side assistance from policies in California or Europe.
But climate advocates in North America and Europe cannot be completely sanguine about what this development means globally. For environmentalists and other western liberals who have worked in decarbonization for decades, it will in particular require some rhetorical and political adjustment. We cannot pretend that we are playing by the 1990s’ rules, nor that environmental activism is but one part of a post-1970s progressive coalition, which is free to make demands and ignore inconvenient trade-offs. Basic questions of decarbonization policy now have patent geopolitical significance, which environmental groups attempt to side-step at their own peril.
Yet it isn’t only Americans or Europeans who must answer these questions. China’s dominance of decarbonization technology means that for the time being, every country on Earth must address this dynamic. When the scholar Mazzocco looked at how six countries around the world are approaching Chinese EVs, she found an uneven landscape, she told me on a recent podcast. Costa Rica, which has long embraced climate policy, has welcomed Chinese-made EVs; Brazil opened its doors to them but has now begun to close it.
Most major countries have some form of domestic automaking industry; no country will be able to sit back and passively allow Chinese exports to drive their local automakers out of business. At the same time, China’s manufacturing primacy is already making conventional export-driven growth less attractive for countries. And that will only be the beginning of the dilemmas to come. As long as going green requires buying and integrating Chinese technologies into critical infrastructure, environmental policymakers will be wagering decarbonization’s success on some of the world’s highest stakes geopolitical bets.
Environmentalists have long insisted climate change is a national security issue, but are we ready to think and act like it is? Do Western anxieties about a large and globalized war — either a Chinese invasion of Taiwan, a Russian invasion of the EU, or both — reflect a reasonable response to a real and growing menace, or an elite panic driven by our declining economic primacy? If China were to invade Taiwan, what would that mean for climate and energy policy — not only in the West, but around the world? Would American or European environmentalists even get a vote on that question — and if they do, how would they balance emissions reduction against other goals? If the unthinkable happens, we will all be called to account.
A decade ago, I remember watching the live stream of the world’s diplomats applauding their own success in Paris and realizing that I would be seeing that video in documentaries and news reels for the rest of my life. How will I see it then? I wondered. Would it strike me as the naivete of a simpler time, an era when liberal internationalism still seemed possible? Or would it really reflect a turning point, the moment when the world took the climate challenge seriously, pragmatically, and began to decarbonize in earnest? A decade later, I still don’t know. Perhaps the answer is both.
The electric vehicle-maker’s newly unveiled, lidar-equipped, autonomy-enabled R2 is scheduled to hit the road next year.
When Rivian revealed the R2 back in the spring of 2024, the compelling part of the electric SUV was price. The vehicle looked almost exactly like the huge R1S that helped launch the brand, but scaled down to a true two-row, five-seat ride that would start at $45,000. That’s not exactly cheap, but it would create a Rivian for lots of drivers who admired the company’s sleek adventure EV but couldn’t afford to spend nearly a hundred grand on a vehicle.
But at the company’s “Autonomy and AI Day,” held on Thursday at Rivian’s Palo Alto office in the heart of Silicon Valley, company leaders raised the expectations for their next vehicle. R2 wouldn’t just be the more affordable Rivian — it would be the AI-defined car that vaults them into the race to develop truly self-driving cars.
First, the hardware. Rivian said that the R2 will come with 11 camera and five radar units spread around the vehicle to improve the car’s ability to comprehend the world around it. But the crucial, headline-grabbing addition is a lidar, or light-based radar, unit. Lidar shoots laser pulses and measures the time it takes for the reflected light to return, thereby building a three-dimensional picture of the environment it surveys.
Those twirling bobs you might have seen on the top of Waymo’s driverless cars as they roam the streets, mapping the world around them, are lidar. The technology’s ability to see the world in detail across distances is necessary for the upper levels of automotive autonomy — the ones where the car can basically do it all and the humans can take their hands off the wheel and their eyes off the road.
Lidar units to date have been large and expensive, which is one reason they’re seen in pods that protrude from the top of a vehicle. Rivian, however, figured out how to mount one within the vehicle, in the area at the top of the front windshield near the rear-view mirror. The forward-facing lidar gives the vehicle 300 meters of forward vision. Demos the company showed during autonomy day revealed just how much more a constellation of cameras, radar, and lidar can see than a system without lidar, especially in dark or foggy conditions.
The other “wow” reveal on Thursday was that the R2 will process all that camera data on a chip that Rivian built from scratch to handle the AI and autonomous driving workload of its vehicles, rather than sourcing chips from some other tech company. CEO R.J. Scaringe said during his presentation to open the event that this kind of vertical integration was meant to allow the company to keep pace with the AI race as opposed to having to work with whatever third-party components it could get.
The result is a leap forward in capability over what Rivian offered with the R1S SUV and R1T pickup truck. Those vehicles had a hand-free system that let the EVs drive themselves with minimal human oversight on a little more than 100,000 miles of roads that were well-marked and well-mapped. James Philbin, the vice president of autonomy and AI, promised on Thursday that the lidar and processing improvements would allow hands-free driving on more than 3 million miles of roads — basically anywhere that the lines on the highway are clear enough for the R2’s cameras to see. And what’s next, Rivian promises, is true autonomy. The SUV will drive itself entirely from point to point when the conditions allow, and as the AI continuously improves over time, you might eventually see driverless Rivians out there competing with the likes of Waymo.
All this stuff costs money, of course. The Rivian Autonomy+ package would add $2,500 or a monthly fee of $50 to the purchase price. But the fact that this tech is coming to a car that starts in the $40,000s is telling. It is how many people will get their first taste of true vehicle autonomy.
Thursday’s event wasn’t all about self-driving, either. Rivian also built an AI software assistant for the cabin that can be summoned with a “Hey Rivian” and perform all kinds of in-car functions, such as changing the driving mode or adjusting the climate control. The achievement here is one of natural language. In Rivian’s demos, the assistant could ably fulfill the driver’s wishes with a command like “make it a little toastier in here” as opposed to formal instructional language like “turn the driver’s temperature to 70 degrees and set the seat heater to level one.”
At times this feels unnecessary, like AI looking for something to do to justify its existence. It doesn’t take that many button-pushes to alter the climate, after all. I admit, though, that having test-driven Rivians on road trips this summer, one of their weak points is my struggle to remember exactly which menu contains which controls. AI, in a way, helpfully solves a problem created by the modern EV that has amazing capability, but routes that capability through a large touchscreen that’s annoying (and dangerous) to navigate while driving.
Rivian is playing catch up with Tesla when it comes to autonomy, of course, as Elon Musk’s company has been touting its Full Self Driving feature for years and is now building the Cybercab, which is meant to be a car that humans will never drive. But Tesla has struggled to meet its timelines and targets for autonomous systems, giving rivals like Rivian a window to develop their own technology.
And so, what’s clear after Rivian’s event is that car companies, especially EV makers, are going to be key players in this autonomy and AI age. Nowhere was it written that electric vehicles had to be synonymous with self-driving vehicles. Battery-powered cars could be dumb and not smart, ruled by buttons instead of touchscreens. It just so happens that EVs are finally coming of age during the simultaneous ascent of artificial intelligence — and that the leading EV-only startups are Silicon Valley tech companies, or at least started out that way.
Tesla has forgotten about acting like a car company and staked its future on being the one that will crack true self-driving and reap the windfall. Rivian, which hadn’t made nearly as much noise about AI and autonomy before this week, has put forth a compelling case for its in-house autonomous systems and AI models, ones that will continue to improve as they’re trained on data provided by thousands of R2s hitting the road starting in 2026.
The market is reeling from a trio of worrisome data center announcements.
The AI industry coughed and the power industry is getting a cold.
The S&P 500 hit a record high on Thursday afternoon, but in the cold light of Friday, several artificial intelligence-related companies are feeling a chill. A trio of stories in the data center and semiconductor industry revealed dented market optimism, driving the tech-heavy NASDAQ 100 down almost 2% in Friday afternoon trading, and several energy-related stocks are down even more.
Here’s what’s happening:
Taken together, the three stories look like an AI slowdown, at least compared to the most optimistic forecasts for growth. If so, expectations of how much power these data centers need will also have to come down a bit. That has led to notable stock dips for companies across the power sector, especially independent power producers that own power plants, many of whose shares have risen sharply in the past year or two.
Shares in NRG were down around 4.5% on the day on Friday afternoon; nuclear-heavy Constellation Energy was down over 6%; Talen Energy, which owns a portfolio of nuclear and fossil fuel plants, was down almost 3% and Vistra was down 2%. Shares in GE Vernova, which is expanding its gas turbine manufacturing capacity to meet high expected demand for power, were down over 3.5%.
It’s not just traditional power companies that are catching this AI chill — renewables are shivering, as well. American solar manufacturer First Solar is down over 5%, while solar manufacturing and development company Canadian Solar is down over almost 9%.
Shares of Blue Owl, the investment firm that is helping to fund the big tech data center buildout, were down almost 4%.
The fates of all these companies are deeply intertwined. As Heatmap contributor Advait Arun wrote recently, ”The commercial potential of next-generation energy technologies such as advanced nuclear, batteries, and grid-enhancing applications now hinge on the speed and scale of the AI buildout.” Many AI-related companies are either invested in or lend to each other, meaning that a stumble that looks small initially could quickly cascade.
The power industry has seen these types of AI-optimism hiccups before, however. In January, several power companies swooned after Chinese AI company DeepSeek released an open source, compute-efficient large language model comparable to the most advanced models developed by U.S. labs.
Constellation’s stock price, for example, fell as much as 20% in response to the “DeepSeek Moment,” but are up over 45% this year, even factoring in today’s fall. GE Vernova shares have doubled in value this year.
So it looks like the power sector will still have something to celebrate at the end of this year, even if the celebrations are slightly less warm than they might have been.