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For the first time, the Energy Department is charting how to build new industries from scratch — and preserve America’s energy advantage.
The Biden administration took a major step forward on Tuesday to answering one of the biggest outstanding questions about its climate policy: So, uh, how are you planning on doing all this?
The answer took the form of a new series of reports, running to hundreds of pages in total, that provide the most detailed look yet at how now-experimental energy technologies can be rapidly scaled to meet the needs of the American economy. These reports, dubbed “the Pathways to Commercial Liftoff,” focus on three technologies that will be crucial to decarbonization: clean hydrogen, long-duration energy storage, and advanced nuclear reactors. Another report on capturing and storing carbon pollution is due soon.
The reports, which were written by 13 authors from across the Department of Energy, suggest that that agency has taken a more active role in carrying out the goals of the bipartisan infrastructure law and the Inflation Reduction Act, which together encompass most of President Biden’s legislative climate policy. The department says that it will update the reports every year, potentially creating a living library that will describe — in meticulous detail — the obstacles to creating a cleaner energy future.
“What we’re trying to provide is a sort of stake in the ground,” Melissa Klembara, an author of the report and the director of portfolio strategy at the Department of Energy’s office of clean-energy demonstrations, told me. “What is our vision? What does the private sector need to believe to co-invest? What is it going to take to achieve market lift-off?”
Perhaps above all, the documents underscore the scale — and the difficulty — of the task that the Biden administration has set for itself. The United States is trying to do something with little precedent. Over the next 10 years, the government will spend hundreds of billions of dollars in line with the bipartisan infrastructure law and the Inflation Reduction Act. This influx aims to transform the chemical substrate of the $23 trillion American economy. Today, the burning of fossil fuels — ancient sunlight rendered dense and combustible by time and geology — generates 79% of the country’s energy today; the Biden administration has committed to slashing that share by 2030 and essentially bringing it to zero by 2050.
It plans to do that through what has been widely termed “industrial strategy” — policy that aims to grow a specific part of the economy or develop a new type of technology. But what exactly the Biden administration’s strategy is has remained frustratingly vague. While much of the IRA’s spending will go to uncapped tax credits, the government is also tasked with making tens of billions of dollars of targeted investments to push sectors to decarbonize faster. (In hydrogen alone, for instance, the government can spend up to $25.8 billion on these investments.)
Where will those investments go? Scholars believe that successful industrial policy must generally be tailored to the needs of the industries in question: You can’t grow the telecommunications sector, for example, by building railroads and digging canals. Industrial policy, in other words, is about the specifics. So to spend that money well, policy makers must first get to know the industries they want to help — and then they must spot, in advance, the problems and bottlenecks that will prevent that industry from flourishing.
That’s what these reports are trying to do. They are the most detailed guide yet to how the Biden administration plans to conduct industrial policy for the most advanced — and the most fledgling — energy technologies in its arsenal.
Each of the technologies in the reports could be important in some way to fighting climate change: Nuclear reactors could provide a stable, always-on source of zero-carbon electricity; long-term energy storage will help the lights stay on when the sun isn’t shining and the wind isn’t blowing; and hydrogen will help decarbonize industrial activities — such as making steel, fertilizer, and chemicals; or powering cargo ships and long-haul trucks — that now depend on fossil fuels.
The reports were written after dozens of conversations with private companies and technical experts, Klembara said. The hydrogen report alone involved more than 60 discussions, about half of which were with “capital allocators” — companies, investment managers, and venture capitalists who will decide whether to invest in the sector.
“What we’re really trying to capture with these reports is, what is that common fact base so that we can have that dialogue with the private sector on the path to commercial liftoff,” she said. Then the government “can better understand, too, where [we] can leverage our investments to buy down those risks.”
These problems can be remarkably straightforward: They are the kind of oh-yes-that-seems-obvious issues that arise from starting an industry from scratch. In hydrogen, for instance, the report identifies two big up-and-coming problems: First, hydrogen producers still don’t have good ways to move or store hydrogen once they make it; second, a stable commodity market for hydrogen doesn’t exist. In other words, even if you make clean hydrogen, you won’t necessarily have anyone to sell it to, and even if you do, you might not have any way to get it to them cheaply. (The cost of moving hydrogen often equals the cost of producing it, the study finds.)
Those are problems that, by comparison, the natural-gas industry has solved: Gas drillers can rely on the country’s existing network of pipelines, trucks, storage tanks, and vast salt caverns to move and store gas to where it’s needed; and they can take their gas to the Henry Hub, a de facto national spot market in the fossil fuel, to sell it. If hydrogen is eventually to replace natural gas, it must develop its own version of these networks.
These reports also show how the government is thinking through its own role as a steward of economic growth.
In some ways, they show that the Biden administration — or at least the Energy Department — is becoming more comfortable with America’s distinctive approach to industrial policy. While industrial policy in other countries, such as Germany or Japan, tends to be led by the government or by government-aligned institutions, America has always relied more on the enthusiastic participation — or at least the begrudging acquiescence — of private companies. These reports detail what companies need in order to easily participate in the country’s clean-energy future. (That the consulting firm McKinsey & Co. — the ne plus ultra of American management advice — contributed to the report only drives home its country of origin.)
In that light, the reports are an argument that there’s still work to be done in these sectors — and that the government specifically needs to do it. In the past, American industrial policy hasn’t only relied on companies; it’s taken hold only when lawmakers and officials believed that the market has failed in some crucial way and that private companies cannot manage that failure. These reports — which, again, were written in consultation with the private sector — basically consist of the authors saying: Look at this market failure! Now look at this one! And this one! None of these problems will fix themselves.
But in other ways they may show something else — that America is finally learning how other countries conduct successful industrial policy and copying part of the playbook. As I’ve written before, industrial-policy agencies in Taiwan and South Korea play a key information-gathering role in their national economies: They focus economic activity not only by handing out funding or issuing regulations, but by publishing a common road map that all companies can work from. That’s what the government has done here — and by promising to update these reports on an annual basis, that’s what it’s seemingly going to do going forward.
And crucially, the Department of Energy is going to do the updating. That department has emerged as perhaps the lead actor of America’s industrial policy. That makes sense — it is the agency, after all, with the in-house bank, the national labs, and the technical expertise — but it wasn’t a given; the Environmental Protection Agency, the Department of Commerce, or even the Department of the Treasury might have stepped in. But at the same time, the agency’s new role — and its importance to the government — is somewhat unstable. If the current set of officials were to leave the Energy Department, it’s not clear to me that their replacements would take up these important government functions.
Finally, it’s just a recognition of how weird America’s task is. Although Biden’s economic and climate policies are often categorized as “industrial policy,” they really consist of two different things. In some sectors, such as solar-panel manufacturing, the United States is trying to catch up to China and other low-cost East Asian manufacturers. This is “classic” industrial policy, and it has a long history: Germany, Japan, and South Korea were each able to understand and then match America’s early dominance in making internal-combustion cars, for instance. But in other sectors, the United States is trying to do something subtler than catch up. In hydrogen production or advanced nuclear power, the United States is trying to retain its early technological advantage and turn its head start on R&D and basic science into a fully fledged domestic manufacturing industry that will generate hundreds of thousands of jobs. America isn’t trying to reach the bleeding edge of technology; it’s already there, and it’s trying to push that edge forward as quickly as possible.
That’s the challenge that these reports are responding to, Jonas Nahm, a professor of energy, resources, and environment at the Johns Hopkins School of Advanced International Studies, told me. “This is how you do industrial policy at the technological frontier,” he said. Now we’ll see if the government can follow through.
Editor’s note: A previous version of this article misstated a statistic about fossil fuel energy use. It has been corrected. We regret the error.
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Rob and Jesse go deep on the electricity machine.
Last week, more than 50 million people across mainland Spain and Portugal suffered a blackout that lasted more than 10 hours and shuttered stores, halted trains, and dealt more than $1 billion in economic damage. At least eight deaths have been attributed to the power outage.
Almost immediately, some commentators blamed the blackout on the large share of renewables on the Iberian peninsula’s power grid. Are they right? How does the number of big, heavy, spinning objects on the grid affect grid operators’ ability to keep the lights on?
On this week’s episode of Shift Key, Jesse and Rob dive into what may have caused the Iberian blackout — as well as how grid operators manage supply and demand, voltage and frequency, and renewables and thermal resources, and operate the continent-spanning machine that is the power grid. Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Robinson Meyer: So a number of people started saying, oh, this was actually caused because there wasn’t enough inertia on the grid — that Spain kind of flew too close to the sun, let’s say, and had too many instantaneous resources that are metered by inverters and not by these large mechanical generators attached to its grid. Some issue happened and it wasn’t able to maintain the frequency of its grid as needed. How likely do you think that is?
Jesse Jenkins: So I don’t think it’s plausible as the precipitating event, the initial thing that started to drive the grid towards collapse. I would say it did contribute once the Iberian grid disconnected from France.
So let me break that down: When Spain and Portugal are connected to the rest of the continental European grid, there’s an enormous amount of inertia in that system because it doesn’t actually matter what’s going on just in Spain. They’re connected to this continen- scale grid, and so as the frequency drops there, it drops a little bit in France, and it drops a little bit in Latvia and all the generators across Europe are contributing to that balance. So there was a surplus of inertia across Europe at the time.
Once the system in Iberia disconnected from France, though, now it’s operating on its own as an actual island, and there it has very little inertia because the system operator only scheduled a couple thousand megawatts of conventional thermal units of gas power plants and nuclear. And so it had a very high penetration on the peninsula of non-inertia-based resources like solar and wind. And so whatever is happening up to that point, once the grid disconnected, it certainly lacked enough inertia to recover at that point from the kind of cascading events. But it doesn’t seem like a lack of inertia contributed to the initial precipitating event.
Something — we don’t know what yet — caused two generators to simultaneously disconnect. And we know that we’ve observed oscillation in the frequency, meaning something happened to disturb the frequency in Spain before all this happened. And we don’t know exactly what that disturbance was.
There could have been a lot of different things. It could have been a sudden surge of wind or solar generation. That’s possible. It could have been something going wrong with the control system that manages the automatic response to changes in frequency — they were measuring the wrong thing, and they started to speed up or slow down, or something went wrong. That happened in the past, in the case of a generator in Florida that turned on and tried to synchronize with the grid and got its controls wrong, and that causes caused oscillations of the frequency that propagated all through the Eastern Interconnection — as far away as North Dakota, which is like 2,000 miles away, you know? So these things happen. Sometimes thermal generators screw up.
Music for Shift Key is by Adam Kromelow.
Then again, there are reasons why he’d want to focus on existing generation.
Just how big is the data center boom, really? How much is electricity demand going to expand over the coming decades? Business plans, government policy, and alarming environmental forecasts are all based on the idea that we’re on an unrelenting ride upwards in terms of electricity use, especially from data centers used to power artificial intelligence.
It’s one reason why the new Trump administration declared in the first days of its return to power that the country was in an “energy emergency,” and hasbeen used as a justification for its attempted revival of the coal industry.
But one mildly dissenting voice came from a perhaps-unexpected corner: the power industry.
Constellation Energy’s Chief Executive Officer Joseph Dominguez spent a portion of the company’s quarterly earnings call Tuesday throwing lukewarm water on the most aggressive load growth projections, even as the company looks to profit from increased demand for the power that its over 30,000-megawatt, largely nuclear fleet serves.
Dominguez told his audience of investors and analysts that utilities and their power customers have been telling Constellation that “the same data center need is being considered in multiple jurisdictions across the United States at the same time, just like fishing. If you’re a fisherman, you put a bunch of lines in the water to try to catch fish, and the data center developers are doing exactly the same thing.”
This means that different electricity markets or utility territories could report the same future data center demand, when ultimately the developer will pick just one site.
Tallying the demand growth projections from a few large power markets — namely MISO, which largely serves the Midwest; PJM, which largely serves the East Coast; and ERCOT, the Texas energy market — which together “account for less than half” of U.S. power demand, Dominguez said, Constellation finds that they project “notably higher” demand growth than many third-party consultants and analysts foresee for the country as a whole.
“It’s hard not to conclude that the headlines are inflated,” Dominguez said. He further claimed that Constellation had “done the math,” and that “if Nvidia were able to double its output and every single chip went to ERCOT, it still wouldn’t be enough chips to support some of the load forecasts.”
He argued that utilities tend to overstate load growth — an observation backed up by research from the Rocky Mountain Institute. “We get it,” he said. “Utilities have to plan to ensure that the system is reliable.” That frequently means erring on the side of having more generation and transmission to serve future demand as opposed to being caught short.
Dominguez is hardly the first voice to call into question load growth forecasts. Energy industry consultant Jonathan Koomey told Heatmap more than a year ago that “everyone needs to calm the heck down” about AI-driven load growth. Data center developers, chipmakers, and AI companies would likely find efficiencies to get more computing power out of less electric power, he predicted, similar to how the original data center buildout avoided catastrophic predictions of imminent power shortages and spiking electricity prices in the early 2000s.
Since then, demand growth projections have done nothing but rise. But even just a few weeks ago, Peter Freed, Meta’s former director of energy strategy, told Heatmap’s Shift Key podcast, “It is simultaneously true that I think this is going to be a really large demand driver and that we have bubble-like characteristics in terms of the amount of stuff that people are trying to get done.”
Now, to be clear, Dominguez has a reason to talk down expectations of future demand growth — and with it the expectation that there needs to be massive investment in new power plants. Constellation owns and operates a fleet of nuclear power plants, and is bringing on a gas-heavy fleet with its planned acquisition of Calpine.
Dominguez also said that new natural gas and renewables were likely to prove expensive to build.
“The cost of new entry, whether that be for combined cycle machines or solar with storage, has gone up substantially, as has the time to build and site these assets,” Dominguez said. “Now, at the end of the day, in a tightening market, we compete with the cost of new entry.”
This is halfway consistent with what other big players in the energy industry have been saying. John Ketchum, the chief executive of NextEra, which has a large renewables development business,has been telling anyone who will listen that the way to meet urgent load growth is with renewables and batteries, as they can be built cheaper and faster than natural gas, let alone nuclear.
Dominguez’s take, however, is that it’s all quite expensive and lengthy considering the likely level of need.
“When I listen to some of the comments on these calls, I just have to tell you, folks, I think the load is being overstated. We need to pump the brakes here.”
On defending wind, Russian gas, and NREL layoffs
Current conditions: A state of emergency is in effect in Manitoba, Canada, due to multiple wildfires • 17 million people in the south-central U.S. are at risk of severe storms on Tuesday • The Interior Department has reportedly suspended air quality monitoring for National Parks, including California’s Joshua Tree, where the AQI today is moderate.
Attorneys general from 17 Democratic states and Washington, D.C., filed a lawsuit on Monday challenging President Trump’s executive order pausing approvals, permits, and loans for onshore and offshore wind projects. The lawsuit argues that Trump exceeds his authority with the indefinite pause, which threatens “thousands of good-paying jobs and billions in investments, and … is delaying our transition away from the fossil fuels that harm our health and our planet,” in the words of New York Attorney General Letitia James, who is leading the coalition.
In a response to the lawsuit, a White House spokesperson told The Associated Press that “the American people voted for the president to restore America’s energy dominance, and Americans in blue states should not have to pay the price of the Democrats’ radical climate agenda.” As my colleague Emily Pontecorvo has written, however, state climate goals “become nearly impossible if no additional [wind] projects are able to get through the permitting process until at least 2029,” with New York state’s especially in jeopardy after the administration ordered the halt of construction on the fully permitted Empire Wind project south of Long Island.
The European Union plans to announce on Tuesday a 2027 deadline for companies to end any remaining energy contracts with Russia, the Financial Times reported Monday. Though the EU’s use of Russian oil and coal virtually ended with sanctions after the invasion of Ukraine in 2022, Europe still bought 49.5 billion cubic meters of Russian gas through pipelines in 2024, and another 24.2 billion transported on ships as liquified natural gas, per Rystad Energy (though some of that LNG was resold). Another way of looking at it: “The EU purchased a total of [$26 billion] in Russian energy in 2024, exceeding its military assistance to Ukraine last year,” Bloomberg writes, with imports accounting for about 19% of the bloc’s total gas purchases.
The proposed measures will need to be approved by a majority of EU member states and the European Parliament before they can be adopted, according to FT. Without Russian LNG, Europe is expected to turn to the U.S. to meet its energy needs.
Share of European Union gas demand met by Russian supply, 2001-2024
IEA
More than 100 employees at the National Renewable Energy Laboratory lost their jobs in a round of layoffs on Monday, Mother Jones reports. The cuts included non-probationary employees, or those who’ve worked at the Department of Energy division for over two years.
Though NREL has more than 3,000 employees on staff, sources who spoke with Mother Jones described the cuts as “rather haphazard and unorganized,” while others stressed that “if I am suddenly the only person on my team, I can’t handle that work.” The layoffs also notably come after President Trump’s “skinny” budget proposed $15 billion in cuts to Infrastructure Investment and Jobs Act funding. The White House Office of Management and Budget has said that the budget aims to reorient the Department of Energy’s funding away from “unreliable renewable energy” and “toward research and development of technologies that could produce an abundance of domestic fossil energy and critical minerals, innovative concepts for nuclear reactors and advanced nuclear fuels, and technologies that promote firm baseload power.”
The Federal Emergency Management Agency plans to end door-to-door survivor outreach in disaster areas for the upcoming hurricane and wildfire seasons, Wired reported Monday, based on a FEMA memo dated May 2. Previously, the agency would canvass disaster survivors to inform them about how to register for federal aid, a policy that one emergency management coordinator told Wired was critical given how many survivors don’t get adequate information about recovery resources otherwise. Instead, FEMA’s memo said the agency will “focus survivor outreach and assistance registration capabilities in more targeted venues.”
Last year, Republicans on the Oversight Committee singled out FEMA’s outreach program over alleged “widespread discrimination against individuals displaying Trump campaign signs on their property” in the wake of Hurricane Milton. The White House’s budget has also cited FEMA for supposedly “skipping over homes when providing aid.” But the Trump administration has also sought to pare back the agency aggressively: Earlier this year, it denied a request for federal aid from Arkansas’ Republican Governor and former White House Press Secretary Sarah Huckabee Sanders after severe tornadoes that left more than 40 people in the region dead, arguing the disaster was not “beyond the capabilities of the state, affected local governments, and voluntary agencies” to address.
Kevork Djansezian/Getty Images
The Los Angeles Dodgers have faced calls from activists and fans to end their sponsorship deal with Phillips 66’s 76 gas station brand — but the partnership might face a natural end due to the Olympics coming to L.A. in 2028, Legal Planet reports. Dodger Stadium will be an official Olympic venue during the summer games, and its 76 gas ads will violate the Olympic Charter prohibiting “commercial installations and advertising signs … in the stadia, venues or other sports grounds.”
The Dodgers are under mounting pressure to drop the Phillips 66 partnership even earlier. There are 76 gasoline ads “plastered throughout the ballpark, from the visiting team’s bullpen to the ribbon board screens lining the stands … Even the on-deck circles on the field, where batters prepare to hit, are orange-and-blue 76 logos,” the Los Angeles Times’ Sammy Roth wrote last year in a column calling for the team to break up with the oil company. As of November, the Houston-based energy company was facing six counts of violating the U.S. Clean Water Act by illegally discharging 790,000 gallons of wastewater from its Carson refinery into the L.A. County sewer system. “The lead up to the 2028 Olympic games period would seem to be a natural time for the Dodgers to reset a marquee sponsor for years to come — and to do so on their own terms — or else be forced to by Olympic rules,” Legal Planet writes.
“C’mon Ford, c’mon GM, c’mon Chrysler, let’s roll again/Build something useful that people need, build us a safe way for us to be/Build us something that won’t kill our kids, that runs real clean, that runs real clean.” —Lyrics to Neil Young’s new single “Let’s Roll Again.”