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Delaying congestion pricing is one of the worst climate policy decisions made by any Democrat in recent memory.

If it holds, then Governor Kathy Hochul’s decision today to delay congestion pricing indefinitely in New York will be a generational setback for climate policy in the United States.
It is one of the worst climate policy decisions made by a Democrat at any level of government in recent memory.
It is worse than the Mountain Valley pipeline, the 300-mile gas pipeline that Senator Joe Manchin of West Virginia got approved in 2022 in exchange for supporting the Inflation Reduction Act.
And it is worse than the Willow project in Alaska, the oil mega-project that President Joe Biden okayed last year under pressure from that state’s local and indigenous leaders.
It is so bad because it will set back the development of climate-friendly cities and rapid transit infrastructure in the United States for years if not decades. And it will deter other American cities from implementing the kind of time-saving, pollution-averting, anti-gridlock measure that the country desperately needs.
There is nothing good to be said for this decision. It is bad politics, bad economics, bad governance, and bad for the climate.
Let us briefly count the ways that it is destructive.
It is stupid coalition politics. Hochul has alienated her allies, including environmental groups, state budget hawks, and transit advocates. Bill McKibben, the longtime New Yorker writer who has become one of the country’s most famous climate activists, called Hochul’s decision “one of the most aggressive anti-environmental actions ever undertaken by a Democratic governor.”
In exchange, Hochul has delighted her Republican adversaries, who can praise her wise decision-making in the weeks to come — and therefore brandish their own bipartisan bonafides — but continue to campaign against congestion pricing through November. Congestion pricing is unpopular now, but in her fecklessness, Hochul has guaranteed that it will be a live issue in November.
It is nonsense budget politics. Hochul says that she has delayed congestion pricing because she is worried about the city’s recovery from the pandemic, but regardless of her reasons, she has now left a $1 billion hole in the transit authority’s budget. The New York Times reports that she wants to fill that hole by raising taxes on the state’s businesses.
But that means that she has taken a tax formerly charged to some New York residents and businesses — but which would also fall on New Jersey and Connecticut residents and businesses — and shifted it entirely to in-state entities. She has, in essence, cut taxes on out-of-state residents and raised taxes on New York businesses and consumers.
And instead of taxing the right to use roads in downtown Manhattan, which are a limited public resource, she will instead tax all business activity in the state. What good will that do for New York’s economy?
Those political and financial flaws might be forgiven if her decision was good for the planet. But don’t worry: It’s also bad climate politics.
Cars, SUVs, and trucks belch more climate pollution into the atmosphere than any other single economic activity in the U.S. Nearly 20% of America’s annual carbon pollution comes from individuals and families driving their private vehicles around on roads and highways. This is a far larger share of national pollution than is generated by more famous climate villains, such as air travel.
We have good ways of dealing with all that carbon pollution. In suburbs, small towns, and rural America, the best way to deal with that tailpipe pollution is to gradually transition from gasoline-burning cars to electric vehicles. In some places, the country can also experiment with using experimental, climate-friendly liquid fuels.
But in cities, people have better and cheaper options than getting EVs. We can stop requiring people to drive everywhere and encourage them to walk, bike, and take public transit instead. That will require, at times, treating the use of roads in city centers as the limited public resource that it is — which means charging cars and trucks to enter the most crowded downtown areas of certain cities at certain times of the day.
That’s what congestion pricing is: a way of encouraging cities to grow in pro-climate, pro-environmental ways. Such a policy has already been successfully implemented in London, Singapore, and other congested cities. Even as an urban car owner, I long wanted the city where I lived for a decade — Washington, D.C. — to adopt a similar policy. After all, when Stockholm started its congestion fee, the rate of asthma attacks among its children dropped by half.
So I looked forward to the start of congestion pricing in New York City, America’s biggest, densest, and most transit-friendly city. New York was bushwhacking a trail for everyone else to follow: If congestion policy was a success there, then other American cities could experiment with it in some form.
By pausing that trial before it has even begun, Hochul has essentially frozen our ability to experiment with congestion pricing anywhere else in the country. By shuttering the policy in New York, she has poisoned pro-climate urban politics everywhere. Now people will say: You saw what happened when New York tried to do congestion pricing. Do you really want to try that here?
In the past, when national Democrats have approved new pipelines or oil projects, they have argued that those projects will not affect the country’s carbon pollution because only demand for fossil fuels, and not the supply of them, drives carbon emissions. But what makes congestion pricing so powerful is that demand is precisely what it targets. Congestion pricing makes buses run faster, pays for the subway system, and pushes people and businesses to consider the social cost of their driving before they get in the car.
Congestion pricing, if implemented widely, can actually conserve fossil fuels and cut carbon emissions. Now Hochul has halted its progress everywhere.
She has made, in other words, a local mistake with national and even global consequences. It is such a foolhardy error that it instantly recasts Kathy Hochul’s climate record as governor.
Hochul has previously been seen as a center-left governor playing a difficult but moderate environmental hand. But is that really her record? She has struggled to build wind farms off the coast of New York, even though it is essential to decarbonizing the state’s power grid. She has so far failed to pass the NY HEAT Act, which would help the state transition away from using fossil fuels to heat its buildings. She has even failed to pass little climate measures that would fund the state’s more modest climate goals.
I would compare her to Senator Joe Manchin, the fossil-fuel-friendly West Virginia lawmaker who repeatedly refused to vote for Biden’s climate policy — except at least Manchin put his political reputation on the line when it mattered and ultimately negotiated, and voted for, the Inflation Reduction Act. At least Manchin has many qualities to recommend him: He was canny, risk-taking, proud, and courageous when it counted. Hochul is just a loser.
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Rob checks in with Commodity Context’s Rory Johnston as the Iran War (hopefully) draws to a close.
When Iran closed the Strait of Hormuz earlier this year, experts projected oil prices would go to $200 a barrel. But then… they didn’t. In fact, while gasoline prices rose in the United States, and Europe and Asia suffered higher costs, the resulting energy crisis wasn’t even as bad as what followed Russia’s 2022 invasion of Ukraine.
Why? China. The country seems to have absorbed the costs of Trump’s war of choice by releasing hundreds of millions of barrels from its strategic stockpile. On this episode of Shift Key, Rob is joined by Rory Johnston, an oil markets researcher and the author of the Commodity Context newsletter. They discuss China’s massive (and quiet) intervention, why it’s “the most important thing we learned” from the Iran War, and what it means for the future of energy and geopolitics. Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap News.
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.
Mentioned:
China Oil Demand Doubts, Rory’s 2023 article about Chinese strategic stockbuilding
Previously on Shift Key: Why the Iran Ceasefire Hasn’t Ended the Energy Crisis, featuring Rory
This episode of Shift Key is sponsored by ...
Heatmap Pro brings all of our research, reporting, and insights down to the local level. The software platform tracks all local opposition to clean energy and data centers, forecasts community sentiment, and guides data-driven engagement campaigns. Book a demo today to see the premier intelligence platform for project permitting and community engagement.
Music for Shift Key is by Adam Kromelow.
We got a much better sense of the Trump administration’s nuclear buildout plans today.
The Energy Department announced its long-awaited loan program that will aim to build a new fleet of nuclear reactors across the country. The department’s in-house bank will provide low-interest loans of up to $17.5 billion to help utilities and power developers buy up to 10 Westinghouse AP1000s, the third-generation nuclear reactor that is that company’s flagship product.
I can’t say this program was entirely a surprise: If you read Heatmap, you’ll remember we reported on the existence of this program — and the discussions between the government, utilities, power developers, and Westinghouse — back in February. Gregory Beard, who leads the Energy Department’s in-house bank, also teased the program at a Houston conference in April.
The program looks roughly as anticipated: It will aim to construct up to 10 new reactors, with two AP1000 Westinghouse reactors across five sites. That could add up to 11 gigawatts of nearly around the clock zero-carbon electricity to the power grid. What’s new is that Westinghouse and the utility will jointly own the power plants.
According to The Wall Street Journal, utilities and Westinghouse will each own part of the plants once they’re built. Five loans will become available; the department is already in talks with seven utilities.
At the high level, it’s a cool program — or at least I think so. Nuclear support has become surprisingly bipartisan, at least at the elite level, in recent years. In New York, Governor Kathy Hochul is trying to develop new nuclear plants. As we’ve noted before, the countries with some of the cleanest power grids in the world, such as France and Sweden, achieved their low carbon emissions in part by undertaking large, state-led nuclear energy buildouts. France, in particular, harmonized its nuclear power plants to a single reactor design and then built them to spec across the landscape. China is engaged in a similar buildout now with a variant of the AP1000. By getting behind the AP1000 in the United States, the Trump administration is following a global best practice.
The idea of a mass buildout makes sense for other reasons, too. Recent nuclear projects in the United States have often faced delays because construction and manufacturing timelines don’t line up. AP1000s are manufactured partly off-site in Westinghouse facilities and then shipped in; when a part arrives late, an expensive construction crew has to sit idle while they wait for it to arrive. (These timing misalignments drove part of the Vogtle plant’s runaway costs in Georgia.) By placing what is in essence a bulk order for AP1000 parts, the new program aims to bring down the cost of production and even allows project sites to swap identical parts as they come available — if one site isn’t ready to receive a pressure vessel, for instance, it can go somewhere else.
I hesitate to praise the project's climate bonafides at the risk of discouraging the Trump administration, but it is worth noting that if this project were to succeed, it would be one of the largest state-assisted build-outs of zero-carbon electricity in recent American history. But it would still take some time to arrive: These reactors aren’t forecast to come online til 2035.
Let me note one more irony. For a long time, the country’s policymakers and nuclear industry (to the extent the latter exists) have dreamt of small modular reactors: petite fission plants that can be manufactured in a factory and would produce a few hundred megawatts. The AP1000, in both its American and Chinese iterations, is a very large reactor — but it has become, in a sense, modular and manufacturable.
Cameco, which owns about half of Westinghouse, saw its stock rise 1.8% in the day’s trading. Brookfield Renewable Partners, which owns the other half, was flat. It was otherwise a choppy day in the markets, with the S&P 500 falling 1.4% and some tech and AI-exposed companies continuing their slide.
There will be much more to say about this program, and we look forward to covering it at Heatmap.
Hyperscalers might be paying billions to avoid blame for rising electricity prices.
Here is a mystery for you: On Wednesday, the House Energy and Commerce Committee will take up the Ratepayer Protection Act, a bipartisan bill sponsored by Colorado Republican Gabe Evans and Florida Democrat Kathy Castor that seeks to enshrine Trump’s similarly named pledge into law.
Among the bill’s supporters is Kentucky Representative Brett Guthrie, a Republican and the chair of the committee. Guthrie is no opponent of artificial intelligence, saying in a statement praising the bill that “Winning the race to AI dominance is essential to securing America’s future global leadership, and that means expeditiously building the power infrastructure needed to support new technologies, while doing so in a responsible way.” Guthrie did not respond to a request for comment.
Microsoft, one of seven large technology companies that agreed to cover any additional grid infrastructure costs stemming from their data centers under Trump’s original Ratepayer Protection Pledge, supports the bill, describing it as an “important step to help ensure American families are protected from rising electricity costs.” Google, another signatory, generally backs the idea of specialized large load tariffs that allocate network costs back to the hyperscalers.
But … why? After all, these companies are voluntarily putting themselves on the hook for what could be billions of dollars in costs that would typically be socialized to all the customers on the grid.
The Data Center Coalition, a trade group including several hyperscalers, has been more circumspect about the bill. Cy McNeill, the group’s senior director of federal affairs, told me in a statement that the group “is reviewing the details of the Ratepayer Protection Act with our members and looks forward to engaging with policymakers on this important topic.”
Evans, Castor, Guthrie, and and the rest appear to be acting not out of hostility towards the AI industry, but rather from a desire to protect it from public backlash fed by rising electricity prices. Earlier this month, Guthrie co-signed a letter to FBI Director Kash Patel, among others, raising concerns that China had “engaged in a coordinated effort to slow U.S. growth in AI development and the building of infrastructure supporting AI data centers” by fomenting domestic opposition — hardly the interpretation of someone working against the industry.
The explanation, perhaps, lies in the answers to two big questions about the Ratepayer Protection Act:
1. Are data centers responsible for higher electricity prices now, or will they be in the future?
2. And would the approach taken in the law actually work to protect ratepayers?
As to the first question, analysts have come up with a nuanced answer. The electricity cost increases we’ve seen in the last five or so years have been largely driven by expenses associated with the distribution grid, including the poles and wires themselves. In some states, like California, the costs come back to wildfires; in others, like Maine, to storm remediation. Looking backwards to 2019, researchers have not been able to find a regular relationship between load growth and price hikes.
In fact, several states “absorbed large industrial and data center load additions while reducing inflation-adjusted retail prices,” according to researchers at Columbia University’s Center on Global Energy Policy. By contrast, some states with little load growth from industry or data centers, such as Maine or California, have seen prices rise substantially.
Many analysts expect electricity prices to continue rising nationally, and data centers could be a driver going forward as demand hits a grid whose capacity to generate and transmit electricity is increasingly strained. This is likely already happening in the country’s largest electricity market, PJM Interconnection, where the system’s independent market monitor has claimed that current and forecasted data center demand has cost customers over $23 billion from recent capacity auctions.
To get prices to actually fall — or at least grow more slowly —it would require that “low-cost supply is available, existing infrastructure is more fully utilized, and cost allocation ensures that new demand contributes to system efficiency,” the Columbia researchers write. Under business as usual however, prices will likely continue to rise.
On the second question, there is much more cynicism.
Critics of the original Ratepayer Protection Pledge, including Harvard Law School’s Ari Peskoe, pointed out that the actual parties to ratemaking — utilities and state regulators — were not involved in the pledge at all. Already, there are accusations that projects developed by pledge signatories could lead to higher prices. Meta's sprawling planned data center project in Louisiana is responsible for the utility’s plans to buy a Texas natural gas-fired power plant, according to documents filed by regulators reviewed by the Times-Picayune. The $1.8 billion deal could lead to $8 a month in additional costs for typical Louisiana ratepayers.
The Ratepayer Protection Act would go a bit further than the pledge, amending the Public Utility Regulatory Policies Act to “establish a Federal standard relating to the recovery of the full, incremental costs of upgrades that serve large-load customers.” Peskoe, however, described this to me in an email as “largely symbolic” and noted that “Congress may not force state regulators to do anything” under current Supreme Court jurisprudence. “This section of PURPA is basically Congress asking state regulators to please take a look at the ratemaking standard.”
That being said, Peskoe noted that “many states and non-regulated utilities do tend to consider PURPA ratemaking standards,” but that there’s “no enforcement mechanism,” depriving the law of any teeth. “States can reject the ratemaking standards or adopt them in a way that deviates from what Congress may have intended.”
Still, it is likely in the political interest of state regulators to come up with something on large load tariffs, the Cato Institute’s Travis Fisher told me. He recommended that the National Association of Regulatory Utility Commissioners “spearhead an initiative to get every state regulator to sign a ratepayer protection pledge,” if only to insulate themselves from political backlash and maintain their power over retail ratemaking.
But even if states do adopt the cost allocation principle, determining exactly which infrastructure is being installed due to a data center and what serves all users can be tricky.
“Any real-world example of this is going to be quite complicated, and the devil’s always in the details,” Ben Schifman, a senior technology fellow at the Institute for Progress and a former attorney at the Department of the Interior and the Department of Justice, told me. While it might be possible to conclude that “a given substation is simply only needed for that data center,” he said, “as soon as you start zooming out into the larger, big-ticket investments, it’s quite complicated to attribute the cost to one user or one group of users.”
In summary, the Ratepayer Protection Act will ask state regulators to consider an approach to data center cost allocation that may not capture all of their costs and will likely do little to arrest the fundamental drivers of higher electricity costs. Viewed through this lens, the logic of the coalition supporting both the original Ratepayer Protection Pledge and the beefed-up Ratepayer Protection Act comes into focus.
Electricity prices are likely to continue to rise, and data center construction has powerful interests behind it. The public’s attitude towards data centers is rapidly souring, and no matter how many nuanced PDFs are published on the topic, people continue to blame data centers for higher electricity costs.
And if prices continue to rise, the big data center developers may be able to point to the Ratepayer Protection Act and say “well, it wasn’t me.”