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Most nonprofit boards can do whatever they want.
Surely you’ve heard by now. On Friday, the board of directors of OpenAI, the world-bestriding startup at the center of the new artificial intelligence boom, fired its chief executive, Sam Altman. He had not been “consistently candid” with the board, the company said, setting in motion a coup — and potential counter-coup — that has transfixed the tech, business, and media industries for the past 72 hours.
OpenAI is — was? — a strange organization. Until last week, it was both the country’s hottest new tech company and an independent nonprofit devoted to ensuring that a hypothetical, hyper-intelligent AI “benefits all of humanity.” The nonprofit board owned and controlled the for-profit startup, but it did not fund it entirely; the startup could and did accept outside investment, such as a $13 billion infusion from Microsoft.
This kind of dual nonprofit/for-profit structure isn’t uncommon in the tech industry. The encrypted messaging app Signal, for instance, is owned by a foundation, as is the company that makes the cheap, programmable microchip Raspberry Pi. The open-source browser Firefox is overseen by the Mozilla Foundation.
But OpenAI’s structure is unusually convoluted, with two nested holding companies and a growing split between who was providing the money (Microsoft) and who ostensibly controlled operations (the nonprofit board). That tension between the nonprofit board and the for-profit company is what ultimately ripped apart OpenAI, because when the people with control (the board) tried to fire Altman, the people with the money (Microsoft) said no. As I write this, Microsoft seems likely to win.
This may all seem remote from what we cover here at Heatmap. Other than the fact that ChatGPT devours electricity, OpenAI doesn’t obviously have anything to do with climate change, electric vehicles, or the energy transition. Sometimes I even have the sense that many climate advocates take a certain delight in high-profile AI setbacks, because they resent competing with it for existential-risk airtime.
Yet OpenAI’s schism is a warning for climate world. Strip back the money, the apocalypticism, the big ideas and Terminator references, and OpenAI is fundamentally a story about nonprofit governance. When a majority of the board decided to knock Altman from his perch, nobody could stop them. They alone decided to torch $80 billion in market value overnight and set their institution on fire. Whether that was the right or wrong choice, it illustrates how nonprofit organizations — especially those that, like OpenAI, are controlled solely by a board of directors — act with an unusual amount of arbitrary authority.
Why does that matter for the climate or environmental movement? Because the climate and energy world is absolutely teeming with nonprofit organizations — and many of them are just as unconstrained, just as willfully wacky, as OpenAI.
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Let’s step back. Nonprofits can generally be governed in two ways. (Apologies to nonprofit lawyers in the audience: I’m about to vastly simplify your specialty.) The first is a chapter- or membership-driven structure, in which a mass membership elects leaders to serve on a board of directors. Many unions, social clubs, and business groups take this form: Every few years, the members elect a new president or board of directors, who lead the organization for the next few years.
The other way is a so-called “board-only” organization. In this structure, the nonprofit’s board of directors leads the organization and does not answer to a membership or chapter. (There is often no membership to answer to.) When a vacancy opens up on the board, its remaining members appoint a replacement, perpetuating itself over time.
OpenAI was just such a board-only organization. Even though Altman was CEO, OpenAI was led officially by its board of directors.
This is a stranger way of running an organization than it may seem. For a small, private foundation, it may work just fine: Such an organization has no staff and probably meets rarely. (Most U.S. nonprofits are just this sort of organization.) But when a board-only nonprofit gets big — when it fulfills a crucial public purpose or employs hundreds or thousands of people — it faces an unusual lack of institutional constraints.
Consider, for instance, what life is like for a decently sized business, a small government agency, and a medium-sized nonprofit. The decently sized business is constantly buffeted by external forcing factors. Its creditors need to be repaid; it is battling for market share and product position. It faces market discipline or at least some kind of profit motive. It has to remain focused, competitive, and at least theoretically efficient.
The government agency, meanwhile, is constrained by public scrutiny and political oversight. Its bureaucrats and public servants are managed by elected officials, who are themselves accountable to the public. When a particularly important agency is not doing its job, voters can demand a change or elect new leadership.
Nonprofits can have some of the same built-in checks and balances — but only when they are controlled by members, and not by a board. If a members association embarrasses itself, for instance, or if it doesn’t carry out its mission, then its membership can vote out the board and elect new directors to replace them. But stakeholders have no such recourse for a board-only nonprofit. Insulated from market pressure and public oversight, board-only nonprofits are free to wander off into wackadoodle land.
The problem is that board-only nonprofits are only becoming more powerful — in fact, many of the nonprofits you know best are probably controlled solely by their board. In 2002, the Harvard political scientist Theda Skocpol observed that American civic life had undergone a rapid transformation: where it had once been full of membership-driven federations, such as the Lions Club or the League of Women Voters, it was now dominated by issues-focused advocacy groups.
From the late 19th to the mid-20th century, she wrote, America “had a uniquely balanced civic life, in which markets expanded but could not subsume civil society, in which governments at multiple levels deliberately and indirectly encouraged federated voluntary associations.” But from the 1960s to the 1990s, that old network fell apart. It was “bypassed and shoved to the side by a gaggle of professionally dominated advocacy groups and nonprofit institutions rarely attached to memberships worthy of the name,” Skocpol wrote.
The sheer number of groups exploded. In 1958, the Encyclopedia of Associations listed approximately 6,500 associations, Skocpol writes. By 1990, that number had more than tripled to 23,000. Today, the American Society of Association Executives — which is, just so we’re clear here, literally an association for associations — counts almost 1.9 million associations, including 1.2 million nonprofits.
This new network includes some nonprofits that claim to have members but are not in fact governed by them, such as the AARP. It includes “public citizen” or legal-advocacy groups, which watchdog legislation or fight for important precedents in the courts, such as Earthjustice, the Center for Biological Diversity, or Public Citizen itself. And it includes independent, mission-driven, and board-controlled nonprofits — such as OpenAI.
There is nothing wrong with these new groups per se. Many of them are inspired by the advocacy and legal organizations that won some of the Civil Rights Movement’s biggest victories. But unlike the member federations and civic associations that they largely replaced, these new groups don’t force Americans to engage with what their neighbors are thinking and feeling. So they “compartmentalize” America, in Skocpol’s words. Instead of articulating the views of a deep, national membership network, these groups essentially speak for a centralized and professionalized leadership corps — invariably located in a major city — who are armed with modern marketing techniques. And instead of fundraising through dues, fees, or tithes, these new groups depend on direct-mail operations, massive ad campaigns, and foundation grants.
This is the organizational superstructure on which much of the modern climate movement rests. When you read a climate news story, someone quoted in it will probably work for such a nonprofit. Many climate and energy policy experts spend at least part of their careers at some kind of nonprofit. Most climate or environmental news outlets — although not this one — are funded in whole or part through donations and foundation grants. And most climate initiatives that earn mainstream attention receive grants from a handful of foundations.
There is nothing necessarily wrong with this setup — and, of course, an equivalent network devoted to stopping and delaying climate policy exists to rival it on the right. But the entire design places an enormous amount of faith in the leaders of these nonprofits and foundations, and in the social strata that they occupy. If a nonprofit messes up, then only public attention or press coverage can right the ship. And there is simply not enough of either resource to keep these things on track.
That leads to odd resource allocation decisions, business units that seem to have no purpose (alongside teams that seem perpetually overworked), and decisions that frame otherwise decent policies in politically unpalatable ways. It regularly burns out people involved in climate organizations. And it means that much of the climate movement’s strategy is controlled by foundation officials and nonprofit directors. Like any other group of executives, these people are capable of deluding themselves about what is happening in the world; unlike other types of leaders, however, they face neither an angry electorate nor a ruthless market that will force them to update their worldview. The risk exists, then, that they could blunder into disaster — and take the climate movement with them.
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Ecolectro, a maker of electrolyzers, has a new manufacturing deal with Re:Build.
By all outward appearances, the green hydrogen industry is in a state of arrested development. The hype cycle of project announcements stemming from Biden-era policies crashed after those policies took too long to implement. A number of high profile clean hydrogen projects have fallen apart since the start of the year, and deep uncertainty remains about whether the Trump administration will go to bat for the industry or further cripple it.
The picture may not be as bleak as it seems, however. On Wednesday, the green hydrogen startup Ecolectro, which has been quietly developing its technology for more than a decade, came out with a new plan to bring the tech to market. The company announced a partnership with Re:Build Manufacturing, a sort of manufacturing incubator that helps startups optimize their products for U.S. fabrication, to build their first units, design their assembly lines, and eventually begin producing at a commercial scale in a Re:Build-owned factory.
“It is a lot for a startup to create a massive manufacturing facility that’s going to cost hundreds of millions of dollars when they’re pre-revenue,” Jon Gordon, Ecolectro’s chief commercial officer, told me. This contract manufacturing partnership with Re:Build is “massive,” he said, because it means Ecolectro doesn’t have to take on lots of debt to scale. (The companies did not disclose the size of the contract.)
The company expects to begin producing its first electrolyzer units — devices that split water into hydrogen and oxygen using electricity — at Re:Build’s industrial design and fabrication site in Rochester, New York, later this year. If all goes well, it will move production to Re:Build’s high-volume manufacturing facility in New Kensington, Pennsylvania next year.
The number one obstacle to scaling up the production and use of cleaner hydrogen, which could help cut emissions from fertilizer, aviation, steelmaking, and other heavy industries, is the high cost of producing it. Under the Biden administration, Congress passed a suite of policies designed to kick-start the industry, including an $8 billion grant program and a lucrative new tax credit. But Biden only got a small fraction of the grant money out the door, and did not finalize the rules for claiming the tax credit until January. Now, the Trump administration is considering terminating its agreements with some of the grant recipients, and Republicans in Congress might change or kill the tax credit.
Since the start of the year, a $500 million fuel plant in upstate New York, a $400 million manufacturing facility in Michigan, and a $500 million green steel factory in Mississippi, have been cancelled or indefinitely delayed.
The outlook is particularly bad for hydrogen made from water and electricity, often called “green” hydrogen, according to a recent BloombergNEF analysis. Trump’s tariffs could increase the cost of green hydrogen by 14%, or $1 per kilogram, based on tariff announcements as of April 8. More than 70% of the clean hydrogen volumes coming online between now and 2030 are what’s known as “blue” hydrogen, made using natural gas, with carbon capture to eliminate climate pollution. “Blue hydrogen has more demand than green hydrogen, not just because it’s cheaper to produce, but also because there’s a lot less uncertainty around it,” BloombergNEF analyst Payal Kaur said during a presentation at the research firm’s recent summit in New York City. Blue hydrogen companies can take advantage of a tax credit for carbon capture, which Congress is much less likely to scrap than the hydrogen tax credit.
Gordon is intimately familiar with hydrogen’s cost impediments. He came to Ecolectro after four years as co-founder of Universal Hydrogen, a startup building hydrogen-powered planes that shut down last summer after burning through its cash and failing to raise more. By the end, Gordon had become a hydrogen skeptic, he told me. The company had customers interested in its planes, but clean hydrogen fuel was too expensive at $15 to $20 per kilogram. It needed to come in under $2.50 to compete with jet fuel. “Regional aviation customers weren’t going to spend 10 times the ticket price just to fly zero emissions,” he said. “It wasn’t clear to me, and I don’t think it was clear to our prospective investors, how the cost of hydrogen was going to be reduced.” Now, he’s convinced that Ecolectro’s new chemistry is the answer.
Ecolectro started in a lab at Cornell University, where its cofounder and chief science officer Kristina Hugar was doing her PhD research. Hugar developed a new material, a polymer “anion exchange membrane,” that had potential to significantly lower the cost of electrolyzers. Many of the companies making electrolyzers use designs that require expensive and supply-constrained metals like iridium and titanium. Hugar’s membrane makes it possible to use low-cost nickel and steel instead.
The company’s “stack,” the sandwich of an anode, membrane, and cathode that makes up the core of the electrolyzer, costs at least 50% less than the “proton exchange membrane” versions on the market today, according to Gordon. In lab tests, it has achieved more than 70% efficiency, meaning that more than 70% of the electrical energy going into the system is converted into usable chemical energy stored in hydrogen. The industry average is around 61%, according to the Department of Energy.
In addition to using cheaper materials, the company is focused on building electrolyzers that customers can install on-site to eliminate the cost of transporting the fuel. Its first customer was Liberty New York Gas, a natural gas company in Massena, New York, which installed a small, 10-kilowatt electrolyzer in a shipping container directly outside its office as part of a pilot project. Like many natural gas companies, Liberty is testing blending small amounts of hydrogen into its system — in this case, directly into the heating systems it uses in the office building — to evaluate it as an option for lowering emissions across its customer base. The equipment draws electricity from the local electric grid, which, in that region, mostly comes from low-cost hydroelectric power plants.
Taking into account the expected manufacturing cost for a commercial-scale electrolyzer, Ecolectro says that a project paying the same low price for water and power as Liberty would be able to produce hydrogen for less than $2.50 per kilogram — even without subsidies. Through its partnership with Re:Build, the company will produce electrolyzers in the 250- to 500-kilowatt range, as well as in the 1- to 5-megawatt range. It will be announcing a larger 250-kilowatt pilot project later this year, Gordon said.
All of this sounded promising, but what I really wanted to know is who Ecolectro thought its customers were going to be. Demand for clean hydrogen, or the lack thereof, is perhaps the biggest challenge the industry faces to scaling, after cost. Of the roughly 13 million to 15 million tons of clean hydrogen production announced to come online between now and 2030, companies only have offtake agreements for about 2.5 million tons, according to Kaur of BNEF. Most of those agreements are also non-binding, meaning they may not even happen.
Gordon tied companies’ struggle with offtake to their business models of building big, expensive, facilities in remote areas, meaning the hydrogen has to be transported long distances to customers. He said that when he was with Universal Hydrogen, he tried negotiating offtake agreements with some of these big projects, but they were asking customers to commit to 20-year contracts — and to figure out the delivery on their own.
“Right now, where we see the industry is that people want less hydrogen than that,” he said. “So we make it much easier for the customer to adopt by leasing them this unit. They don’t have to pay some enormous capex, and then it’s on site and it’s producing a fair amount of hydrogen for them to engage in pilot studies of blending, or refining, or whatever they’re going to use it for.”
He expects most of the demand to come from industrial customers that already use hydrogen, like fertilizer companies and refineries, that want to switch to a cleaner version of the fuel, or hydrogen-curious companies that want to experiment with blending it into their natural gas burners to reduce their emissions. Demand will also be geographically-limited to places like New York, Washington State, and Texas, that have low-cost electricity available, he said. “I think the opportunity is big, and it’s here, but only if you’re using a product like ours.”
On coal mines, Energy Star, and the EV tax credit
Current conditions: Storms continue to roll through North Texas today, where a home caught fire from a lightning strike earlier this week • Warm, dry days ahead may hinder hotshot crews’ attempts to contain the 1,500-acre Sawlog fire, burning about 40 miles west of Butte, Montana• Severe thunderstorms could move through Rome today on the first day of the papal conclave.
The International Energy Agency published its annual Global Methane Tracker report on Wednesday morning, finding that over 120 million tons of the potent greenhouse gas were emitted by oil, gas, and coal in 2024, close to the record high in 2019. In particular, the research found that coal mines were the second-largest energy sector methane emitter after oil, at 40 million tons — about equivalent to India’s annual carbon dioxide emissions. Abandoned coal mines alone emitted nearly 5 million tons of methane, more than abandoned oil and gas wells at 3 million tons.
“Coal, one of the biggest methane culprits, is still being ignored,” Sabina Assan, the methane analyst at the energy think tank Ember, said in a statement. “There are cost-effective technologies available today, so this is a low-hanging fruit of tackling methane.” Per the IEA report, about 70% of all annual methane emissions from the energy sector “could be avoided with existing technologies,” and “a significant share of abatement measures could pay for themselves within a year.” Around 35 million tons of total methane emissions from fossil fuels “could be avoided at no net cost, based on average energy prices in 2024,” the report goes on. Read the full findings here.
Opportunities to reduce methane emissions in the energy sector, 2024
IEA
The Environmental Protection Agency told staff this week that the division that oversees the Energy Star efficiency certification program for home appliances will be eliminated as part of the Trump administration’s ongoing cuts and reorganization, The Washington Post reports. The Energy Star program, which was created under President George H.W. Bush, has, in the past three decades, helped Americans save more than $500 billion in energy costs by directing them to more efficient appliances, as well as prevented an estimated 4 billion metric tons of greenhouse gas from entering the atmosphere since 1992, according to the government’s numbers. Almost 90% of Americans recognize its blue logo on sight, per The New York Times.
President Trump, however, has taken a personal interest in what he believes are poorly performing shower heads, dishwashers, and other appliances (although, as we’ve fact-checked here at Heatmap, many of his opinions on the issue are outdated or misplaced). In a letter on Tuesday, a large coalition of industry groups including the Air-Conditioning, Heating, and Refrigeration Institute, the Association of Home Appliance Manufacturers, and the U.S. Chamber of Commerce wrote to EPA Administrator Lee Zeldin in defense of Energy Star, arguing it is “an example of an effective non-regulatory program and partnership between the government and the private sector. Eliminating it will not serve the American people.”
House Speaker Mike Johnson suggested that the electric vehicle tax credit may be on its last legs, according to an interview he gave Bloomberg on Tuesday. “I think there is a better chance we kill it than save it,” Johnson said. “But we’ll see how it comes out.” He estimated that House Republicans would reveal their plan for the tax credits later this week. Still, as Bloomberg notes, a potential hangup may be that “many EV factories have been built or are under construction in GOP districts.”
As we’ve covered at Heatmap, President Trump flirted with ending the $7,500 tax credit for EVs throughout his campaign, a move that would mark “a significant setback to the American auto industry’s attempts to make the transition to electric vehicles,” my colleague Robinson Meyer writes. That holds true for all EV makers, including Tesla, the world’s most valuable auto company. However, its CEO, Elon Musk — who holds an influential position within the government — has said he supports the end of the tax credit “because Tesla has more experience building EVs than any other company, [and] it would suffer least from the subsidy’s disappearance.”
Constellation Energy Corp. held its quarterly earnings call on Tuesday, announcing that its operating revenue rose more than 10% in the first three months of the year compared to 2024, beating expectations. Shares climbed 12% after the call, with Chief Executive Officer Joe Dominguez confirming that Constellation’s pending purchase of natural gas and geothermal energy firm Calpine is on track to be completed by the end of the year, and that the nuclear power utility is “working hard to meet the power needs of customers nationwide, including powering the new AI products that Americans increasingly are using in their daily lives and that businesses and government are using to provide better products and services.”
But as my colleague Matthew Zeitlin reported, Dominguez also threw some “lukewarm water on the most aggressive load growth projections,” telling investors that “it’s not hard to conclude that the headlines are inflated.” As Matthew points out, Dominguez also has some reason to downplay expectations, including that “there needs to be massive investment in new power plants,” which could affect the value of Constellation’s existing generation fleet.
The Rockefeller Foundation aims to phase out 60 coal-fired power plants by 2030 by using revenue from carbon credits to cover the costs of closures, the Financial Times reports. The team working on the initiative has identified 1,000 plants in developing countries that would be eligible for the program under its methodology.
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.