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The Federal Reserve giveth and the Federal Reserve taketh away.
Shares in climate-related companies — green hydrogen, residential solar, renewables developers — have been flagging in the past few months, and it seems like the damage may have spread to the private markets as well, where fledgling companies seek funding from individual venture capital firms.
The S&P Clean Energy Index — a group of 100 “global clean energy-related businesses from both developed and emerging markets” — has declined around 30% so far this year, compared to the broader stock market going up 12%.
While there are many different types of clean energy companies, the widespread malaise across the sector’s shares can mostly be attributed to high interest rates and changing public policy.
Many in the environmental business, advocacy, and public policy worlds are optimistic that clean energy can eventually become — or even already is — cost competitive with fossil fuels (not to mention better for the planet), but much of the sector is still both largely future oriented and heavily tied to government-provided incentives and policy preferences.
This means in sectors like hydrogen or offshore wind, big fights over tax credits and contract adjustments can meaningfully impact the future profitability of, or at least investor excitement around, clean energy companies if those battles go the “wrong” way.
The hydrogen company Plug Power is down around 45% this year, as is the residential solar company Sunrun. The energy company NextEra, which has massive wind and solar investments and is looking to be a big player in hydrogen, is down by more than a third. The Northeast energy company Avangrid, which paid $48 million to get out of an offshore wind deal in Massachusetts, is down by about a quarter this year. Orsted, the Danish wind company with projects up and down the East Coast, many now in some form of limbo due to rapidly accelerating costs, is down almost 50% this year.
And there’s evidence that capital may be becoming scarcer in the private markets as well. According to the audit and consulting firm PwC, overall funding from venture and private equity investors for climate technology companies fell by about 40%, taking it down to a level last seen five years ago.
Much of the fall can be chalked up to an overall decline in start-up funding — which fell 50% — the PWC analysis said. Indeed, the portion of all start-up investment that’s devoted to climate investments has actually gone up in the last year. This might be welcome news for the long-term prospects of the sector, but it’s still cold comfort for climate tech companies hunting for cash to stay afloat or expand.
While stock prices and business outlooks are not always the same — a stock price can decline because investors decided they were overly optimistic about a company’s prospects even if it’s still growing — there are some unifying causes to the troubles the clean tech industry is facing.
The one that pops up everywhere is interest rates, which are at the highest level in decades in the United States.
When the Federal Reserve raises interest rates and keeps them high, money becomes more expensive to borrow (just ask anyone who’s trying to buy a house right now). This matters a lot for a bevy of clean energy companies, because they often need to spend now — to, say, build a utility-scale solar array — in order to secure flows of payments in the future. When interest rates are high, funding is not only costlier, but future payments are less attractive compared to, say, buying low risk government bonds, which can offer a sizable return with less risk.
“Recently investors have been concerned that higher interest rates mean shrinking NPV, or value creation, for new renewable projects … lack of access to capital, prohibitively high renewables costs, lower renewables demand, and significantly lower value of future growth pipelines,” Morgan Stanley analysts wrote in a note earlier this week. (They ultimately described the sell-off as “overdone”).
Much of the sell-off, the Morgan Stanley analysts said, was attributable to an announcement made last month by NextEra, which is both a leading renewables company and the owner of a Florida utility. NextEra said that the growth rate of dividends paid out by an affiliated company that buys its renewable projects would be cut in half in order “to reduce financing needs and better position the partnership to continue to deliver long-term value for unitholders.”
That’s a mouthful, but it essentially means that a source of capital for a leading renewables developer is less optimistic about the business and decided to cut what it paid to its investors instead of acquiring another solar, wind, or battery project.
This announcement led to a quick, sudden decline in the company’s stock price, knocking around $30 billion off its market value and dragging the broader sector’s valuations down by about 12% soon after the announcement.
For specific companies and sectors, they’ve had their own challenges that have brought down stock prices.
Publicly traded residential solar companies have seen their valuations fall dramatically in the last year, which can be chalked up to, Morgan Stanley analysts argue, “the combination of higher interest rates and policy changes in California,” referring to a new state policy which dramatically cuts back payments to homeowners selling solar power to the electric grid. “Overall, we expect another rough quarter for residential solar companies,” Citi analysts said, in a note downgrading two solar companies, SunPower (stock down two thirds this year) and Sunnova (down 47%).
“Interest rates are highly relevant for the renewables space as installers are effectively financing companies and as renewable project expected returns are sensitive to interest rate changes,” analysts at Citi said in a note this week.
In August, Sunrun, a leader in residential solar, told investors that “recent interest rate increases, inflationary pressures, and working capital needs have prevented us from generating meaningful cash generation.”
And in offshore wind, there have been declines across the board. “The U.S. offshore wind market has run into challenges as project returns have declined due to cost inflation and higher cost of capital,” Morgan Stanley analysts said in a note. “While some offshore wind projects have proven to be NPV-negative and companies have cancelled contracts, we do not see risk of onshore wind, solar, and storage contracts facing these same issues.”
For companies looking to invest in green hydrogen, there is a lot of money being poured into the sector by the federal government, but also a lot of uncertainty around which projects will qualify for tax benefits. Morningstar analyst Brett Castelli described Plug Power as “a high-risk high-reward investment in the green hydrogen economy” with “operating losses and heavy capital investment associated with its green hydrogen network.” The company, Castelli said, would do better, “the more flexible the [federal] rules.”
There is still, of course, a tidal wave of money from the Inflation Reduction Act and Infrastructure Investment and Jobs Act set to flood into the energy sector, but there’s no guarantee it will go to specific companies or startups. Meanwhile, the rollout of the bills has been, well, let’s say methodical, as rules get written and spending programs get built out.
And that leaves investors asking “show me the money.”
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The Senate told renewables developers they’d have a year to start construction and still claim a tax break. Then came an executive order.
Renewable energy advocates breathed a sigh of relief after a last-minute change to the One Big Beautiful Bill Act stipulated that wind and solar projects would be eligible for tax credits as long as they began construction within the next 12 months.
But the new law left an opening for the Trump administration to cut that window short, and now Trump is moving to do just that. The president signed an executive order on Monday directing the Treasury Department to issue new guidance for the clean electricity tax credits “restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”
The broad safe harbors in question have to do with the way the government defines the “beginning of construction,” which, in the realm of federal tax credits, is a term of art. Under the current Treasury guidance, developers must either complete “physical work of a significant nature” on a given project or spend at least 5% of its total cost to prove they have started construction during a given year, and are therefore protected from any subsequent tax law changes.
As my colleague Matthew Zeitlin previously reported, oftentimes something as simple as placing an order for certain pieces of equipment, like transformers or solar trackers, will check the box. Still, companies can’t just buy a bunch of equipment to qualify for the tax credits and then sit on it indefinitely. Their projects must be up and operating within four years, or else they must demonstrate “continuous progress” each year to continue to qualify.
As such, under existing rules and Trump’s new law, wind and solar developers would have 12 months to claim eligibility for the investment or production tax credit, and then at least four years to build the project and connect it to the grid. While a year is a much shorter runway than the open-ended extension to the tax credits granted by the Inflation Reduction Act, it’s a much better deal than the House’s original version of the OBBBA, which would have required projects to start construction within two months and be operating by the end of 2028 to qualify.
Or so it seemed.
The tax credits became a key bargaining chip during the final negotiations on the bill. Senator Lisa Murkowski of Alaska fought to retain the 12-month runway for wind and solar, while members of the House Freedom Caucus sought to kill it. Ultimately, the latter group agreed to vote yes after winning assurances from the president that he would “deal” with the subsidies later.
Last week, as all of this was unfolding, I started to hear rumors that the Treasury guidance regarding “beginning of construction” could be a key tool at the president’s disposal to make good on his promise. Industry groups had urged Congress to codify the existing guidance in the bill, but it was ultimately left out.
When I reached out to David Burton, a partner at Norton Rose Fulbright who specializes in energy tax credits, on Thursday, he was already contemplating Trump’s options to exploit that omission.
Burton told me that Trump’s Treasury department could redefine “beginning of construction” in a number of ways, such as by removing the 5% spending safe harbor or requiring companies to get certain permits in order to demonstrate “significant” physical work. It could also shorten the four-year grace period to bring a project to completion.
But Burton was skeptical that the Treasury Department had the staff or expertise to do the work of rewriting the guidance, let alone that Trump would make this a priority. “Does Treasury really want to spend the next couple of months dealing with this?” he said. “Or would it rather deal with implementing bonus depreciation and other taxpayer-favorable rules in the One Big Beautiful Bill instead of being stuck on this tangent, which will be quite a heavy lift and take some time?”
Just days after signing the bill into law, Trump chose the tangent, directing the Treasury to produce new guidance within 45 days. “It’s going to need every one of those days to come out with thoughtful guidance that can actually be applied by taxpayers,” Burton told me when I called him back on Monday night.
The executive order cites “energy dominance, national security, economic growth, and the fiscal health of the Nation” as reasons to end subsidies for wind and solar. The climate advocacy group Evergreen Action said it would help none of these objectives. “Trump is once again abusing his power in a blatant end-run around Congress — and even his own party,” Lena Moffit, the group’s executive director said in a statement. “He’s directing the government to sabotage the very industries that are lowering utility bills, creating jobs, and securing our energy independence.”
Industry groups were still assessing the implications of the executive order, and the ones I reached out to declined to comment for this story. “Now we’re circling the wagons back up to dig into the details,” one industry representative told me, adding that it was “shocking” that Trump would “seemingly double cross Senate leadership and Thune in particular.”
As everyone waits to see what Treasury officials come up with, developers will be racing to “start construction” as defined by the current rules, Burton said. It would be “quite unusual” if the new guidance were retroactive, he added. Although given Trump’s history, he said, “I guess anything is possible.”
“I believe the tariff on copper — we’re going to make it 50%.”
President Trump announced Tuesday during a cabinet meeting that he plans to impose a hefty tax on U.S. copper imports.
“I believe the tariff on copper — we’re going to make it 50%,” he told reporters.
Copper traders and producers have anticipated tariffs on copper since Trump announced in February that his administration would investigate the national security implications of copper imports, calling the metal an “essential material for national security, economic strength, and industrial resilience.”
Trump has already imposed tariffs for similarly strategically and economically important metals such as steel and aluminum. The process for imposing these tariffs under section 232 of the Trade Expansion Act of 1962 involves a finding by the Secretary of Commerce that the product being tariffed is essential to national security, and thus that the United States should be able to supply it on its own.
Copper has been referred to as the “metal of electrification” because of its centrality to a broad array of electrical technologies, including transmission lines, batteries, and electric motors. Electric vehicles contain around 180 pounds of copper on average. “Copper, scrap copper, and copper’s derivative products play a vital role in defense applications, infrastructure, and emerging technologies, including clean energy, electric vehicles, and advanced electronics,” the White House said in February.
Copper prices had risen around 25% this year through Monday. Prices for copper futures jumped by as much as 17% after the tariff announcement and are currently trading at around $5.50 a pound.
The tariffs, when implemented, could provide renewed impetus to expand copper mining in the United States. But tariffs can happen in a matter of months. A copper mine takes years to open — and that’s if investors decide to put the money toward the project in the first place. Congress took a swipe at the electric vehicle market in the U.S. last week, extinguishing subsidies for both consumers and manufacturers as part of the One Big Beautiful Bill Act. That will undoubtedly shrink domestic demand for EV inputs like copper, which could make investors nervous about sinking years and dollars into new or expanded copper mines.
Even if the Trump administration succeeds in its efforts to accelerate permitting for and construction of new copper mines, the copper will need to be smelted and refined before it can be used, and China dominates the copper smelting and refining industry.
The U.S. produced just over 1.1 million tons of copper in 2023, with 850,000 tons being mined from ore and the balance recycled from scrap, according to United States Geological Survey data. It imported almost 900,000 tons.
With the prospect of tariffs driving up prices for domestically mined ore, the immediate beneficiaries are those who already have mines. Shares in Freeport-McMoRan, which operates seven copper mines in Arizona and New Mexico, were up over 4.5% in afternoon trading Tuesday.
Predicting the location and severity of thunderstorms is at the cutting edge of weather science. Now funding for that science is at risk.
Tropical Storm Barry was, by all measures, a boring storm. “Blink and you missed it,” as a piece in Yale Climate Connections put it after Barry formed, then dissipated over 24 hours in late June, having never sustained wind speeds higher than 45 miles per hour. The tropical storm’s main impact, it seemed at the time, was “heavy rains of three to six inches, which likely caused minor flooding” in Tampico, Mexico, where it made landfall.
But a few days later, U.S. meteorologists started to get concerned. The remnants of Barry had swirled northward, pooling wet Gulf air over southern and central Texas and elevating the atmospheric moisture to reach or exceed record levels for July. “Like a waterlogged sponge perched precariously overhead, all the atmosphere needed was a catalyst to wring out the extreme levels of water vapor,” meteorologist Mike Lowry wrote.
More than 100 people — many of them children — ultimately died as extreme rainfall caused the Guadalupe River to rise 34 feet in 90 minutes. But the tragedy was “not really a failure of meteorology,” UCLA and UC Agriculture and Natural Resources climate scientist Daniel Swain said during a public “Office Hours” review of the disaster on Monday. The National Weather Service in San Antonio and Austin first warned the public of the potential for heavy rain on Sunday, June 29 — five days before the floods crested. The agency followed that with a flood watch warning for the Kerrville area on Thursday, July 3, then issued an additional 21 warnings, culminating just after 1 a.m. on Friday, July 4, with a wireless emergency alert sent to the phones of residents, campers, and RVers along the Guadalupe River.
The NWS alerts were both timely and accurate, and even correctly predicted an expected rainfall rate of 2 to 3 inches per hour. If it were possible to consider the science alone, the official response might have been deemed a success.
Of all the storm systems, convective storms — like thunderstorms, hail, tornadoes, and extreme rainstorms — are some of the most difficult to forecast. “We don’t have very good observations of some of these fine-scale weather extremes,” Swain told me after office hours were over, in reference to severe meteorological events that are often relatively short-lived and occur in small geographic areas. “We only know a tornado occurred, for example, if people report it and the Weather Service meteorologists go out afterward and look to see if there’s a circular, radial damage pattern.” A hurricane, by contrast, spans hundreds of miles and is visible from space.
Global weather models, which predict conditions at a planetary scale, are relatively coarse in their spatial resolution and “did not do the best job with this event,” Swain said during his office hours. “They predicted some rain, locally heavy, but nothing anywhere near what transpired.” (And before you ask — artificial intelligence-powered weather models were among the worst at predicting the Texas floods.)
Over the past decade or so, however, due to the unique convective storm risks in the United States, the National Oceanic and Atmospheric Administration and other meteorological agencies have developed specialized high resolution convection-resolving models to better represent and forecast extreme thunderstorms and rainstorms.
NOAA’s cutting-edge specialized models “got this right,” Swain told me of the Texas storms. “Those were the models that alerted the local weather service and the NOAA Weather Prediction Center of the potential for an extreme rain event. That is why the flash flood watches were issued so early, and why there was so much advanced knowledge.”
Writing for The Eyewall, meteorologist Matt Lanza concurred with Swain’s assessment: “By Thursday morning, the [high resolution] model showed as much as 10 to 13 inches in parts of Texas,” he wrote. “By Thursday evening, that was as much as 20 inches. So the [high resolution] model upped the ante all day.”
Most models initialized at 00Z last night indicated the potential for localized excessive rainfall over portions of south-central Texas that led to the tragic and deadly flash flood early this morning. pic.twitter.com/t3DpCfc7dX
— Jeff Frame (@VORTEXJeff) July 4, 2025
To be any more accurate than they ultimately were on the Texas floods, meteorologists would have needed the ability to predict the precise location and volume of rainfall of an individual thunderstorm cell. Although models can provide a fairly accurate picture of the general area where a storm will form, the best current science still can’t achieve that level of precision more than a few hours in advance of a given event.
Climate change itself is another factor making storm behavior even less predictable. “If it weren’t so hot outside, if it wasn’t so humid, if the atmosphere wasn’t holding all that water, then [the system] would have rained and marched along as the storm drifted,” Claudia Benitez-Nelson, an expert on flooding at the University of South Carolina, told me. Instead, slow and low prevailing winds caused the system to stall, pinning it over the same worst-case-scenario location at the confluence of the Hill Country rivers for hours and challenging the limits of science and forecasting.
Though it’s tempting to blame the Trump administration cuts to the staff and budget of the NWS for the tragedy, the local NWS actually had more forecasters on hand than usual in its local field office ahead of the storm, in anticipation of potential disaster. Any budget cuts to the NWS, while potentially disastrous, would not go into effect until fiscal year 2026.
The proposed 2026 budget for NOAA, however, would zero out the upkeep of the models, as well as shutter the National Severe Storms Laboratory in Norman, Oklahoma, which studies thunderstorms and rainstorms, such as the one in Texas. And due to the proprietary, U.S.-specific nature of the high-resolution models, there is no one coming to our rescue if they’re eliminated or degraded by the cuts.
The impending cuts are alarming to the scientists charged with maintaining and adjusting the models to ensure maximum accuracy, too. Computationally, it’s no small task to keep them running 24 hours a day, every day of the year. A weather model doesn’t simply run on its own indefinitely, but rather requires large data transfers as well as intakes of new conditions from its network of observation stations to remain reliable. Although the NOAA high-resolution models have been in use for about a decade, yearly updates keep the programs on the cutting edge of weather science; without constant tweaks, the models’ accuracy slowly degrades as the atmosphere changes and information and technologies become outdated.
It’s difficult to imagine that the Texas floods could have been more catastrophic, and yet the NOAA models and NWS warnings and alerts undoubtedly saved lives. Still, local Texas authorities have attempted to pass the blame, claiming they weren’t adequately informed of the dangers by forecasters. The picture will become clearer as reporting continues to probe why the flood-prone region did not have warning sirens, why camp counselors did not have their phones to receive overnight NWS alarms, why there were not more flood gauges on the rivers, and what, if anything, local officials could have done to save more people. Still, given what is scientifically possible at this stage of modeling, “This was not a forecast failure relative to scientific or weather prediction best practices. That much is clear,” Swain said.
As the climate warms and extreme rainfall events increase as a result, however, it will become ever more crucial to have access to cutting-edge weather models. “What I want to bring attention to is that this is not a one-off,” Benitez-Nelson, the flood expert at the University of South Carolina, told me. “There’s this temptation to say, ‘Oh, it’s a 100-year storm, it’s a 1,000-year storm.’”
“No,” she went on. “This is a growing pattern.”