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If you want to decarbonize concrete, it helps to understand the incredible scale of the problem.

To say that concrete poses a decarbonization challenge would be an understatement. Cement production alone is responsible for somewhere between 5 and 10% of global CO2 emissions [0], roughly two to four times more than aviation, a fact that even the construction industry is finally coming to grips with.
And yet the real problem with decarbonizing concrete isn’t the scale of its emissions, it’s the scale of concrete itself. There is simply a preposterous amount of the stuff. Contemplating concrete is like contemplating the universe — awesome, in the old God-fearing definition of the word.
Before we get into the jaw-dropping amount of concrete we produce every year, it’s worth briefly discussing how the stuff is made, and thus where its emissions come from.
Concrete is formed by mixing together cement (mostly calcium silicates), aggregates (such as sand and gravel), and water into a liquid slurry. The cement reacts with the water, forming a paste that binds the mixture into a single solid mass. Beyond concrete’s high strength and low cost, it’s these liquid beginnings that make concrete so useful. It can easily be formed into any shape and leveled with the help of gravity so you can walk on it or park a car 10 stories up on it. Essentially all modern concrete is also reinforced with steel bars, which provide tensile strength and arrest cracks.
So what about the emissions? Roughly 70-90% of the embodied carbon in concrete comes from manufacturing just the cement [1]. Partly this is because making cement is an energy-intensive process — limestone and clay are put into a kiln and heated around 2500 degrees Fahrenheit. But it’s also because the chemical reaction that turns the limestone into cement (known as calcination) releases CO₂ as a byproduct. Roughly 50-60% of cement’s carbon emissions are due to calcination [2], and thus wouldn’t be addressed by moving to less carbon-intensive electricity sources, like green hydrogen.
Now for the good stuff. Again, the most important thing to understand about concrete is the scale of its production. The world produces somewhere around 4.25 billion metric tons of cement annually (though estimates vary) [3], which works out to about 30 billion tons of concrete produced each year [4].
How much are 30 billion tons?
One way of looking at it is we produce around 4 metric tons, or just under 60 cubic feet (roughly a cube 4 feet on a side), of concrete for each person on the planet each year.
Another way of looking at it is to consider the total amount of mass, full stop, that civilization ingests each year. Estimates here vary quite a bit, but it seems to be in the neighborhood of 100 billion tons [5]. So of the total volume of material that gets extracted and used each year — including all mining, all oil drilling, all agriculture and tree harvesting — around 30% of it by mass goes toward making concrete. The amount of concrete produced each year exceeds the weight of all the biomass we use annually, and all the fossil fuels we use annually.
Total civilization annual material extraction, via Krausmann et al 2018. This is up to 2015, and has now exceeded over 90 Gt/year, with another ~8 Gt/year of recycled material.
Another way of looking at it is that the total mass of all plants on Earth is around 900 billion metric tons. So at current rates of production, it would take about 30 years to produce enough concrete to exceed all the Earth’s plant (dry) biomass.
Because humans have been producing concrete for a while, and because concrete tends to last a long time, we seem to be on the cusp of this happening. Elhacham et al 2020 estimate that total human-created mass (roughly half of which is concrete) reached the total weight of all Earth’s biomass sometime in 2020. Eyeballing their graph, concrete alone will exceed the total weight of all biomass sometime around 2040.
Anthropogenic mass vs biomass during the 20th century, via Elhacham et al 2020
In a pure mass-flow sense, human civilization is basically a machine for producing concrete and gravel (and to a lesser extent bricks and asphalt).
So civilization uses a lot of concrete. Where is it all going?
China, mostly. In recent history, China has been responsible for roughly half the world’s cement production, and by implication, concrete use [6]. The U.S., by comparison, only uses 2%, with Europe using another 5%.
Cement production by region, via Sanjuan et al 2020. Since cement production roughly tracks consumption (see here and here), we can also use this as a rough guide toward where concrete is used. Note that this gives yet another value for total global cement production of 4.65 Gt
Here’s another view from around 2010, showing what this has looked like over time (data after 2010 is a projection).
Cement consumption by region, via Altwair 2010
This gets summarized in the oft-repeated statistic that China used more cement in three years than the U.S. did in the entire 20th century.
But since China has a much larger population than the U.S., we can get a more intuitive understanding of this by looking at cement consumption per capita. Here’s per capita consumption sometime around 2015:
Per capita cement consumption by country, via Globbulk
We see that the official numbers from China make it a huge outlier in cement consumption, using around eight times as much per capita as the U.S. However, in per capita terms, some Middle Eastern countries exceed it. Saudi Arabia is higher, and Qatar, which is somewhere over 2,000 kg/capita, is so high it doesn’t even show up on the graph. It’s the combination of China’s huge population and its huge per-capita consumption that make it such an outlier in concrete production.
The official Chinese numbers are so huge, in fact, that some analysts suspect that they’re inflated, either by manipulating the data or by producing construction projects that don’t have actual demand (or both). The graph above also includes a more “realistic” estimate (which is still 3x as high as U.S. per-capita use).
What does all this concrete construction mean in practical terms? Well, China has somewhere around 50-60% of the floor space per capita as the U.S. does, or roughly as much living space per capita as most European countries [7]. This is the result of a massive trend toward urbanization over the last quarter century. Urbanization rates went from around 25% in 1990 to 60% in 2017, a period in which China’s population also increased by 250 million. In other words, in less than 30 years over 550 million moved into Chinese cities, and they all needed somewhere to live. By building enormous numbers of concrete high rises, in under 20 years China quintupled its urban residential floor space and doubled its residential floor space overall.
Residential floor space in China over time, via Pan 2020
Beyond China, we see high per capita rates of cement use in the rest of Southeast Asia, as well as the Middle East [8].
One reason you see this volume of concrete use in lower-income, urbanizing countries is that concrete construction is comparatively labor-intensive to produce. The materials for concrete are extremely cheap, and much of its cost in high-cost labor countries (such as the U.S.) is from the labor to produce it — building and setting up the formwork, laying out the reinforcing, placing the embeds, etc. If you’re a country with a lot of low-cost labor, this is a pretty good trade-off.
In addition to the current largest users of concrete, one trend to keep an eye on long-term is India’s concrete use. If India ever proceeds on a path of mass urbanization similar to China (as some folks speculate it will), we could see a massive uptick in global concrete output — India’s urbanization rate of 34% is around where China was in the late 1990s. A shift in India toward a per capita cement consumption more consistent with the rest of Southeast Asia (say around 600 kg/capita) would increase worldwide cement consumption by about 13%, and it does seem as if India’s cement use is trending upward.
By contrast, one thing clear from this data is that the U.S. actually uses an unusually low amount of concrete. Per capita, it uses as little as any other Western country, and far, far less than some — like, surprisingly, Belgium.
So we’ve seen where it gets used in the world. Can we go deeper and look at specifically what concrete is being used for?
This will vary significantly depending on the region and the local construction tradition. In the U.S., we have roughly the following breakdown (via the Portland Cement Association):
Overall, roughly half of our concrete gets used in buildings — about 26% goes into residential buildings, 2% in public buildings, and 16% into commercial buildings. The other half gets used for infrastructure — streets and highways, water conveyance and treatment tanks, etc. Because most construction in the U.S. is just one- or two-story buildings (mostly wood for residential buildings and steel for commercial ones), concrete in buildings is probably mostly going into foundations, slabs on grade, and concrete over metal deck, though there’s probably a substantial amount going into concrete masonry units as well.
But the U.S. has a somewhat unusual construction tradition, where the vast majority of our residential construction, both single-family homes and multifamily apartments, is built from light-framed wood. In other places, it's much more common to use concrete. For instance, the U.K. uses closer to 80% of its concrete for buildings, with most of that going toward the superstructure, the concrete frame that holds the building up. China, which has urbanized on the back of huge numbers of concrete residential high rises, probably devotes an even larger share of its concrete to residential construction.
Understanding how much concrete the world uses, and where it’s being used, is important if you want to use less of it.
The scale of the industry is particularly important to keep in mind. For instance, you often see enthusiasm for the idea of replacing concrete buildings with mass timber ones. But assuming you could substitute all the world’s concrete for an equal volume of wood [9], you’d need to more than triple the total annual volume of global wood harvested [10], which puts a somewhat different spin on the issue.
Most other materials would have emissions as bad or worse than concrete if they were used on the same scale.
Consider, for instance, railway ties. In the U.S., these are still largely made out of wood, but in many places they have been replaced with concrete ties. And some places are considering changing from concrete ties to plastic composite rail ties instead. It’s hard to know the exact embodied emissions without a lot of specific details about the materials and supply chains used, but can we ballpark how much a plastic tie uses compared to a concrete one?
Per the Inventory of Carbon and Energy database, concrete varies between 150 and 400 kg of embodied CO2 per cubic meter, depending on the properties of the mix, with an “average” value of about 250. Plastics mostly have embodied emissions of about 3-4 kg of CO2 per kg of plastic, or about 3,500 kg per cubic meter (assuming a density of about 1,000 kg per cubic meter). So per unit volume, plastic has somewhere around 10 times the embodied emissions of concrete.
We can also do a more direct comparison. Consider a beam spanning around 20 feet and supporting a vertical load of 21,000 pounds per linear foot. The lightest U.S. standard steel section that will span this distance is a W16x26, which weighs about 236 kg and will have embodied carbon emissions of around 354 kg.
A concrete beam of the same depth, supporting the same load and spanning the same distance, will be 10.5 inches wide by 16 inches deep, with three #10 steel bars running along the bottom. This beam will have about 190 kg of embodied emissions from the concrete, and about another 230 kg of embodied emissions from the steel rebar. This is about 20% more than the steel beam, but in the same ballpark — and over half the “concrete” emissions are actually due to the embedded reinforcing steel.
This is arguably a nonrepresentative example (most concrete, such as in columns or slabs, will have a much lower ratio of steel), but the basic logic holds: Concrete is unusual in its total volume of use, not how emissions-heavy it is as a material. Most material substitutes that aren’t wood, recycled materials, or industrial byproducts that can be had for “free” won’t necessarily be much better when used at the same scale. In some ways, it’s surprising that the carbon emissions from concrete are as low as they are.
Of course, this calculus is likely to change over time — as electricity sources change over to lower carbon ones, you’re likely to see the embodied emissions of materials drop along with it. And since cement releases CO2 as part of the chemical process of producing it, concrete will look increasingly worse compared to other materials over time.
One potential option is to find ways of changing the cement production process to be less carbon-intensive. The easiest option is to just replace manufactured Portland Cement with some other cementitious material. Industrial byproducts such as blast furnace slag, silica fume, and fly ash, often have cementitious properties and don’t have a “carbon penalty” (since they’d be produced regardless.) Materials like these can potentially eliminate large volumes of cement in a concrete mix, and they’re a key part of current low-carbon concrete strategies — even “normal” concrete mixes tend to utilize these to some degree. But the total volume of these materials is limited by the extent of various industrial processes. And for things like fly ash (which is a byproduct from coal plants) and slag (which is a byproduct from CO2-emitting blast furnaces), we can expect production to decline over time.
Another option is to take advantage of the fact that concrete will naturally absorb CO2 over time, a process known as carbonation. Even normal concrete will absorb roughly 30% of the CO2 emitted during the production process over the course of its life. Companies like Carbicrete, Carboncure, Carbonbuilt, and Solida all offer methods of concrete production that allow the concrete to absorb CO₂ during the production process, substantially reducing embodied emissions. Interestingly, these producers mostly claim that their concrete is actually cheaper than conventional concretes, which would obviously be a massive tailwind for the technology’s adoption.
It’s not obvious what the best path forward is for addressing concrete carbon emissions (like with most things, I suspect it’ll end up being a mix of different solutions), but understanding the parameters of the problem is necessary for solving it.
Note: A version of this article originally appeared in the author’s newsletter, Construction Physics, and has been repurposed for Heatmap.
[0] - This figure varies depending on the source. Chatham House provides a frequently cited estimate of 8%. We can also ballpark it — roughly 0.93 pounds of CO₂ gets emitted for each pound of cement produced, around 4.25 billion tons of cement are produced annually, which gets ~3.95 billion tons of CO₂, and total annual CO₂ emissions are in the neighborhood of 46 billion tons, getting us a bit less than 9%.
[1] - Per Circular Ecology, ~70-90% of emissions are from the cement production process, depending on the type of concrete and what the rest of the supply chain looks like.
[2] - This seems to vary depending on where the cement is being made — in Myanmar, for instance, it’s around 46%.
[3] - Another number where the sources often don’t agree with each other, see here, here, and here for estimates on annual cement production.
[4] - Concrete is roughly 10-15% cement by weight, depending on the strength of the mix, what other cementitious materials are being used, etc. An average value of 12.5% yields 34 billion tons, which we’ll knock down to account for other uses of cement (masonry mortar, grout, gypsum overlay, etc.) This roughly tracks with estimates from PCA (“4 tons of concrete produced each year for every person on Earth”), and from the now-defunct Cement Sustainability Initiative, which estimated 25 billion tons of concrete against 3.125 billion tons of cement in 2015.
[5] - See here, here, and here for an estimate of total civilization mass flow. This doesn’t (I believe) include waste byproducts, which can be substantial — for instance, it doesn’t include the ~46 billion tons of CO₂ emitted each year, or the 16 billion tons of mine tailings, or the 140 billion tons of agriculture byproducts (though this last number is difficult to verify and seems high).
[6] - We see something similar with cement as we do with other bulky, low-value materials, in that it's made in lots of distributed manufacturing facilities relatively close to where it’s used. See here for a map of cement plants in the U.S. around 2001, for instance.
[7] - For China’s total floor space, see here (most sources seem to agree with these numbers). For U.S. floor space, see my Every Building In America article. For per-capita living space in Europe, see here.
[8] - The often high rates of cement use by middle-income countries have led some folks to develop a U-shaped cement consumption theory of industrial development — that countries start out using a small amount of cement, use more as they get richer and build up their physical infrastructure, and then eventually transition to using lower volumes of cement again. The Globbulk paper spends considerable time debunking this.
[9] - It’s not actually obvious to me what the substitution ratio would be. In strength-governed cases, you’d need proportionally more timber than concrete, but in other cases (such as replacing concrete walls with light-framed stud walls), you’d probably use less. Obviously, you can’t substitute all concrete for wood, but you can probably switch out more than you think — there’s no reason you couldn’t use wood foundations instead of concrete ones in many cases, for instance.
[10] - 30 billion tons of concrete is roughly 12.5 billion cubic meters, and total annual wood products produced is currently around 5.5 billion cubic meters.
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Giving up on hourly matching by 2030 doesn’t mean giving up on climate ambition — necessarily.
Microsoft celebrated a “milestone achievement” earlier this year, when it announced that it had successfully matched 100% of its 2025 electricity usage with renewable energy. This past week, however, Bloomberg reported that the company was considering delaying or abandoning its next clean energy target set for 2030.
What comes after achieving 100% renewable energy, you might ask? What Microsoft did in 2025 was tally its annual energy consumption and purchase an equal amount of solar and wind power. By 2030, the company aspired to match every kilowatt it consumes with carbon-free electricity hour by hour. That means finding clean power for all the hours when the sun isn’t shining and the wind isn’t blowing.
The news that Microsoft is revisiting this goal could be read as the beginning of the end of corporate climate ambition. Microsoft has long been a pioneer on that front, setting increasingly difficult goals and then doing the groundwork to help others follow in its footsteps. Now it appears to be accepting defeat. The news comes just weeks after my colleague Robinson Meyer broke the news that the company is also pausing its industry-leading carbon removal purchasing program.
Delaying or abandoning the clean energy target — the two options presented in the Bloomberg story — represent quite different scenarios, however.
“There’s going to be a big difference between them saying, We’re going to keep trying as hard as we can to go as far as we can, but acknowledge we may not hit it, versus saying, Well, we can’t hit this extremely ambitious goal we set for ourselves, therefore we’re just giving up on the overall mission,” Wilson Ricks, a manager in Clean Air Task Force’s electricity program, told me.
The goal was always going to be difficult, if not impossible, for Microsoft to hit, Ricks said. Yes, it’s gotten tougher as Microsoft’s electricity usage has surged with the rise of artificial intelligence, and because Congress killed subsidies for clean energy as the Trump administration has done its best to stall wind and solar development. But some of the technologies likely needed to achieve the goal, such as advanced nuclear and geothermal power plants, have yet to achieve commercial deployment, let alone reach meaningful scale, and probably won’t by 2030 — especially not across all the regions that Microsoft operates in.
Nonetheless, some clean energy advocates (including Ricks) argue that keeping hourly matching as a north star is paramount because it helps put the world on the path to fully decarbonized electric grids.
Google was the first to introduce a 24/7 carbon-free energy strategy in 2020, and for a moment, it seemed that the rest of the corporate world would follow. A handful of companies joined a coalition to support the goal, but to date, I’m aware of just two — Microsoft and the data storage company Iron Mountain — that have followed Google in committing to achieving it.
Most companies approach their clean energy claims with considerably less precision. The norm is to purchase “unbundled” renewable energy certificates, tradeable vouchers that say a certain amount of renewable energy has been generated somewhere, at some point, and that the certificate owner can lay claim to it. Many simply buy enough of these RECs to cover their annual electricity usage and call themselves “powered by 100% renewable energy.”
There’s a spectrum of quality in the RECs available for purchase, but the market is flooded with cheap, relatively meaningless certificates. A company that operates in a coal-heavy region like Indiana can buy RECs from a wind farm in Texas that was built a decade ago, which won’t do anything to change the makeup of the grid in either place.
Today, the gold standard for companies with capital to throw around is instead to seek out long-term contracts directly with wind and solar developers known as power purchase agreements. That doesn’t mean the wind and solar farms send power to the companies directly. But these types of contracts are more likely to bring new projects onto the grid by providing guaranteed future revenues, helping developers secure the financing they need to build.
Microsoft started buying unbundled RECs more than a decade ago, and in 2014, it reported it had matched all of its global electricity usage. In 2016, the company began setting goals for direct procurement of renewable energy. In 2020, it pledged to achieve 100% renewable this way by 2025 — but it wasn’t going to sign just any wind or solar agreements. It aimed to pursue contracts with projects that were in the same regions as the company’s operations and that wouldn’t have been built without the company’s support. “Where and how you buy matters,” it wrote in its 2020 sustainability report. “The closer the new wind or solar farm is to your data center, the more likely it is those zero carbon electrons are powering it.”
In 2021, Microsoft upped the ante again by establishing its 2030 hourly matching target, which it referred to as “100/100/0” — 100% of electrons, 100% of the time, zero-carbon energy.
Microsoft has never publicly reported its progress toward the 2030 goal. The company’s enthusiasm for the target has also appeared to wane. In 2020, before Microsoft even made the 100/100/0 commitment, it touted a solution it developed to track and match renewable energy generation and consumption on an hourly basis. In the years since, it has led its peers in investments in round-the-clock nuclear power, even signing a 20-year power purchase agreement with Constellation Energy to bring the shuttered Three Mile Island nuclear plant in Pennsylvania back online.
But Microsoft has stopped publicizing the goal in blog posts and press releases. It went unmentioned in the recent announcement about the 2025 renewable energy achievement, for instance. And a section in the company’s annual sustainability report listing its climate targets that had previously advertised the 2030 goal as “Replacing with 100/100/0 carbon-free energy” was re-written in 2025 as “Expanding carbon-free electricity,” fuzzier rhetoric that now reads as a harbinger of a softer approach.
Microsoft did not respond to questions about its progress toward the 2030 target. In an emailed statement, a spokesperson emphasized the company’s commitment to maintaining its annual matching goal — the one achieved in 2025. No doubt that will take a lot more investment in the years to come now that the company is gobbling up a lot more electricity for data centers — some of it directly from natural gas plants.
Microsoft also shared a statement from Melanie Nakagawa, Microsoft’s chief sustainability officer, emphasizing the company’s commitment to become carbon negative. “At times we may make adjustments to our approach toward our sustainability goals,” she said. “Any adjustments we make are part of our disciplined approach—not a change in our long-term ambition.”
Even if Microsoft axes its hourly matching target, the company might have to start reporting its clean electricity usage on an hourly basis anyway. The Greenhouse Gas Protocol, a nonprofit that sets standards for how companies should calculate their emissions, is currently considering adopting an hourly accounting requirement. While the protocol’s standards are voluntary, companies almost uniformly follow them, and they will soon become mandatory in much of the world, as governments in California and Europe plan to integrate them into corporate disclosure rules.
The accounting rule change is highly controversial, with many companies arguing that it will deter them from investing in clean energy altogether, since their purchases won’t look as good on paper. “I don’t think anybody is debating having rules and guidelines around how you do more narrow matching, we should have that,” Michael Leggett, the co-founder and chief product officer for Ever.Green, a company that sells high-impact RECs, told me. “I think the debate has largely been around, is that required?”
Leggett said he could see how Microsoft’s pullback could be twisted to support either side. Proponents of the hourly accounting method will say, “Aha! See? This is why we have to require it.” Opponents will say, “See, even Microsoft can’t do it, so how are you going to require all these other companies to do it?”
I spoke to Alex Piper, the head of U.S. policy and markets at EnergyTag, a nonprofit that advocates for reforms to enable 24/7 clean energy, who saw the news as vindicating.
“What we’re seeing right now is many of the hyperscale technology companies look to the fastest path to power, and whether it is or not, some of them are turning to gas as that solution,” he told me. Piper argued that companies are choosing natural gas in part because they can get away with clean energy claims under the protocol’s existing rules. “The proposed rules for the greenhouse gas protocol would require those companies to at least be transparent.”
But Microsoft walking back its hourly matching goal does not have to mean that it’s walking back its climate ambition. It’s possible for companies to achieve significant emissions reductions by focusing their clean energy purchases on the places where wind and solar will do the most to displace fossil fuels, rather than worrying about matching every hour. For a company that operates in California, for example, supporting the addition of solar power to a coal-heavy grid — even if it’s in a different part of the country or the world — will do more, faster, than helping to build solar locally or waiting for around-the-clock resources such as geothermal power to come online.
Critics of hourly accounting argue that it doesn’t give companies credit for this kind of approach. “What I would love to have happen is anything to incentivize, recognize, and reward companies signing 20-year contracts that enable new projects coming online,” Leggett said of the Greenhouse Gas Protocol’s forthcoming rule change.
Ricks, of Clean Air Task Force, rejects the idea that an hourly accounting requirement would deter these kinds of deals. “That doesn’t mean that they can’t report any other set of numbers they want to,” he said. “Many companies do report things that aren’t currently recognized in the Greenhouse Gas Protocol.”
Microsoft is a prime example. The company includes two measures of its renewable energy usage in its annual reports: “percentage of renewable electricity,” which includes the unbundled RECs Microsoft has continued to buy over the years, and “percentage of direct renewable electricity,” which tracks power purchase agreements and the renewable portion of the grid mix where its facilities are located. The former uses the Greenhouse Gas protocol’s current accounting method, under which Microsoft says it has hit 100% every year since 2014. But the latter is the company’s own bespoke calculation.
The company’s 2025 feat was based on this made-up methodology, and it represents the first time Microsoft has announced to the world that it used 100% renewable energy. It never previously made such claims about its REC purchases, as far as I can tell. In other words, Microsoft’s standards for what it publicizes are far more rigorous than what the Greenhouse Gas Protocol requires.
Regardless of what the protocol decides, it will determine only what companies must report. It won’t prevent them from offering up their own, additional metrics of success.
PJM Interconnection has some ideas, as does the state of New Jersey.
We’ve already talked this week about Pennsylvania asking whether the modern “regulatory compact,” which grants utilities monopoly geographical franchises and regulated returns from their capital investments, is still suitable in this era of rising prices and data-center-driven load growth.
Now America’s biggest electricity market and another one of that market’s biggest states are considering far-reaching, fundamental reforms that could alter how electricity infrastructure is planned and paid for over 65 million Americans.
New Jersey Governor Mikie Sherrill anchored her 2025 campaign on electricity prices, and for good reason — in the past four years, electricity prices in the state have gone up 48%, according to Heatmap and MIT’s Electricity Price Hub, while average bills have risen from $83 per month to $130. On her first day in office, Sherrill issued two executive orders acting on that promise, directing the state to make funds available to freeze rates and declaring a state of emergency to ease the way to building more generation.
Included in that first order was a review of utility business models to be carried out by state regulators. What that review will entail is now coming into focus.
On Wednesday, the New Jersey Board of Public Utilities issued a statement announcing that it will look specifically at “whether New Jersey’s century-old utility business model — one that rewards electric distribution companies (EDCs) for capital spending even when cheaper alternatives exist — should be replaced with a framework tied to performance, affordability, and long-term cost stability.” In case anyone was still ambiguous as to what the outcome of said study might be, the board added that it is “expected to drive the most significant restructuring of utility regulation in New Jersey in decades.”
The current system, the board’s president Christine Guhl-Savoy said at a hearing Thursday, “creates a structural incentive to favor capital intensive solutions, even when lower costs, non-wires or demand side alternatives may be available.”
This structure, she said, could help explain why “over the past decade, electric delivery charges in New Jersey have risen steadily.” Within the service territory of PSEG, one of the four major New Jersey utilities, distribution charges alone have risen from $19.24 per month in January 2020 (as far back as the Heatmap-MIT data goes) to $21.84 as of April, while transmission charges have risen from around $20 to just over $29 per month. Many critics of the utility business model point to high levels of local grid spending on distribution as a way that utilities pad their earnings with returns harvested from ratepayers.
In the system regulators explored at the hearing, new projects would get a more skeptical look and ratepayers payouts would be partially determined by utilities hitting pre-defined service goals. NJBPU executive director Bob Brabston also indicated that the review process would take a close look at utilities’ regulated returns on equity — echoing his neighbor across the Delaware River, Pennsylvania Governor Josh Shapiro, who wrote in a letter to his state’s utilities earlier this week that these returns must be “transparent” and “justifiable,” and no longer be based on “educated guesses.”
“We want to make sure that the actual cost of equity and the returns on equity are close,” Brabston said Thursday. “We don’t want there to be a significant gap between the cost of equity that you all experience and the returns that the agencies that the agency awards.”
Meanwhile, in Valley Forge, Pennsylvania, the framework within which New Jersey’s utilities exist is coming in for its own examination.
PJM Interconnection — the nation’s largest electricity market, which covers not just Pennsylvania and New Jersey but also part or all of 11 other states — released an almost 70-page paper Wednesday, in which the organization’s president David Mills wrote that “the current situation is not tenable.”
PJM has been the poster child for a host of issues plaguing the electricity markets across the country, including fast-rising prices, a failure to quickly bring on new generation, and an inability to assure the market’s preferred level of reserve reliability. This set of challenges, Mills said in the paper’s introduction, “reflects something more fundamental than a design that needs recalibration.” Instead, PJM must consider “whether the foundational assumptions of the market remain valid – and if not, what a valid set of assumptions would require.”
The problem with the electricity market, he argued, can be solved by more markets. Right now, when prices shoot up, governments intervene with price caps, suppressing the market signal necessary to bring on sufficient generation that would bring down prices.
To replace that system, the paper proposes three possible models. The first, which it calls “Stabilized Markets,” would allow capacity to be procured for several years at a time outside of the current auction system, so that utilities could make sure their basic needs were covered before they go into the annual auctions. This would provide long term security for new investment.
The second path would be a more fundamental reform. This “Differential Reliability” approach would do away with the “shared reliability compact,” under which all loads must be served by the system at all times. Instead, PJM would “develop the operational and commercial framework to explicitly differentiate reliability,” incentivizing approaches like bring your own generation or curtailing power for new large sources of demand.
The third path is an “Energy Market Transition,” which might also be called the “Texas option.” Following this path, the capacity market would shrink as a portion of revenues earned by generators, and more revenue would come from real-time or near-real-time electricity sales.
While this path isn’t “full Texas” (ERCOT doesn’t have a capacity market at all), it would mean allowing for higher prices for energy in real-time, a.k.a. “scarcity pricing” which is arguably the defining feature of the ERCOT system (though even that was scaled back when prices got too high).
“The choices embedded in these paths involve genuine trade-offs, and those trade-offs affect different stakeholders uniquely,” the paper says.If PJM has learned anything in the past few years, it’s that it doesn’t get to make decisions on its own. Those stakeholders will get their say, one way or another.
Big fundraises for Nyobolt and Skeleton Technologies, plus more of the week’s biggest money moves.
Following a quiet week for new deals, the industry is back at it with a bunch of capital flowing into some of the industry’s most active areas. My colleague Alexander C. Kaufman already told you about one of the more buzzworthy announcements from data center-land in Wednesday’s AM newsletter: Wave energy startup Panthalassa raised $140 million in a round led by Peter Thiel to “perform AI inference computing at sea” using nodes powered by the ocean’s waves.
This week also saw fresh funding for more conventional data center infrastructure, as Nyobolt and Skeleton Technologies both announced later-stage rounds for data center backup power solutions. Meanwhile, it turns out Redwood Materials is not the only company bringing in significant capital for second-life EV battery systems — Moment Energy just raised $40 million to pursue a similar approach. Elsewhere, investors backed an effort to rebuild domestic magnesium production, and, in a glimmer of hope for a sector on the outs, gave a boost to green cement startup Terra CO2.
Cambridge-based startup Nyobolt has become the latest battery company to reach a $1 billion valuation, with its expansion into the data center market helping fuel excitement around its tech. Spun out of University of Cambridge research in 2019, the company develops ultra-fast-charging batteries based on a modified lithium-ion chemistry. Its core innovation is an anode made from niobium tungsten oxide, which Nyobolt says enables its batteries to charge to 80% in less than five minutes, with a cycle life that’s 10 times longer than conventional lithium-ion, all without the risk of fire.
The company has now raised a $60 Series C, following what it describes as a period of “rapid commercial momentum,” with revenue increasing five-fold year-over-year as customers in the robotics and data center industry piled in. Symbotic, an autonomous robotics company and existing customer, led the latest round. While Symbotic previously relied on supercapacitors to power its robots, Nyobolt’s says its batteries provide six times more energy capacity in a lighter package, allowing its warehouse robots to work for retailers like Walgreens, Target, and Kroger around the clock.
Now the startup is targeting data center customers too, positioning its tech as a fast-acting fix for the sudden power surges common to large-scale artificial intelligence workloads, as well as a temporary backup power solution for outages. While it has no confirmed domestic data center customers to date, it does have a nonbinding agreement with the Indian state of Rajasthan to deploy over 100 megawatts of off-grid AI data center and power management infrastructure, part of a broader push to expand its presence across the country.
Notably, the press release made no mention of plans to sell its tech to electric vehicle automakers, though this appears to have been a central focus previously. As recently as last summer, executive vice president Ramesh Narasimhan told the BBC that he hoped Nyobolt’s batteries would “transform the experience of owning an EV.” But while its tech does enable extremely fast charging, its underlying chemistry is not optimized for long-range driving. A sports car built to test the company’s batteries had just a 155 mile range. So like many of its climate tech peers, the company appears to be betting that data centers now represent a more reliable opportunity.
This week brought additional news from another European player aiming to smooth out data center power surges. Estonia-based supercapacitor startup Skeleton Technologies raised $39 million in what it describes as the first close of a pre-IPO funding round, with a U.S. listing planned for next year. Its core tech is built around a “curved graphene” structure, which the company likens to a crumpled sheet of paper with a high surface area. The graphene’s many exposed surfaces and edges allows it to hold more electric charge, which Skeleton says delivers a 72% improvement in energy density.
Like Nyobolt, Skeleton says its tech offers faster response times and longer cycle life. But supercapacitors are a fundamentally different technology than Nyobolt’s modified lithium-ion solution. Though they offer near-instantaneous response times, they store very little energy — just enough to smooth out microsecond power spikes in GPU workloads. Nyobolt’s batteries, by contrast, aim not only to smooth out data center power spikes, but also to deliver about 90 seconds of backup power in the case of an outage, before a generator or other backup source kicks in.
Skeleton is already mass-producing supercapacitors in Germany and delivering to unnamed “major U.S. hyperscalers for AI infrastructure.” It’s also making moves to expand its U.S. footprint ahead of its pending IPO, opening an engineering facility in Houston and aiming to begin domestic manufacturing of AI data center solutions in the first half of this year.
Last year brought a wave of new climate tech coalitions, with one of the most ambitious efforts known as the All Aboard Coalition. This group of venture firms is targeting the investment gap known as the missing middle, which falls between early-stage venture rounds and infrastructure funding. The model is relatively mechanical: When three or more member firms participate in a later-stage round for a company, the coalition automatically coinvests out of its own fund, matching the members’ combined contribution.
The group made its first investment in January, supporting the AI-powered geothermal exploration and development company Zanskar’s Series C round. This week, it announced its second: a $22 million commitment to low-carbon cement startup Terra CO2, bringing the company’s Series B total to $147 million. Cement production accounts for roughly 8% of global emissions, a figure Terra aims to shrink by making so-called "supplementary cementitious materials” — which can partially displace traditional cement in concrete mixes — from abundant silicate rocks. By grinding and thermally processing these rocks into a glassy powder, Terra’s product mimics the properties of conventional cement. The company says it can replace up to 50% of the cement in typical concrete mixes, lowering associated emissions by as much as 70%.
The new funding will help Terra build its first commercial-scale plant in Texas, exactly the type of first-of-a-kind project that the coalition was designed to support. But the scale of this challenge remains clear. As noted in ImpactAlpha’s coverage, the coalition has raised just $100 million toward its goal of a $300 million fund — already a relatively modest goal considering the capital intensity of novel infrastructure projects. Bloomberg previously reported that the group aimed to raise the full amount by the end of October 2025, raising questions about the willingness of LPs to bet on projects at this crucial but capital-intensive juncture.
When I think about repurposing used electric vehicle batteries for stationary storage, I think of battery recycling giant Redwood Materials, which raised a $425 million Series E in January after moving aggressively into this promising market. But while Redwood’s well-established recycling business certainly provides it with the largest pipeline of used batteries, it’s far from the only company pursuing this business model. A smaller player with a largely similar approach underscored that this week, when it announced a $40 million Series B to scale its gigafactory in Texas and expand its facilities in British Columbia.
That’s Moment Energy, which focuses on using second-life EV batteries to power commercial and industrial sites such as data centers, hospitals, and factories. Like Redwood, it relies on proprietary software to aggregate battery packs with myriad chemistries and design specs into coordinated grid-scale systems. What the company sees as its critical differentiator, however, is its safety standards. Moment has achieved UL certification, a key safety benchmark that it says others in the industry have yet to meet.
In a shot at its competitors, the company described itself in a press release as the “only provider proven capable of deploying second-life battery storage systems in the built environment without special dispensations or regulatory loopholes.” While Moment never names names, Redwood’s first commercial-scale system sits on its own private land in an open air setting, where certification is arguably unnecessary. “What most other second life [battery] companies are now trying to say is, let’s just lobby to make second life UL certification easier, because it is impossible to get UL certification, as it stands,” the company’s CEO, Edward Chiang, told TechCrunch. “But at Moment, we say that’s not true. We got it.”
As I wrote last September, it’s a good time to be a critical minerals startup, because as you may have heard, “critical minerals are the new oil.” These materials sit at the center of modern energy infrastructure — batteries, magnets, photovoltaic cells, and electrical wiring, to name just a few uses — plus their supply is concentrated in geopolitically tense regions and subject to extreme price volatility. It also certainly doesn’t hurt that the Trump administration loves them and wants to mine and refine way more of them in the U.S.
The latest beneficiary of this enthusiasm is Magrathea, which this week raised a $24 million Series A to build what it says will be the only new magnesium smelter in the U.S., in Arkansas. The company has now raised over $100 million in total, including a $28 million grant from the Department of Defense. Its approach relies on an electrolysis-based process that’s able to extract pure magnesium from seawater and brines, which it positions as a cleaner, cheaper alternative to the high-heat, emission-intensive method that China uses to produce most of the world’s magnesium today.
The U.S. military has taken note of this potential new domestic supply. Magrathea’s 2022 seed round coincided with Russia’s invasion of Ukraine, as the military looked to scale domestic defense tech supply chains. Magnesium alloys are often used to help reduce weight in EV components, a benefit equally applicable to military helicopters, drones, and next-generation fighter jets. So while these defense applications represent somewhat of a pivot from the startup’s initial focus, a greener fighter jet is still better than a dirty fighter jet.