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And the U.S. Inflation Reduction Act is surprisingly well-designed to deal with the fallout.
It’s an open secret in U.S. climate policy circles that the Inflation Reduction Act got its name for purely political reasons. It’s a climate bill, after all. Calling it “Inflation Reduction Act” was just the marketing term to help sell it to a skeptical public more worried about rising prices than temperatures in August 2022.
Temperatures have only risen since, while inflation is down, and the Inflation Reduction Act had nothing to do with either. But to see why the name was more than appropriate only takes going back a further six months.
On February 24, 2022, Russian president Vladimir Putin launched a full-scale invasion of Ukraine. In many ways, the step shouldn’t have come as a surprise. The invasion followed months of saber-rattling. It wasn’t even Putin’s first invasion of Ukraine — that happened ten years earlier, with Russia’s forceful annexation of Crimea. But Russia’s bombs raining down on Ukraine still came as a shock. February 24 was a Thursday. By Sunday morning, Germany had changed 75 years of pacifist defense strategy. Another result of the invasion: fossil energy price spikes.
Now, two years later, it has become clear that the shock of the war has changed the trajectory of global energy and climate in ways that we are only beginning to appreciate. It is also precisely where the U.S. Inflation Reduction Act enters the picture, and why history will judge the law — and its name — kindly. Let me explain.
Gas prices in Europe had already been high all winter before Russia’s invasion, in part in response to Putin’s posturing. After the invasion, they spiked. The peak happened in August 2022, in anticipation of the Russian war lasting through the coming winter and worries about the war dragging on. Drag on, of course, it did. Two years in, there’s no end to the fighting in sight. Gas prices, meanwhile, are down again to levels not seen since well before the invasion.
One key reason: demand is down. Europe’s gas demand was down almost 18% in the first year after the invasion, compared to the year before. Not all of that is good news, for the climate or otherwise. One reason for decreased gas demand had been temporarily increased coal use. Another is a sputtering European economy.
The U.S. had been relatively insulated from these extreme fluctuations. But it, too, saw gas prices spike in August 2022. The spike, to be clear, was much lower than in Europe. Gas, unlike oil, is a regional market. But the economic upshot was similar everywhere: massive inflation driven by volatility in fossil fuel prices, or “fossilflation” for short.
All of us, the global economy, and the fortunes of political leaders everywhere are at the mercy of geopolitical vagaries. Putin blows a fuse and invades Ukraine, and your gas bills spike – both types of “gas” bills, by the way: gasoline to get to work, and methane gas to heat your home. Electricity bills typically are not far behind, with gas-powered plants that can be called upon at a moment’s notice providing a necessary margin of safety during moments of peak demand. That means that they — or, by extension, Putin, in this case — set the price.
Don’t take my word for it. The U.S. Bureau of Labor Statistics unpacks the underlying drivers of inflation into three main categories: food, fuel, and everything else. Throughout the most recent U.S. spike in inflation in 2022, the energy category alone was responsible for around half of total inflation. And that’s just counting the direct effects. Indirectly, a good portion of the food price increases ever since are also due to higher energy costs. If the farmer pays more to harvest the crop, soon those commodity prices increase as well. Of course, it isn’t all fossil fuels. Putin’s invasion, for example, also impacted corn production in the Ukraine directly, by destroying crop land, preventing a timely harvest, and cutting off export routes.
There are two other climate-related factors that drive inflation — call them “climateflation” and “greenflation,” to use German economist Isabel Schnabel’s terms. Schnabel — a member of the Executive Board of the European Central Bank, the body that sets interest rates for the 340 million people in the Eurozone — introduced all three -flationary terms in a March 2022 speech warning of “a new age of energy inflation.”
Climateflation is just what it sounds like: inflation because of unmitigated climate change. When an extreme weather event wipes out a country’s harvest of a particular crop, prices spike. One year it’s avocados, the next sugar, and more significant food staples like corn, rice, and wheat are never far behind. The long-term prescription, much like with fossilflation: get off fossil fuels.
None of that will happen overnight. That, in a sense, makes the IRA a horrible political strategy with an eye toward the next election cycle. Want to cut inflation quickly? Make gas and gasoline cheaper with direct handouts. Hello, gas tax holidays!
The problem with that policy quick fix is that it’s just that: decidedly short-term thinking. Fossil energy use will go up as a result. In fact, several U.S. states and European countries have done just that in response to Putin’s invasion. As a result, the average price paid per ton of CO 2 has gone down in 2022, after a decade of steadily rising carbon prices the world over.
The IRA famously does not establish a carbon price either, and that’s A-OK. It does establish a $900-per-ton price for methane paid by oil and gas companies, but the law is decidedly more carrots than sticks. That contrasts U.S. climate policy with what has been the primary focus of the EU, with its emissions trading system and national carbon taxes. It also addresses a more subtle type of climate-related inflation: greenflation, upward pressure on prices because of the rush to get off fossil fuels.
The good news on that front: It seems to be true that there’s plenty of the kinds of precious metals and rare earth minerals we need to power the low-carbon transition to go around. Polysilicon prices spiked for a bit, before new supply came online, and solar panel prices never budged from their decades-long, precipitous decline. Lithium, nickel, and other minerals used in batteries and other low-carbon technologies similarly rose for a bit before they, too, declined precipitously.
The post-fossil fuel transition will still take plenty of active management and proactive policy. That is where the U.S. IRA shines, and where the EU, despite its head start and overall ambitious climate policy, is playing catchup.
In May 2022, the European Union passed REPowerEU, a broad set of measures to cut off Russian gas within five years. By September of that year, the EU had cut Russian gas as a percentage of total gas piped in from abroad to under 10%, down from over 40% a year prior. Germany built three LNG import terminals in record time, and lots of other measures showed almost immediate effect.
Overall, the EU is now racing to catch up with the U.S. in the global climate race with its own set of ambitious supply-side measures in form of a broad Green Deal Industrial Plan. We should all applaud that transatlantic climate policy competition and embrace the newly rekindled green growth mindset. Done right, the planet will emerge as a winner, and so will our economies.
The IRA has not and will not cut inflation overnight. But that fight is indeed a big part of the bill’s legacy: Play the long game of tackling all three types of climate-related inflation — fossilflation, climateflation, and greenflation — at their very core, and indeed justify the law’s name.
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The failure of the once-promising sodium-ion manufacturer caused a chill among industry observers. But its problems may have been more its own.
When the promising and well funded sodium-ion battery company Natron Energy announced that it was shutting down operations a few weeks ago, early post-mortems pinned its failure on the challenge of finding a viable market for this alternate battery chemistry. Some went so far as to foreclose on the possibility of manufacturing batteries in the U.S. for the time being.
But that’s not the takeaway for many industry insiders — including some who are skeptical of sodium-ion’s market potential. Adrian Yao, for instance, is the founder of the lithium-ion battery company EnPower and current PhD student in materials science and engineering at Stanford. He authored a paper earlier this year outlining the many unresolved hurdles these batteries must clear to compete with lithium-iron-phosphate batteries, also known as LFP. A cheaper, more efficient variant on the standard lithium-ion chemistry, LFP has started to overtake the dominant lithium-ion chemistry in the electric vehicle sector, and is now the dominant technology for energy storage systems.
But, he told me, “Don’t let this headline conclude that battery manufacturing in the United States will never work, or that sodium-ion itself is uncompetitive. I think both those statements are naive and lack technological nuance.”
Opinions differ on the primary advantages of sodium-ion compared to lithium-ion, but one frequently cited benefit is the potential to build a U.S.-based supply chain. Sodium is cheaper and more abundant than lithium, and China hasn’t yet secured dominance in this emerging market, though it has taken an early lead. Sodium-ion batteries also perform better at lower temperatures, have the potential to be less flammable, and — under the right market conditions — could eventually become more cost-effective than lithium-ion, which is subject to more price volatility because it’s expensive to extract and concentrated in just a few places.
Yao’s paper didn’t examine Natron’s specific technology, which relied on a cathode material known as “Prussian Blue Analogue,” as the material’s chemical structure resembles that of the pigment Prussian Blue. This formula enabled the company’s batteries to discharge large bursts of power extremely quickly while maintaining a long cycle life, making it promising for a niche — but crucial — domestic market: data center backup power.
Natron’s batteries were designed to bridge the brief gap between a power outage and a generator coming online. Today, that role is often served by lead-acid batteries, which are cheap but bulky, with a lower energy density and shorter cycle life than sodium-ion. Thus, Yao saw this market — though far smaller than that of grid-scale energy storage — as a “technologically pragmatic” opportunity for the company.
“It’s almost like a supercapacitor, not a battery,” one executive in the sodium-ion battery space who wished to remain anonymous told me of Natron’s battery. Supercapacitors are energy storage devices that — like Natron’s tech — can release large amounts of power practically immediately, but store far less total energy than batteries.
“The thing that has been disappointing about the whole story is that people talk about Natron and their products and their journey as if it’s relevant at all to the sodium-ion grid scale storage space,” the executive told me. The grid-scale market, they said, is where most companies are looking to deploy sodium-ion batteries today. “What happened to Natron, I think, is very specific to Natron.”
But what exactly did happen to the once-promising startup, which raised over $363 million in private investment from big name backers such as Khosla Ventures and Prelude Ventures? What we know for sure is that it ran out of money, canceling plans to build a $1.4 billion battery manufacturing facility in North Carolina. The company was waiting on certification from an independent safety body, which would have unleashed $25 million in booked orders, but was forced to fold before that approval came through.
Perhaps seeing the writing on the wall, Natron’s founder, Colin Wessells, stepped down as CEO last December and left the company altogether in June.
“I got bored,” Wessels told The Information of his initial decision to relinquish the CEO role. “I found as I was spending all my time on fundraising and stockholder and board management that it wasn’t all that much fun.”
It’s also worth noting, however, that according to publicly available data, the investor makeup of Natron appears to have changed significantly between the company’s $35 million funding round in 2020 and its subsequent $58 million raise in 2021, which could indicate qualms among early backers about the direction of the company going back years. That said, not all information about who invested and when is publicly known. I reached out to both Wessels and Natron’s PR team for comment but did not receive a reply.
The company submitted a WARN notice — a requirement from employers prior to mass layoffs or plant closures — to the Michigan Department of Labor and Economic Opportunity on August 28. It explained that while Natron had explored various funding avenues including follow-on investment from existing shareholders, a Series B equity round, and debt financing, none of these materialized, leaving the company unable “to cover the required additional working capital and operational expenses of the business.”
Yao told me that the startup could have simply been a victim of bad timing. “While in some ways I think the AI boom was perfect timing for Natron, I also think it might have been a couple years too early — not because it’s not needed, but because of bandwidth,” he explained. “My guess is that the biggest thing on hyperscalers’ minds are currently still just getting connected to the grid, keeping up with continuous improvements to power efficiency, and how to actually operate in an energy efficient manner.” Perhaps in this environment, hyperscalers simply viewed deploying new battery tech for a niche application as too risky, Yao hypothesized, though he doesn’t have personal knowledge of the company’s partnerships or commercial activity.
The sodium-ion executive also thought timing might have been part of the problem. “He had a good team, and the circumstances were just really tough because he was so early,” they said. Wessells founded Natron in 2012, based on his PhD research at Stanford. “Maybe they were too early, and five years from now would have been a better fit,” the executive said. “But, you know, who’s to say?”
The executive also considers it telling that Natron only had $25 million in contracts, calling this “a drop in the bucket” relative to the potential they see for sodium-ion technology in the grid-scale market. While Natron wasn’t chasing the big bucks associated with this larger market opportunity, other domestic sodium-based battery companies such as Inlyte Energy and Peak Energy are looking to deploy grid-scale systems, as are Chinese battery companies such as BYD and HiNa Battery.
But it’s certainly true that manufacturing this tech in the U.S. won’t be easy. While Chinese companies benefit from state support that can prop up the emergent sodium-ion storage industry whether it’s cost-competitive or not, sodium-ion storage companies in the U.S. will need to go head-to-head with LFP batteries on price if they want to gain significant market share. And while a few years ago experts were predicting a lithium shortage, these days, the price of lithium is about 90% off its record high, making it a struggle for sodium-ion systems to match the cost of lithium-ion.
Sodium-ion chemistry still offers certain advantages that could make it a good option in particular geographies, however. It performs better in low-temperature conditions, where lithium-ion suffers notable performance degradation. And — at least in Natron’s case — it offers superior thermal stability, meaning it’s less likely to catch fire.
Some even argue that sodium-ion can still be a cost-effective option once manufacturing ramps up due to the ubiquity of sodium, plus additional savings throughout the batteries’ useful life. Peak Energy, for example, expects its battery systems to be more expensive upfront but cheaper over their entire lifetime, having designed a passive cooling system that eliminates the need for traditional temperature control components such as pumps and fans.
Ultimately, though, Yao thinks U.S. companies should be considering sodium-ion as a “low-temperature, high-power counterpart” — not a replacement — for LFP batteries. That’s how the Chinese battery giants are approaching it, he said, whereas he thinks the U.S. market remains fixated on framing the two technologies as competitors.
“I think the safe assumption is that China will come to dominate sodium-ion battery production,” Yao told me. “They already are far ahead of us.” But that doesn’t mean it’s impossible to build out a domestic supply chain — or at least that it’s not worth trying. “We need to execute with technologically pragmatic solutions and target beachhead markets capable of tolerating cost premiums before we can play in the big leagues of EVs or [battery energy storage systems],” he said.
And that, he affirmed, is exactly what Natron was trying to do. RIP.
They may not refuel as quickly as gas cars, but it’s getting faster all the time to recharge an electric car.
A family of four pulls their Hyundai Ioniq 5 into a roadside stop, plugs in, and sits down to order some food. By the time it arrives, they realize their EV has added enough charge that they can continue their journey. Instead of eating a leisurely meal, they get their grub to go and jump back in the car.
The message of this ad, which ran incessantly on some of my streaming services this summer, is a telling evolution in how EVs are marketed. The game-changing feature is not power or range, but rather charging speed, which gets the EV driver back on the road quickly rather than forcing them to find new and creative ways to kill time until the battery is ready. Marketing now frequently highlights an electric car’s ability to add a whole lot of miles in just 15 to 20 minutes of charge time.
Charging speed might be a particularly effective selling point for convincing a wary public. EVs are superior to gasoline vehicles in a host of ways, from instantaneous torque to lower fuel costs to energy efficiency. The one thing they can’t match is the pump-and-go pace of petroleum — the way combustion cars can add enough fuel in a minute or two to carry them for hundreds of miles. But as more EVs on the market can charge at faster speeds, even this distinction is beginning to disappear.
In the first years of the EV race, the focus tended to fall on battery range, and for good reason. A decade ago, many models could travel just 125 or 150 miles on a charge. Between the sparseness of early charging infrastructure and the way some EVs underperform their stated range numbers at highway speeds, those models were not useful for anything other than short hauls.
By the time I got my Tesla in 2019, things were better, but still not ideal. My Model 3’s 240 miles of max range, along with the expansion of the brand’s Supercharger network, made it possible to road-trip in the EV. Still, I pushed the battery to its limits as we crossed worryingly long gaps between charging stations in the wide open expanses of the American West. Close calls burned into my mind a hyper-awareness of range, which is why I encourage EV shoppers to pay extra for a bigger battery with additional range if they can afford it. You just had to make it there; how fast the car charged once you arrived was a secondary concern. But these days, we may be reaching a point at which how fast your EV charges is more important than how far it goes on a charge.
For one thing, the charging map is filling up. Even with an anti-EV American government, more chargers are being built all the time. This growth is beginning to eliminate charging deserts in urban areas and cut the number of very long gaps between stations out on the highway. The more of them come online, the less range anxiety EV drivers have about reaching the next plug.
Super-fast charging is a huge lifestyle convenience for people who cannot charge at home, a group that could represent the next big segment of Americans to electrify. Speed was no big deal for the prototypical early adopter who charged in their driveway or garage; the battery recharged slowly overnight to be ready to go in the morning. But for apartment-dwellers who rely on public infrastructure, speed can be the difference between getting a week’s worth of miles in 15 to 20 minutes and sitting around a charging station for the better part of an hour.
Crucially, an improvement in charging speed makes a long EV journey feel more like the driving rhythm of old. No, battery-powered vehicles still can’t get back on the road in five minutes or less. But many of the newer models can travel, say, three hours before needing to charge for a reasonable amount of time — which is about as long as most people would want to drive without a break, anyway.
An impressive burst of technological improvement is making all this possible. Early EVs like the original Chevy Bolt could accept a maximum of around 50 kilowatts of charge, and so that was how much many of the early DC fast charging stations would dispense. By comparison, Tesla in the past few years pushed Supercharger speed to 250 kilowatts, then 325. Third-party charging companies like Electrify America and EVgo have reached 350 kilowatts with some plugs. The result is that lots of current EVs can take on 10 or more miles of driving range per minute under ideal conditions.
It helps, too, that the ranges of EVs have been steadily improving. What those car commercials don’t mention is that the charging rate falls off dramatically after the battery is half full; you might add miles at lightning speed up to 50% of charge, but as it approaches capacity it begins to crawl. If you have a car with 350 miles of range, then, you probably can put on 175 miles in a heartbeat. (Efficiency counts for a lot, too. The more miles per kilowatt-hour your car can get, the farther it can go on 15 minutes of charge.)
Yet here again is an area where the West is falling behind China’s disruptive EV industry. That country has rolled out “megawatt” charging that would fill up half the battery in just four minutes, a pace that would make the difference between a gasoline pit stop and a charging stop feel negligible. This level of innovation isn’t coming to America anytime soon. But with automakers and charging companies focused on getting faster, the gap between electric and gas will continue to close.
On the need for geoengineering, Britain’s retreat, and Biden’s energy chief
Current conditions: Hurricane Gabrielle has strengthened into a Category 4 storm in the Atlantic, bringing hurricane conditions to the Azores before losing wind intensity over Europe • Heavy rains are whipping the eastern U.S. • Typhoon Ragasa downed more than 10,000 trees in Yangjiang, in southern China, before moving on toward Vietnam.
The White House Office of Management and Budget directed federal agencies to prepare to reduce personnel during a potential government shutdown, targeting employees who work for programs that are not legally required to continue, Politico reported Wednesday, citing a memo from the agency.
As Heatmap’s Jeva Lange warned in May, the Trump administration’s cuts to the federal civil service mean “it may never be the same again,” which could have serious consequences for the government’s response to an unpredictable disaster such as a tsunami. Already the administration has hollowed out entire teams, such as the one in charge of carbon removal policy, as our colleague Katie Brigham wrote in February, shortly after the president took office. And Latitude Media reported on Wednesday, the Department of Energy has issued a $50 million request for proposals from outside counsel to help with the day-to-day work of the agency.
At the Heatmap House event at New York Climate Week on Wednesday, Senate Minority Leader Chuck Schumer kicked things off by calling out President Donald Trump’s efforts to “kill solar, wind, batteries, EVs and all climate friendly technologies while propping up fossil fuels, Big Oil, and polluting technologies that hurt our communities and our growth.” The born and raised Brooklynite praised his home state. “New York remains the climate leader,” he said, but warned that the current administration was pushing to roll back the progress the state had made.
Yet as Heatmap’s Charu Sinha wrote in her recap of the event, “many of the panelists remained cautiously optimistic about the future of decarbonization in the U.S.” Climate tech investors Tom Steyer and Dawn Lippert charted a path forward for decarbonization technology even in an antagonistic political environment, while PG&E’s Carla Peterman made a case for how data centers could eventually lower energy costs. You can read about all these talks and more here.
Nearly 100 scientists, including President Joe Biden’s chief climate science adviser, signed onto a letter Wednesday endorsing more federal research into geoengineering, the broad category of technologies to mitigate the effects of climate change that includes the controversial proposal to inject sulfur dioxide into the atmosphere to reflect the sun’s heat back into space. In an open letter, the researchers said “it is very unlikely that current” climate goals “will keep the global mean temperature below the Paris Agreement target” of 1.5 degrees Celsius above pre-industrial averages. The world has already warmed by more than 1 degree Celsius.
Earlier this month, a paper in the peer-reviewed journal Frontiers argued against even researching technologies that could temporarily cool the planet while humanity worked to cut planet-heating emissions. But Phil Duffy, Biden’s former climate adviser, said in a statement to Heatmap that the paper “opposes research … that might help protect or restore the polar regions.” He went on via email, “As the climate crisis accelerates, we all agree that we need to rapidly scale up mitigation efforts. But the stakes are too high not to also investigate other possible solutions.”
President Trump and Prime Minister Keir Starmer. Leon Neal/Getty Images
UK Prime Minister Keir Starmer plans to skip the United Nations annual climate summit in Brazil in November, the Financial Times reported on Wednesday. He will do so despite criticizing his predecessor Rishi Sunak a few years ago for a “failure of leadership” after the conservative leader declined to attend the annual confab. One leader in the ruling Labour party said there was a “big fight inside the government” between officials pushing Starmer to attend the event those “wanting him to focus on domestic issues.”
Polls show approval for Starmer among the lowest of any leaders in the West. But he has recently pushed for more clean energy, including signing onto a series of nuclear power deals with the U.S.
The Tennessee Valley Authority has assumed the role of the nation’s testbed for new nuclear fission technologies, agreeing to build what are likely to be the nation’s first small modular reactors, including the debut fourth-generation units that use a coolant other than water. Now the federally-owned utility is getting into fusion. On Wednesday, the TVA inked a deal with fusion startup Type One Energy to develop a 350-megawatt plant “using the company’s stellarator fusion technology.” The deal, first brokered last week but reported Tuesday in World Nuclear News, promises to deploy the technology “once it is commercially ready.” It also follows the announcement just a few days ago of a major offtake agreement for fusion leader Commonwealth Fusion Systems, which will sell $1 billion of electricity to oil giant Eni.
Climate change is good news for foreign fish. A new study in Nature found that warming rivers have brought about the introduction of new invasive species. This, the researchers wrote, shows “an increase in biodiversity associated with improvement of water in many European rivers since the late twentieth century.”