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If the Senate reconciliation bill gets enacted as written, you’ve got about 92 days left to seal the deal.
If you were thinking about buying or leasing an electric vehicle at some point, you should probably get on it like, right now. Because while it is not guaranteed that the House will approve the budget reconciliation bill that cleared the Senate Tuesday, it is highly likely. Assuming the bill as it’s currently written becomes law, EV tax credits will be gone as of October 1.
The Senate bill guts the subsidies for consumer purchases of electric vehicles, a longstanding goal of the Trump administration. Specifically, it would scrap the 30D tax credit by September 30 of this year, a harsher cut-off than the version of the bill that passed the House, which would have axed the credit by the end of 2025 except for automakers that had sold fewer than 200,000 electric vehicles. The credit as it exists now is worth up to $7,500 for cars with an MSRP below $55,000 (and trucks and sports utility vehicles under $80,000), and, under the Inflation Reduction Act, would have lasted through the end of 2032. The Senate bill also axes the $4,000 used EV tax credit at the end of September.
“Long story short, the credits under the current legislation are only going to be on the books through the end of September,” Corey Cantor, the research director of the Zero Emission Transportation Association, told me. “Now is definitely a good time, if you’re interested in an EV, to look at the market.”
The Senate applied the same strict timeline to credits for clean commercial vehicles, both new and used. For home EV chargers, the tax credit will now expire at the end of June next year.
While EVs were on the road well before the 2022 passage of the Inflation Reduction Act, what the new tax credit did was help build out a truly domestic electric vehicle market, Cantor said. “You have a bunch of refreshed EV models from major automakers,” Cantor told me, including “more affordable models in different segments, and many of them qualify for the credit.”
These include cars produced domestically by Kia, Hyundai, and Chevrolet. But of course, the biggest winner from the credit is Tesla, whose Model Y was the best-selling car in the world in 2023.
Tesla shares were down over 5.5% in Tuesday afternoon trading, though not just because of Congress. JPMorgan also released an analyst report Monday arguing that the decline in sales seen in the first quarter would accelerate in the second quarter. President Trump, with whom Tesla CEO Elon Musk had an extremely public falling out last month, suggested on social media Monday night that the government efficiency department Musk himself formerly led should “take a good, hard, look” at the subsidies Musk receives across his many businesses. Trump also said that he would “take a look” at Musk’s United States citizenship in response to reporters’ questions about it.
Cantor told me that he expects a surge of consumer attention to the EV market if the bill passes in its current form. “You’ve seen more customers pull their purchase ahead” when subsidies cut-offs are imminent, he said.
But overall, the end of the subsidy is likely to reduce EV sales from their previously expected levels.
Harvard researchers have estimated that the termination of the EV tax credit “would cut the EV share of new vehicle sales in 2030 by 6.0 percentage points,” from 48% of new sales by 2030 to 42%. Combined with other Trump initiatives such as terminating the National Electric Vehicle Infrastructure program for publicly funded chargers (currently being litigated) and eliminating California’s waiver under the Clean Air Act that allowed it to set tighter vehicle emissions standards, the share of new car sales that are electric could fall to 32% in 2030.
But not all government support for electric vehicles will end by October 1, even if the bill gets the president’s signature in its current form.
“It’s important for consumers to know there are many states that offer subsidies, such as New York, and Colorado,” Cantor told me. That also goes for California, New Jersey, Nevada, and New Mexico. You can find the full list here.
Editor’s note: This story has been edited to include a higher cost limit for trucks and SUVs.
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Why Microsoft, Talen Energy, the Data Center Coalition, and everyone else who objected to PJM’s proposal kinda has a point.
You could be mistaken for thinking data center load flexibility was the wave of the future.
With electricity prices rising — in some cases directly due to substantial new investments to support data centers — and data center developers desperate for power, there has seemed to be a new consensus forming around a way to solve both problems using the existing grid, simply by asking data centers to ramp down their energy use at times of peak demand. The whole thing looks like a win-win-win. Researchers have argued that even relatively low levels of curtailment could make room for almost 100 gigawatts of new load to the grid. Goldman Sachs released a report praising data center flexibility, and Google even negotiated a contract to enable flexibility with a Midwestern utility.
So everyone is on board with curtailment, right?
Well, no, at least not in the largest electricity market in the country — and the one that has become the poster child for backlash to data center development.
PJM Interconnection, the 13-state electricity market that spans the Mid-Atlantic and Midwest, has a data center problem. Costs associated with data centers ballooned to over $9 billion in its latest capacity auction, where generators get paid for their ability to stay online, a 174% increase, according to PJM’s independent market monitor.
The system operator has been working on a process to try to balance getting data centers online without risking the reliability of the grid, and in August unveiled an outline for so-called “Non-Capacity-Backed Load,” describing how new large loads like data centers could have their power curtailed.
“PJM expects that there will be a transitional period where NCBL will be necessary as a result of the significant integration of large loads,” the presentation read. “Participation would ideally be voluntary,” but new loads could be assigned NCBL status “on a mandatory basis if needed.” In other words, new data centers could, under the proposal, be essentially forced to shut down from time to time.
PJM then asked for feedback from its stakeholders. What it got wasn’t positive.
The proposal “clearly intrudes upon state jurisdiction and exceeds the Commission’s authority,” a representative from Microsoft said in a public comment on the proposal. Not only that, it would “fundamentally undercut the very purpose of PJM’s capacity market.” In the end, “the proposed rule won’t solve the problem.”
Multiply that sentiment across nearly 200 pages and imagine it coming from nearly every large company involved in the generation, transmission, and consumption of electricity in one of the most populous markets in the U.S. and you’ll begin to understand just how not positive the reaction truly was.
Several commenters, including data center developers, focused on singling out particular large loads for special treatment, which they argued ran afoul of what regional transmission organizations like PJM are allowed to do in structuring electricity markets. The Data Center Coalition, a trade group of datacenter developers, said that PJM “has not provided a defensible rationale for creating this new class of service, and on its face the proposal is unduly discriminatory.”
Like several other stakeholders, the DCC questioned whether PJM was the right actor to create new classes of rates, arguing that type of action “fall[s] squarely within state jurisdiction.” Talen Energy, an independent power company with a significant PJM footprint, also said that the proposal “lies outside of [PJM’s] power to impose.”
Talen, like other power producers, would benefit from a more traditional RTO process, whereby new load induces new demand for energy and capacity, which it could meet (for a price).
“Instead of discriminating against a single form of demand, PJM should focus on improving load forecasting and a market-based solution that encourages more generation supply to be built so that the ‘golden age for American manufacturing and technological dominance’ can be achieved,” the company wrote in its submission.
Even Tyler Norris, the Duke University researcher who has done some of the most widely cited and influential work on data center flexibility, critiqued the proposal, writing on X that there was “much room for improvement” and that it didn’t offer any “defined speed-to-power benefit” for data centers by participating.
The backlash from data center developers shouldn’t be surprising, explained Abraham Silverman, a former lawyer for the New Jersey Board of Public Utilities and an assistant research scholar at Johns Hopkins. “The existing rules are financially very favorable to the data centers. And the reason for that is because both transmission and generation costs are being spread over every customer in the PJM footprint.”
Traditionally, the infrastructure costs of bringing on new load are spread across all customers as a fixed cost, with the idea being that with more customers, over time the fixed costs of the grid go down on a per-customer basis. To the developers and other commenters on PJM’s proposal, this is just how electricity markets and utilities work. Generators and transmission owners don’t ask what the power is being used for, they just supply it. If more generation needs to come online to make sure they can meet that supply, that can happen through the capacity market, where utilities pay generators to be available when demand rises.
But that system may be breaking down as new data centers impose large upfront costs on the whole system that then show up in huge rate increases paid by everyone — to the tune of about 25% in transmission costs for PJM customers since 2020, according to Silverman’s research. That new load must receive reliable service, leading to a bonanza for existing and potential new generators, who can collect growing capacity payments.
“PJM recognizes that it’s between a rock and a hard place, where it potentially has more load coming onto its system than it could reliably serve,” Silverman told me. “They are recognizing they need to have a plan for rationing and allocating available capacity on the electric grid.”
PJM itself may be at risk if data center development leads to higher costs, its independent market monitor argued in a memo: “It is not an overstatement to assert that the ongoing addition of large data center loads will put PJM competitive markets at risk unless there is a solution that requires large data center loads to pay for the costs that they would otherwise impose on other customers.”
While the cranky commenters’ arguments may seem pretextual, or at least self-interested, they aren’t entirely off base, Silverman told me.
“I think there is both a legal and a moral problem here,” Silverman explained. “The moral problem is pretty clear cut: I don’t think anybody really thinks that grandma should be paying higher electric rates because of big tech data centers. The legal question is a little bit harder to answer, and I do think there are legitimate issues on both sides.”
Many of the stakeholder complaints center around the idea that treating large loads or data centers differently is discriminatory in a way that runs afoul of federal energy law. But just because the states may have to get involved in order to put data centers in a special class of electricity customer doesn’t mean that the substantive issues aren’t real.
Some states and regional transmission organizations have started to address the effects of data centers on other users of the grid, most notably Texas, which recently passed a law setting up a mandatory curtailment program for large loads, plus a voluntary demand response program, while Ohio utility AEP reached a deal to make sure data center developers cover the cost of new infrastructure by establishing minimum monthly payments.
PJM will hold another meeting on the proposal later this month and aims to have a proposal ready to present to the Federal Energy Regulatory Commission by the end of the year, although some stakeholders cast doubt on whether PJM could get its act together in time to put forward something to FERC by the end of the year. The Data Center Coalition argued in its comments that the current schedule “does not realistically permit” the “level of deliberation and shareholder vetting” necessary.
But even if the developers, transmission owners, and generators are able to push off this plan, however, the conflicts around data center expansion, reliability, and high electricity prices won’t go away.
“At what point do we seriously as a society talk about the trade-offs?” Silverman asked. “I think there are a lot of people who are financially incented to push off that tough conversation.”
On Crux’s growth, Tesla’s slow ‘death,’ and a carbon storage warning
Current conditions: In the Pacific, Hurricane Kiko has strengthened into a Category 2 storm, and is on track to reach “major storm” status • In the Atlantic, moisture is moving into an area with a lot of dry air, posing a “high risk” of developing into a tropical storm • Northern India is facing intense monsoon winds and deadly landslides.
The White House has taken what The New York Times described as “the extraordinary step” of ordering half a dozen agencies to draft plans to thwart the country’s offshore wind industry. Helming the effort are White House Chief of Staff Susie Wiles and Deputy Chief of Staff Stephen Miller. While the assault on the wind industry has largely taken place at the Department of the Interior, the departments of Transportation and Commerce joined the effort in the past two weeks, as this newsletter reported yesterday. Now the Trump administration is tapping in even more agencies, including those that traditionally have little jurisdiction over marine energy production. The Department of Health and Human Services has begun a study into whether wind turbines emit electromagnetic fields that could damage human health. The Department of Defense, meanwhile, is probing whether the projects pose a risk to national security. “We’re all working together on this issue,” Robert F. Kennedy Jr., the secretary of health and human services, said during a cabinet meeting last week.
Heatmap’s Jael Holzman has been following the administration’s increasingly outlandish efforts to squelch wind projects in her newsletter, The Fight. Last week, discussing the potential redesignation of incidental bird deaths as purposeful under the Migratory Bird Treaty Act, she wrote, “It’s worth acknowledging just how bonkers this notion is on first blush.” The move would make operating a wind farm effectively illegal, depriving numerous states of a major source of electricity. “Even I, someone who has broken quite a few eye-popping stories about Trump’s war on renewables, struggle to process the idea of the government truly going there,” she said.
Until earlier this year, clean-energy finance startup Crux was a digital marketplace exclusively for buying and selling tax credits made available by the Inflation Reduction Act. When Republicans in Congress threatened to eliminate tax credit transferability in March, however, the company moved into debt financing, a market that CEO Alfred Johnson told Heatmap’s Katie Brigham was seven times bigger. Now, in an exclusive interview Katie published yesterday, Crux said it’s expanding yet again into the tax and preferred equity markets. “The tax equity market was a $20 billion market before the IRA, and is now a $32 billion to $35 billion market,” Johnson told Katie, citing numbers from the company’s forthcoming mid-year market intelligence report. That’s a 10% to 20% increase over last year. Crux’s overall goal is to make itself a one-stop shop for project financing.
Australian rooftop solar is roughly half the price of Americans pay. Tesla
Tesla’s energy division released a new white paper warning that U.S. regulations were imposing “death by a thousand cuts” on the rooftop solar industry. In a post on LinkedIn, Tesla’s senior director of residential solar Colby Hastings said the “regulatory landscape slows progress, and we need more than one rule change to solve this.”
“Solar insiders have long lamented that residential deployments in the U.S. are too expensive compared to overseas. With the passage of the OBBB and tax credits expiring, it is imperative that we take a hard look at how the industry will navigate the next decade,” she wrote. “We must ensure that consumers have competitive choices for energy. This means affordable solar and storage at home.” Among the changes she proposed were enacting national code standards “that simplify rules, keep pace with hardware innovation, and limit regional variation.” She also called for reducing tariff on imported components to lower the cost of hardware. “Bottom line — we see an opportunity to cut ~40% from the cost stack, reducing average solar + storage installation from > $5/W today to ~$3/W.”
More than 85 climate scientists signed onto a line-by-line critique of the Department of Energy’s recent report sowing doubt over the severity and causes of rising global temperatures. The analysis pointed out that the federal report was written by a “tiny team of hand-picked contrarians” known for “often writing outside their areas of expertise.” The controversial government study had “no peer review of transparency,” they wrote, “unlike legitimate assessments,” and relied on “cherry-picked evidence and miscitations” to reach a “predetermined outcome.”
It’s far from the only criticism Secretary of Energy Chris Wright is attracting. In a Tuesday post on X, Wright claimed that “if you wrapped the entire planet in a solar panel, you would only be producing 20% of global energy,” arguing that “one of the biggest mistakes politicians can make is equating the ELECTRICITY with ENERGY!” A community note X users appended to the agency chief’s post pointed out that this wildly undercounted the potential to capture energy from the sun, which covers the planet in enough solar potential to meet “3,000x global energy use.” Yet even that failed to capture how “funny and sad” Wright’s “silly and unsophisticated” post really was, said electricity analyst David Fishman. In particular, Fishman noted, Wright seemed to underestimate how much total energy usage worldwide could be converted to electricity. “That's thinking like a guy who spent his whole career drilling for gas, but never learned much about physics, electricity, industry, or energy systems,” he wrote. “Really not what you want to see from someone in such a position.”
The amount of carbon emissions that the world can safely store is just a 10th of industry estimates, according to a Bloomberg writeup of a new study in the journal Nature. Researchers at the International Institute for Applied Systems Analysis and Imperial College London found “a prudent global limit” of around 1.46 trillion tons of CO2 that can be safely stored in geologic formations. That’s “almost 10 times smaller than estimates proposed by industry that have not considered risks to people and the environment.” Utilizing all the practical areas to store carbon would curb global warming by 0.7 degrees Celsius, compared to industry estimates of 6 degrees Celsius or higher.
Cooling data centers consumes a huge amount of electricity, and nearly half of that energy is lost as low-temperature waste heat that’s simply vented into the air. But a new study from Rice University found a way to close the loops and channel that heat into more electricity. “There’s an invisible river of warm air flowing out of data centers,” Laura Schaefer, the chair of the mechanical engineering program at Rice and co-author of the paper, said in a press release. “Our question was: Can we nudge that heat to a slightly higher temperature with sunlight and convert a lot more of it into electricity? The answer is yes, and it’s economically compelling.”
Climate policy strategist Justin Guay has a populist pitch for our warming world.
There’s a famous saying in management circles: Culture eats strategy for breakfast.
In a warming world marked by populist politics, the climate equivalent might be: Culture eats climate policy for breakfast.
As air conditioning becomes the latest front in the culture wars, climate hawks would be wise to avoid the culture war trap being set. Instead we should meet the world where it is with a simple, culturally relevant, and popular approach that keeps people cool on a warming planet — a heat pump populism for the masses.
As the climate warms, increasing numbers of cities, regions, and countries are being faced with an uncomfortable new reality — their built environments weren’t built for this environment. Heat waves like the “once in a millennium” Pacific Northwest heat dome of 2021 or this year’s “warmest summer on record” for the UK — which has kept track of such things since 1884 — are driving the need for air conditioning in places it hasn’t historically been required.
The new air conditioning units installed in response to these heat waves drive up already significant electricity consumption — and greenhouse gas emissions in the process. Air conditioning emissions alone account for 3% of global emissions, and are projected to grow significantly as AC unit sales triple by 2050. In China, which also saw heat records fall this summer, air conditioner sales doubled from June to July.
The climate community has responded with concern about the climate doom loop this represents. The impacts of climate change — most pertinently in this case, increased temperatures — unleash more air conditioning usage, which only exacerbates the underlying problem of climate change, itself.
But there’s another, far more sinister doom loop climate hawks should fear — a doom loop that undermines the political resilience necessary to respond to climate change at all.
This doom loop begins with climate impacts that directly harm average people, generating resentment towards existing institutions — notably the ruling government — that anti-climate populist politicians seize on to aid their rise to power. That in turn leads to anticlimate policymaking that exacerbates the underlying problem, climate change, unleashing yet more impacts. And on and on the cycle goes.
Take for example what happened following the historic flooding in Spain’s Valencia region last fall. Rather than looking to address the underlying causes of the catastrophe, including climate change, populist anti-climate parties seized on the perceived inability of mainstream politics to deal with the situation. They instead sought to sow distrust and climate denial by painting the government as inept and incapable of helping people in their time of need, thereby bolstering their case to overthrow the powers that be.
That appears to be a page from the same playbook populists all over Europe are now using after heat waves gripped a region where air conditioning use is projected to grow by 40% by 2050, compared to the historical average from the last decade. From France to the UK, anti-climate populists are seeking to paint the political left — particularly climate-minded parties — as out of touch radicals bent on denying the sweaty masses their relief. As Nicolas Bouzou, the French liberal economist and essayist, put it recently: “The left is against air conditioners, and the right is in favor.”
In other words, the anti-climate right is actively laying a climate doom loop trap — and it appears that at least some members of the climate community are walking right into it. In the UK, 58% of Green Party voters support discouraging AC installation to cope with heat waves. Meanwhile, in France, the head of the French Green party reportedly “scoffed” at Marine Le Pen’s proposal to deploy air conditioners as part of her policy platform, instead, he offered more energy-efficient buildings as a solution. France’s left-wing daily Liberation called AC “an environmental aberration that must be overcome.”
But what if climate hawks attempted some political jiu jitsu instead? What if we decided to make some lemonade out of these lemons? What if, and hear me out, we decided to scold a little less and push abundance a little more? What if, in a hotter world, we stood for something cool?
May I present: the humble heat pump, otherwise known as a two-way AC, i.e. just the opportunity climate advocates should be looking for. The heat pump is essentially an AC unit that can heat as well as cool. Most AC companies don’t unlock the heating capability because it adds to their manufacturing costs — generally $200 to $500 — to do so. If that modest cost were not an issue, AC manufacturers could not only help deploy desperately needed relief from extreme temperatures and rising costs, they could also deploy cheaper, clean and fossil fuel-free heating at the same time.
That’s the argument Nate Adams and the team at the Collaborative Labeling and Appliance Standards Program — otherwise known as Clasp, a nonprofit organization focused on improving the efficiency of everyday appliances and equipment — made when they called for a supply-side intervention to make heat pumps affordable and universally available. Rather than subsidizing heat pump purchases and hoping homeowners take advantage, we should incentivize AC manufacturers and distributors to exclusively sell two-way air conditioners moving forward — no more one-way AC.
Under such a policy, participating manufacturers or distributors would receive a few-hundred-dollar incentive for every two-way AC (i.e. heat pump) sold. That subsidy would decline over time as manufacturers convert production lines and costs come down. Crucially, any participating company would have to commit to stop producing one-way ACs. In addition, governments and participating manufacturers would be wise to invest in training and education programs for HVAC contractors to speed deployment and support consumer education.
The Clasp team calculates that a program like this would cost somewhere between $3 billion to $12 billion in the United States and result in 45 million new two-way ACs deployed, which would save citizens $27 billion in direct energy costs and $80 billion in indirect societal benefits — such as, yes, mitigating climate change.
As I’ve argued previously alongside Nate, the shift in policy focus from consumers to manufacturers and suppliers is really, really important. Most AC replacement purchases are driven by existing equipment breaking down — and now by historic heat waves setting in — which causes panic-buying. That almost always leads people to buy the first replacement they can find, and that’s almost never a heat pump.
If we instead incentivize manufacturers to ensure that heat pumps and only heat pumps are on hardware and home goods store shelves and make it easy for average people to buy and install them by educating HVAC installers around their benefits then we solve this problem. Heat pumps become the default.
Now map that policy onto the political landscape. Imagine that instead of climate-oriented politicians being perceived as out of touch radicals who want to ban air conditioning, we have political leaders using the next inevitable heat wave to announce a new policy of abundant air conditioning for all. That alone won’t win the culture war — it will still require savvy salesmanship to make the pitch land with voters, not to mention digital acumen of a sort the left seems woefully behind in developing. But the ingredients are there, if only our leaders are willing and able to seize on them.
Ironically, as wildfires now ravage Spain, the country’s center-left prime minister is now calling for a national climate pact. His call is a beacon of hope that the climate doom loop can indeed be broken by forward-looking politicians who realize that we must address the underlying cause of these impacts before it’s too late.
It’s time others follow his lead and use these moments of visceral climate impact to drive climate policy forward with an unabashedly populist policy agenda. That’s how we take the bite out of the air conditioning culture war before it even begins. And maybe, just maybe, it’s how we begin to reclaim our politics.