You’re out of free articles.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Sign In or Create an Account.
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here .
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Subscribe to get unlimited Access
Hey, you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Create Your Account
Please Enter Your Password
Forgot your password?
Please enter the email address you use for your account so we can send you a link to reset your password:
They haven’t even been announced yet, but the idea that they will has sent prices soaring.
China, Canada, Mexico, steel, aluminum, cars, and soon, copper. That’s what the market has concluded following a Bloomberg News report last week that copper tariffs would arrive far sooner than the 270 days President Trump gave the Department of Commerce to conduct its investigation into “dumping” of the metal.
Copper has been dubbed the “metal of electrification,” and demand for it is expected to skyrocket under any reasonable scenario to contain global temperature rise. Even according to a U.S. administration that, at best, neglects climate change considerations, copper is an “essential material for national security, economic strength, and industrial resilience,” as the Trump White House said while announcing its investigation into copper imports.
The effort to boost domestic production of copper did not start with this White House, but it has historically run into the same problems that beset the mining industry: New production can take decades to begin, even after you find the minerals you’re looking for underground. And if demand is not assured — if, for instance, subsidies for electric vehicles filled with copper disappear — then investing in new production could lead to bankruptcy, whereas holding back on new capacity would, at worst, mean forgoing some profits.
The Trump administration and the broader energy and foreign policy community have been, in general, obsessed with rocks — critical minerals, rare earths, and other minerals that are indeed “critical” to much of the economy but are not listed as such. Copper sits somewhere between these categories — while it does not appear on the United States Geological Survey list of critical minerals, which ranges from aluminum and antimony to zinc and zirconium, it does appear on the Department of Energy’s list of “critical materials.”
These lists guide federal data collection efforts, and that data can then get used to guide policymaking. Being on these lists doesn’t guarantee that a related program will get funding, but it does mean that the data is there to draw from should someone need to make a case for why their program should get funding.
This gap between the lists has been a target for Congress, especially for legislators in the Southwest, where much of America’s copper is mined. The discrepancies in the list is essentially a matter of focus for the Energy and Interior Departments — with Energy naturally focused on what’s especially important for energy infrastructure. Getting consistency between the lists, which are only a few years old, will “increase transparency within our federal agencies, ensuring all of our nation’s critical resources are developed, traded, and produced equally, and strengthen our supply chains,” Mike Lee (R-Ut), a sponsor of the Senate version of the legislation, said in a statement.
Trump’s executive order asking for the investigation sought to speed up permitting for new mines — and they’ll need all the help they can get. S&P calculates that the average copper mine takes over 30 years to develop. Rio Tinto and BHP’s Resolution Copper project in Superior, Arizona — which the companies hope will produce 20 million tons of copper — has already sucked up some $2 billion of capital while producing zero copper after about 20 years of legal and political opposition. A proposed copper-nickel mine in Minnesota has already absorbed around $1 billion worth of investment and is still wrangling over the more than 20 permits it needs.
But for the Trump administration’s strategy of tariffs and expedited permitting to actually work for American copper end users, it will have to lead to an expansion of smelting and recycling, in addition to mining.
Reuters reported last year that the Mexican conglomerate Grupo Mexico would re-open an Arizona smelter, but that has yet to happen (it’s currently a Superfund site). A copper mine in Milford, Utah said last week that it was expanding to meet rising copper demand.
The smelting sector is dominated by China. “The United States has ample copper reserves, yet our smelting and refining capacity lags significantly behind global competitors,” the White House said in its copper executive order in February. China’s dominance, “coupled with global overcapacity and a single producer’s control of world supply chains, poses a direct threat to United States national security and economic stability.”
The United States produces around 1.2 million tons of copper annually from its mines and imports around 900,000 tons, according to the United States Geological Survey. Some of that domestically mined copper — around 375,000 tons worth — ends up being exported for smelting, according to the Copper Development Association.
While the United States is near the top of national copper production (well behind the world leader, Chile, but comparable to other large-scale copper producers such as Indonesia and Australia), it has a meager copper refining industry, with only two active smelters producing around 400,000 tons of copper a year — a fraction of China’s refining capacity — leaving American industry reliant on imports.
The energy industry has been dealing with the copper issue for years. More specifically, it’s worrying about how domestic and global production will be able to keep up with what forecasters anticipate could be massive demand.
That goes not just for copper — it also includes the metals that are mined alongside it. First Solar, the U.S.-based solar manufacturing company, has benefited from tariffs on solar panels put in place during the Biden administration. But while First Solar has been a winner in the renewable energy trade conflict, it is still sensitive to the global trade in commodities. That’s in part because it is also a major consumer of tellurium, a mineral that’s a byproduct of copper mining, and which was the subject of expanded export Chinese export controls announced early last month.
“We have, over the past decade employed a strategic sourcing strategy to diversify our tellurium supply chain to mitigate a sole sourcing position in China and are undertaking additional measures to mitigate dependencies on China for certain products containing to tellurium,” Alexander Bradley, First Solar’s chief financial officer, said in the company’s February earnings call. “While we continue to evaluate [whether] there will be any operational impact from China's decision, this latest development emphasizes the urgent need for the United States to accelerate the strategic development of copper mining and processing of its byproduct materials, including tellurium.”
Electric vehicles are another major user of copper among climate technologies, with EVs having on average around 180 pounds of copper in them, according to the Copper Development Association. Tesla — which will soon be hit by auto tariffs — has been actively trying to reduce its copper consumption. Meanwhile Rivian, one of Tesla’s primary domestic competitors, announced last year that it would cut its production targets dramatically due to what turned out to be a supplier communication snafu for a copper component of its motors.
“We’re very bullish on copper prices,” Kathleen Quirk, chief executive officer of Freeport-McMoRan, which runs a number of U.S. copper mines (and a smelter, to boot), said at a financial conference in February. With boosts in demand coming from “power generation, new power generation investments, multibillion-dollar investments in infrastructure and energy infrastructure, it's going to be very positive for copper.”
Copper prices paid by American manufacturers have been rising for the past five months, according to the monthly PMI survey. Prices in New York reached record highs last week, hitting almost $12,000 per ton as the industry tried to beat the almost-certainly-inevitable tariffs, according to an ING analyst report released last week.
The actual imposition of the tariffs would constitute a “further upside risk to copper prices” — in other words, prices will continue to climb, according to the ING analysts. “The U.S. copper rush could leave the rest of the world tight on copper if demand picks up more quickly than expected,” the ING analysts wrote.
Copper futures have shot up this year by around 25%, leading to profits for those who mine it — especially in the United States.
From the perspective of Freeport-McMoRan, the market gyrations so far have generally been to the upside, with the premium on copper in the U.S. “helping us from that perspective of generating higher revenues for our U.S. price copper,” Quirk said at the conference. But the domestic copper industry as a whole does not see tariffs as the sole way to increase copper production.
“The U.S. will need an all-of-the-above sourcing strategy to secure a stable supply for domestic use. This must include increased mining in the U.S., increased smelting and refining in the U.S., enhanced recycling, keeping more copper scrap within U.S. borders, and continued trade with reliable partners to maintain the flow of critical raw material feedstocks for domestic use,” Copper Development Association chief executive Adam Estelle told me in an emailed statement.
And tariffs can come in faster than new mines and smelters can be built or their capacity expanded. American mining projects have been mired in decades of permitting delays and negotiations with local communities not because there isn’t a market opportunity for new copper, but because it just takes a very long time to open a mine.
Even as she was celebrating Freeport-McMoRan’s robust outlook, CEO Kathleen Quirk noted that “at the same time, it's become more and more difficult to develop new supplies of copper.”
That goes especially for industries related to renewable energy, where copper finds itself into grid equipment, solar panels, and wind turbines. Even so, they’ve been wary of talking about an impending tariff directly.
A number of trade groups, including the Zero Emission Transportation Association, the National Electrical Manufacturers Association, and the Solar Energy Industries Association, hailed an executive order aiming to accelerate critical minerals production released March 20. When I asked about copper tariffs, however, a ZETA spokesperson referred me to an earlier statement decrying trade conflict with Canada and Mexico, saying that “imposing tariffs on allies and trading partners like Canada and Mexico — both of which play a significant role in the North American automotive supply chain — will increase costs to consumers and make it more difficult to attract investment into our communities.”
Meanwhile, NEMA’s vice president of public affairs, Spencer Pederson, told me in an emailed statement that “any new trade policies must provide predictability and certainty for future domestic investments and businesses.”
Other manufacturing-centric industries that use copper aren’t thrilled about the prospect of tariffs, either. A spokesperson for the National Association of Manufacturers referred me to its recent survey showing that the top two concerns among its members were “trade uncertainties,” feared by more than three quarters of respondents, and “increased raw material costs,” which worried 60% of respondents. While NAM is broadly supportive of many Trump administration goals, especially around extending the 2017 tax cuts, it has called for a “commonsense manufacturing strategy” which includes “making way for exemptions for critical inputs.” That runs against the Trump administration’s preference for big, obvious tariffs.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
On the cobalt conundrum, Madagascar’s mining mess, and Antarctica’s ‘Greenlandification’
Current conditions: Severe storms are sweeping through the central Great Plains states this weekend, whipping up winds of up to 75 miles per hour • Freezing temperatures are settling over Kazakhstan and Mongolia • A record heat wave in Australia is raising temperatures as high as 113 degrees Fahrenheit.
Nearly two dozen states signed onto two lawsuits Thursday to stop the Trump administration from ending the $7 billion grant program that funded solar panels in low-income communities. The first complaint, filed Wednesday, seeks monetary damages over the Environmental Protection Agency’s bid to eliminate the so-called Solar for All program. A second lawsuit, filed Thursday, seeks to reinstate the program. Arizona Attorney General Kris Mayes told Reuters the cancellation affected 900,000 low-income households nationwide, including some 11,000 in Arizona that the state expected to see a 20% spike in bills after losing access to the $156 million in funding from Solar for All. California would lose $250 million in funding. The litigation comes days after Harris County, which encompasses most of Houston, Texas, filed suit against the EPA over its own loss of $250 million due to the program’s termination. Earlier this month, a coalition of solar energy companies, labor unions, nonprofit groups, and homeowners also sued the EPA over the cancellation.
It remains to be seen whether other countries are willing to balk at the Trump administration’s push to gut key carbon-cutting policies. But at least in theory, later today, the drafting group for the International Maritime Organization, the United Nations agency overseeing global shipping, will vote on an emissions pricing mechanism meant to slash greenhouse gas output from an industry that still relies on some of the most heavily polluting fuels. The scheduled vote comes a day after President Donald Trump pressed the international body to reject the proposal, calling it “the Global Green New Scam Tax on Shipping” and vowing to ignore the rules.
The maritime shipping industry accounts for about 3% of global emissions. But the impact of shipping fuels is substantial. As Heatmap’s Robinson Meyer wrote in December, a study found that, when the IMO began enforcing rules to remove a toxic pollutant, sulfur dioxide from shipping fuels, the planet’s temperatures spiked. That’s because, in addition to inflaming the heart and lungs, triggering asthma attacks, and causing acid rain, sulfur dioxide can also reflect heat back into space, artificially cooling the Earth. When that fuel went away, the warming effects of all the carbon in the atmosphere became more apparent.
Get Heatmap AM directly in your inbox every morning:
A child worker at a cobalt mine in the Democratic Republic of the Congo. Michel Lunanga/Getty Images
The Department of Defense canceled a tender to buy cobalt, in what the trade publication Mining.com called “a fresh sign of the challenges facing Western countries trying to bolster domestic supplies of the battery metal.” In mid-August, the Defense Logistics Agency first sought offers for up to 7,500 tons of the bluish metal used in batteries and alloys for jet engines over the next five years, in a contract worth as much as $500 million. It was, according to Bloomberg, the U.S. government’s first attempt to acquire the metal since 1990. When no deals came in by the original due date of August 29, the offer was extended to October 15. But a notice published on a government website Wednesday indicated that the offer had been pulled. The move marks an apparent setback for the Pentagon’s effort to stockpile critical minerals, as I reported in this newsletter earlier this week.
While the funding doesn’t produce raw cobalt from mining, as I reported for Heatmap last month, the DLA has backed an Ohio-based startup called Xerion that’s commercializing a novel approach to processing both that metal and gallium, another mineral over which China has tightened export controls recently. It’s not alone. As Heatmap’s Katie Brigham wrote last month, “everybody wants to invest in critical mineral startups.”
The British rare earths processor Pensana has canceled plans for a refinery in East Yorkshire, England, in favor of investing in an American project instead. The company spent the past seven years developing a $268 million rare earths mine in Angola. One of the largest of its kind in the world, the project is scheduled to begin delivering raw materials in 2027. To turn that ore into industrial-grade materials, Pensana had planned to build a processing facility at the Saltend Chemicals Plant near Hull, England, that would have turned the metals into powerful magnets. The project won about $6.7 million in support from the British government. But Pensana’s founder and chairman, Paul Atherley, told the BBC that was “nowhere near enough.” He compared the deal to the Trump administration’s direct investment of billions of dollars into MP Materials, the country’s only rare earths mine. Pensana instead announced plans to work with the U.S. refiner ReElement to develop a domestic American supply chain, and plans to list its shares on the Nasdaq. As I wrote in Tuesday morning’s newsletter, the world’s top metals trader warned this week that the West’s mineral weakness is a lack of refining capacity, not mining. “Mining is not critical,” Trafigura CEO Richard Holtum said in London on Monday, according to Mining Journal. “True supply chain security comes from processing investment, not just extraction.”
But even the increased supply of ore from overseas projects could be in jeopardy. I have a scoop this morning in Heatmap that highlights the geopolitical challenges U.S. mining projects face overseas. On Sunday, following weeks of youth-led protests over electricity and water outages, Madagascar’s military overthrew its government in a coup. Now the new self-declared leaders have pulled support for Denver-based mining developer Energy Fuels’ plans for a giant mine that would produce rare earths, uranium, and other metals. The so-called Toliara mine, worth an estimated $2 billion, had won approval from the previous government last winter. But a consultant on the ground in Madagascar’s capital of Antananarivo told me the new leaders had “announced the definitive cancellation” of what was previously described as the future “crown jewel” of an economy where 75% of people live on less than $3 per day and less than 40% of the population has access to electricity.
As recently as the 1990s, the Greenland Ice Sheet and the Arctic were melting at a measurable pace thanks to global warming, but Antarctica’s ice cap seemed securely frozen. But, as Inside Climate News reported Thursday, “not anymore.” New satellite data and field observations show the only unpopulated continent is thawing at an alarming rate, leading to what some scientists are now calling the “Greenlandification” of Antarctica, turning it into an environment that’s melting at a rate closer to the Arctic.
There’s little question as to what is causing the meltdown. More than 100 countries now experience at least 10 more “hot days” per year than a decade ago, when the Paris climate accord was first drafted, according to new data analysis from the research groups Climate Central and World Weather Attribution published Thursday in the Financial Times. In 10 countries, the warming over the past decade added roughly a month of additional “hot days.”
The good climate news, reported by Bloomberg: the Bay Area startup Rondo Energy has turned on the world’s largest industrial heat battery, a giant cubic structure that heats clay bricks with electricity from a 20-megawatt solar array to generate steam.
The bad climate news? That steam is used to force more oil out of the ground as part of Holmes Western Oil Corp.’s enhanced oil recovery system.
The mitigating factors to consider: The battery replaced a natural gas-fired boiler at the Kern County, California, facility. And proponents of enhanced oil recovery say the approach meets lasting demand for petroleum by extracting more fuel from existing wells rather than encouraging new drilling.
Denver-based Energy Fuels was poised to move forward on the $2 billion project before the country's leadership upheaval.
As the Trump administration looks abroad for critical minerals deals, the drama threatening a major American mining megaproject in Madagascar may offer a surprising cautionary tale of how growing global instability can thwart Washington’s plans to rewire metal supply chains away from China.
Just days after the African nation’s military toppled the government in a coup following weeks of protests, the country’s new self-declared leaders have canceled Denver-based Energy Fuels’ mine, Heatmap has learned.
The so-called Toliara mine was supposed to be the “crown jewel” of one of the world’s least developed economies, a megaproject designed to patch Madagascar into a new global supply chain meant to reroute trade in metals needed for everything from state-of-the-art weapons to electric vehicle batteries away from China.
Last December, Energy Fuels, the Denver-based rare earths and uranium miner, won approval from the Malagasy government to move forward on its Toliara Project, a critical minerals mine with a value analysts estimated at $2 billion. But on Thursday morning, the new president of Madagascar’s National Assembly “announced the definitive cancellation” of the project, Luke Freeman, a geopolitical consultant with 25 years of experience in Madagascar, told me by email.
Kim Casey, Energy Fuels’ head of investor relations, dismissed the legitimacy of the coup leaders’ decision in an emailed statement. The company is “watching the events in Madagascar closely, and like the rest of the world we are waiting to see how things unfold,” the statement said.
“At this time, governing bodies and areas of responsibility in Madagascar remain unclear,” she went on. “Any statements made by any individual politicians or others amid this crisis have no legal effect, nor should they be taken to represent official Madagascar government policy or the opinions of the majority of local communities.”
Still, Casey left open the possibility that the mine could be postponed. If the coup “results in any delays in our development plans for the Toliara Project,” she said, “Energy Fuels has multiple projects around the world which are advancing at the same time.” Investors seemed less confident. The company’s stock, which had soared by nearly 500% over the past six months, plunged 8% on Wednesday, and another 13% on Thursday afternoon.
Even if the project goes under, it’s unlikely to impact U.S. mineral supplies, Neha Mukherjee, a rare earths analyst the London-based battery-metals consultancy Benchmark Mineral Intelligence, told me. The mine did not have any public offtakers yet, but Energy Fuels announced plans last year to send uranium ore from the project to the White Mesa Mill in Utah for processing.
“Toliara remains at a very early stage and is still working towards a final investment decision, so immediate on-ground impacts are likely to be limited,” she told me in an email. But she warned that “investors and potential offtakers” may “take a more cautious approach until there’s greater clarity on the political environment.”
It is no accident that, despite its unique culture that blends influences from Africa and Asia, Madagascar is a place known to many Americans primarily as the setting of a series of fictional movies about cartoon animals that aren’t even native to the island nation off southeast Africa. More than 75% of the island's 32 million people live on less than $3 per day, and poverty levels have barely declined over the past decade. Less than 40% of its people have access to electricity.
On Sunday, sweeping month-long youth protests over power and water outages, dubbed a “Generation Z revolution,” evolved into a more traditional type of insurrection when an elite arm of Madagascar’s military overthrew the government in what the African Union denounced as a coup.
The upheaval highlights the challenges ahead for U.S. companies as Washington attempts to reduce its dependency on China, which controls most of the world’s mining and processing of key metals such as rare earths and lithium.
The Biden administration sought to get around the issue by making minerals extracted from countries with which the U.S. had free trade agreements eligible for the Inflation Reduction Act’s most generous electric vehicle tax credits. That strategy put a particular focus on allies with vast mining industries, including Australia, Chile, and Canada.
While President Donald Trump has phased out the tax credits, his administration has tried to broker deals across the world with developing countries whose resources China has largely monopolized in recent years. In May, Trump signed a deal with Ukraine to secure revenues from its as-yet largely untapped minerals once the war with Russia ends — a precondition for his administration’s continued assistance in the effort to repel the Kremlin’s invasion. A month later, Trump negotiated a peace deal between the Democratic Republic of the Congo and Rwanda, pausing a bloody conflict and setting the stage for the U.S. to secure new contracts for raw materials in the war-torn but resource-rich part of central Africa.
The administration’s ongoing pressure on Denmark to cede its autonomous territory of Greenland to the U.S. is widely considered a play for the Arctic island’s minerals. Earlier this month, Reuters reported that the administration is considering buying a stake in Critical Metals, a company prospecting for rare earths in Greenland.
Washington’s appetite for critical minerals could even redraw world maps in the next few years.
Under the terms of a peace agreement that ended a decade-long civil war in the 1980s, Bougainville, a breakaway island off Papua New Guinea, is slated to hold a referendum in 2027 over whether to become an independent nation. Polls suggest the overwhelming majority of voters will support secession. In the U.S., a former investment banker turned novelist named John D. Kuhns has taken up the cause of Bougainville’s independence, advocating that Washington support the would-be republic whose biggest economic asset is a shuttered Rio Tinto copper mine that the autonomous government wants to reopen — potentially with U.S. help.
Trump is also weighing recognizing the breakaway region of Somalia’s independence as Somaliland, which has functioned as a sovereign nation with an internationally praised democracy for more than three decades, in a bid to secure deals to mine its mineral riches. Senator Ted Cruz, the Texas Republican, called on Trump to grant Somaliland recognition as recently as August.
But the most promising potential region for critical minerals may be the one sandwiched between America’s two greatest rivals. In September 2013, then-President Joe Biden huddled with the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan on the sidelines of the United Nations General Assembly in New York. From that summit came the C5+1, a partnership between the U.S. and the five Central Asian nations to work on critical minerals. Weeks after Trump returned to office, Secretary of State Marco Rubio affirmed the Trump administration’s support for the partnership in a call with his Uzbek counterpart.
After Australia and Canada, the Central Asian republics represent the “lowest-hanging fruit” for developing a U.S. critical mineral supply chain, said Pini Althaus, a veteran mining executive making deals in the region. The countries are relatively stable, have recently enacted business reforms meant to invite U.S. companies to work there, and — as a means of safeguarding their independence from Moscow and Beijing — are eager to make deals with the U.S., he said.
“We are at least a couple of decades away from having a domestic supply chain in the United States that can meet all of our critical mineral needs,” Althaus told me. “Practically speaking, we don’t have enough of these materials in the U.S., so we must partner with allied countries. Central Asia offers a lot of these opportunities.”
These days, however, political instability isn’t unique to developing countries. The Trump administration is supposed to host a meeting of the C5+1 in Washington as early as next month, Althaus said — that is, if the ongoing government shutdown is resolved.
In a press conference about the newly recast program’s first loan guarantee, Energy Secretary Chris Wright teased his project finance philosophy.
Energy Secretary Chris Wright on Thursday announced a $1.6 billion loan guarantee for American Electric Power to replace 5,000 miles of transmission lines with more advanced wires that can carry more electricity. He also hinted at his vision for how the Trump administration could recast the role of the department's Loan Programs Office in the years to come.
The LPO actually announced that it had finalized an agreement, conditionally made in January under the Biden administration, to back AEP’s plan. The loan guarantee will enable AEP to secure lower-cost financing for the project, for an eventual estimated saving to energy consumers of $275 million over the lifetime of the loan.
“These are the kind of projects where we’re going to partner with businesses to make our energy system more efficient, more reliable, ultimately lower cost,” Wright said on a call with reporters.
And yet in the past few months, the department has also canceled loan guarantees and grants for other transmission projects that were expected to provide those same benefits — including the Grain Belt Express, an 800-mile line set to bring low-cost wind power from Kansas to the Chicago metropolitan area in Illinois.
“We don’t care about authorship,” Wright told reporters, acknowledging that the AEP loan was conditionally approved by the Biden administration. “Not all of them were nonsense. The ones that are in the interest of the American taxpayers, in the interest of the American ratepayers, and there’s a helpful role for government capital — we’re happy to support those.”
When asked specifically why AEP’s proposal met his criteria while the Grain Belt Express didn’t, Wright first made an argument about cost. “I have nothing against the Grain Belt Express,” he said. “I suspect it’ll still be developed. But it’s far more expensive on a per mile basis since it’s a brand new transmission line.”
His subsequent comments, however, hinted at a more significant shift in approach. He went on to argue that the project came with an unacceptable amount of risk since the developers didn’t have buyers yet for the power coming down the line. It was trying to “close on arbitrage,” he said, by buying up cheap wind power that was stranded in Kansas and bringing it to a larger market. “It’s a more commercial enterprise,” he said. “That’s done with private entrepreneurs and private capital.”
It’s important to note that the Grain Belt Express loan guarantee would have been issued under an innovation-focused program within the Loan Programs Office that was specifically geared toward higher risk projects that banks won’t otherwise touch. The AEP project is part of a different program focused on more mature technologies, with a goal of reducing the cost of major utility infrastructure upgrades to ratepayers.
When I floated Wright’s comments by Jigar Shah, the former head of the Loan Programs Office under the Biden administration, he was flummoxed. “It’s nonsensical,” he said. To Shah, taking Wright’s risk aversion to its logical conclusion would mean, for instance, that the office should not fund any nuclear energy projects. “If this becomes a new standard, that means nuclear is dead in the United States,” he said.
AEP is the first developer to secure a loan guarantee under the Energy Dominance Financing Program, Congress’ new name a Biden-era program within LPO that offered loan guarantees to utilities to “retool, repower, repurpose, or replace energy infrastructure.” Initially called the Energy Infrastructure Reinvestment Financing Program and created by the Inflation Reduction Act, it focused on projects with climate benefits, like making efficiency upgrades to power plants or installing renewables on the site of a former coal plant.
In the Biden administration’s view, AEP’s project would “contribute to emissions reductions by supporting existing and new clean generation by expanding transmission capacity in the regions in which they operate.”
Trump’s One Big Beautiful Bill Act rebranded the program and removed any requirements that projects reduce emissions. On Thursday’s call, Wright seemed to imply that it wasn’t just the Biden-era loan program that had been renamed. “The Loan Program Office is being rechristened the Energy Dominant Financing — it is the rechristening of the same department,” he said in response to a question about the office’s remaining loan authority. The Department of Energy did not respond to my request for clarification.
None of that means that the potential emissions benefits from AEP’s project won’t materialize. Limited transmission capacity is one of the biggest obstacles for bringing new wind and solar power online, and reconductoring could also reduce line losses, making the overall grid more efficient.
The transmission project — which includes plans to rebuild some power lines and reconductor others — will ultimately increase capacity by more than 100%, a spokesperson for AEP told me. The first phase will involve upgrades to about 100 miles of wires across Ohio and Oklahoma, while future phases will tackle lines in Indiana, Michigan, and West Virginia, with the intent of meeting growing demand from data centers and manufacturing development, according to a press release.
When reporters asked Wright about the other conditional loan guarantees the Biden administration had issued under the Energy Infrastructure Reinvestment program that are still pending, the secretary stressed that he was looking for applicants that had identified a clear set of projects they would implement. “Many were done in a hurry, without really even having the projects that the loans would be associated with identified. You can end up with a grab bag of projects without a lot of say for where the money went,” he said.
Wright accused the Biden administration of failing to ask applicants to detail the impact the projects would have on taxpayers and ratepayers — a key question his colleagues are now asking.
Shah disagreed with that portrayal. The whole point of the program was to reduce interest rates for utilities and require them to pass on the benefit to ratepayers. All of the projects awarded conditional commitments met that bar, he said.
He warned that if the Trump administration didn’t honor the remaining conditional commitments to utilities under the program — all 10 of them — it risked losing the trust of any new companies it attempts to make similar deals with.
“Most of the nuclear projects that they’re looking to chase are not going to get closed until 2028. And so what signal are they sending? That projects that get approved in the last year of an administration are not going to be honored in the next administration?”