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The president says he want to bring back nuclear — but he’s preparing to eviscerate an office crucial to making that happen.
In the past few days, I’ve started to wonder whether much of the Trump administration’s energy agenda is dead, and Trump officials just don’t realize it yet.
Trump dreamed of a new U.S. mining bonanza. But his tariffs are slowing economic activity and raising equipment costs, silencing that boom.
Trump called for the American oil industry to “drill, baby, drill.” But his trade agenda — plus his demand that OPEC increase its oil production — is smothering the Texas oil patch. The president’s trade war on China is also backfiring on America’s oil and gas producers, who export huge amounts of plastic feedstocks to that country.
Now Trump’s plan to revive nuclear energy is in peril, too — and the culprit, again, is the president’s own policies.
The Trump administration is planning to hollow out a Department of Energy office that has been central to financing almost every new U.S. nuclear project this century. That could kill the federal government’s ability to act as a financial backstop for new nuclear projects, which has been critical to the success of every recent American nuclear project.
It’s not clear that Trump officials realize what they’re doing yet — or that they care. (Secretary of Energy Chris Wright has been out of the country for much of the relevant period.) And while a coalition of centrist, conservative, and pro-nuclear groups is sounding the alarm, I’m not sure Trump officials are going to realize what they’re doing with enough time to stop it.
For decades now, reviving nuclear energy has been a big aim of Republican energy policy. Republican lawmakers passed nuclear-friendly bills in Congress, and Republican presidents tried to advance pro-nuclear policies.
Nuclear was central to the Trump 2024 campaign, too. Many Trump-aligned figures — including Elon Musk and Vice President JD Vance — suggested that the United States should significantly expand its nuclear fleet. (Vance mentioned nuclear during his appearance on Joe Rogan’s influential podcast and in the vice presidential debate.)
Then, on his first day in office, President Trump signed an executive order seeking to loosen rules holding back nuclear energy. The Department of Energy, in turn, has lifted up the revival of nuclear energy as one of its goals for Trump’s second term.
“America’s nuclear energy renaissance starts now,” Wright declared in late March, when he announced new funding for small modular reactors.
Bringing back nuclear power is the explicit goal. But when it comes to energy policy, announcing an aim is not the same as getting it done. Just ask the Biden administration, which struggled to build EV chargers despite $7.5 billion in funding.
It will take a lot of work to execute a project as big and complex as building new nuclear reactors across the United States, and simply wanting to do it will not make it happen.
That’s what the Trump administration may not understand.
The United States has started only four new nuclear projects this century. All but one of those efforts have received — or are now in the process of applying for — a federal loan guarantee by the Loan Programs Office, the Energy Department’s in-house bank.
The Loan Programs Office, or LPO, provides long-term financing to major American clean energy and industrial projects. The LPO is a small office — just a few hundred people — but it was a vital tool of the Biden administration’s clean-energy industrial strategy. The first Trump administration also used it to boost nuclear energy. (It’s helped Trump allies, too: Back in 2010, it made an early loan to build Tesla’s factory in Fremont, California.)
The LPO has been the key guarantor for every new U.S. nuclear project this century, save one:
The only new nuclear project this century the LPO did not support is the new reactor at Watts Bar Nuclear Plant in Tennessee, which opened in 2016. But that project had the federal government’s backing through a different avenue: The facility is owned by the Tennessee Valley Authority, a federally owned power utility.
Despite that track record, commissars at the Department of Government Efficiency are now trying to gut LPO. The Musk-led efficiency team is seeking to slash more than half of the office’s staff, Heatmap News reported last week.
Seemingly seeking to ease those cuts, Energy Department officials have sought to winnow down the office’s headcount on their own. Energy Department officials have encouraged as many LPO employees as possible to accept an early resignation program under which federal employees can resign this month and get paid through September.
About half of Loan Programs Office employees have asked to resign from their positions, according to one person who wasn’t authorized to speak about the matter publicly. The Department of Energy told Heatmap News last week that it could reject some employees’ early resignation requests.
On Monday, a coalition of centrist, conservative, and pro-nuclear groups wrote a letter to Energy Secretary Wright urging him to “ensure LPO remains fully equipped to carry out its mission.”
The letter says that the LPO could lose so much of its staff — many of whom have special technical or scientific training — that it can no longer support development of new nuclear reactors, fossil power plants, or mineral projects.
“The office’s ability to underwrite and monitor large-scale energy projects depends on specialized technical staff and institutional capacity. Without them, the federal government risks slowing or stalling the diverse mix of energy projects that serve national priorities,” the letter says.
The letter’s signatories include the Nuclear Energy Institute, the nuclear industry’s main trade group. Other signatories include American Compass, a Trump-aligned industrial policy group; Oklo, a nuclear energy company; and the American Conservation Coalition, a conservative environmental group.
The letter is the strongest warning yet that the Trump administration could be blowing its nuclear agenda. In doing so, the administration will lose a rare window of opportunity to make progress on nuclear energy.
Americans are looking more favorably on nuclear energy. Earlier this month, a new Gallup poll found that the U.S. public’s support for nuclear energy has hit 61% — just one percentage point short of its all-time high.That has come as Democratic politicians — especially in swing states — have become more supportive of nuclear energy. As I wrote last year, Democratic candidates at the Senate and presidential level proposed pro-nuclear policies in the last election that until recently would have been unthinkable. At the same time, Republicans have maintained their support of nuclear energy.
Nuclear energy occupies a curious position in American politics. Think about it for a second. The country’s 54 commercially operating nuclear power plants are its largest source of zero-carbon electricity, generating more power than all of America’s wind and solar farms, combined. Second, nuclear power requires a large workforce of college-educated professionals, and those workers are unionized at much higher rates than the private workforce. Finally, nuclear power has never succeeded anywhere — not in the United States, not in France or Japan, and not in Russia or China — without huge amounts of public subsidy.
We are talking about a type of energy that is climate-friendly, that helps build a college-educated and unionized workforce, and that basically always requires government support. Yet nuclear energy has historically been beloved by Republicans and hated by Democrats.
I’m not convinced that will be the case for long — one of the two major parties might turn on nuclear energy in the next few years, driven either by political polarization or by the exigencies of events. (The American public’s support of nuclear power reached its all-time high in 2010, on the eve of the Fukushima disaster.)
Now might be the best window to build nuclear energy in this generation. Democrats in Congress — and the Trump administration — both say they want to do it. But the Trump administration is blowing it.
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House Republicans have bet that nothing bad will happen to America’s economic position or energy supply. The evidence suggests that’s a big risk.
When President Barack Obama signed the Budget Control Act in August of 2011, he did not do so happily. The bill averted the debt ceiling crisis that had threatened to derail his presidency, but it did so at a high cost: It forced Congress either to agree to big near-term deficit cuts, or to accept strict spending limits over the years to come.
It was, as Bloomberg commentator Conor Sen put it this week, the wrong bill for the wrong moment. It suppressed federal spending as America climbed out of the Great Recession, making the early 2010s economic recovery longer than it would have been otherwise. When Trump came into office, he ended the automatic spending limits — and helped to usher in the best labor market that America has seen since the 1990s.
On Thursday, the Republican majority in the House of Representatives passed their megabill — which is dubbed, for now, the “One Big, Beautiful Bill Act” — through the reconciliation process. They did so happily. But much like Obama’s sequestration, this bill is the wrong one for the wrong moment. It would add $3.3 trillion to the federal deficit over the next 10 years. The bill’s next stop is the Senate, where it could change significantly. But if this bill is enacted, it will jack up America’s energy and environmental risks — for relatively little benefit.
It has become somewhat passé for advocates to talk about climate change, as The New York Times observed this week. “We’re no longer talking about the environment,” Chad Farrell, the founder of Encore Renewable Energy, told the paper. “We’re talking dollars and cents.”
Maybe that’s because saying that something “is bad for the climate” only makes it a more appealing target for national Republicans at the moment, who are still reveling in the frisson of their post-Trump victory. But one day the environment will matter again to Americans — and this bill would, in fact, hurt the environment. It will mark a new chapter in American politics: Once, this country had a comprehensive climate law on the books. Then Trump and Republicans junked it.
The Republican megabill will make climate change worse. Within a year or two, the U.S. will be pumping out half a megaton more carbon pollution per year than it would in a world where the IRA remains on the books, according to energy modelers at Princeton University. Within a decade, it will raise American carbon pollution by a megaton each year. That is a significant increase. For comparison, the United States is responsible for about 5.2 megatons of greenhouse gas pollution each year. No matter what happens, American emissions are likely to fall somewhat between now and 2035 — but, still, we are talking about adding at least an extra year’s worth of emissions over the next decade. (Full disclosure: I co-host a podcast, Shift Key, with Jesse Jenkins, the lead author of that Princeton study.)
What does America get for this increase in air pollution? After all, it’s possible to imagine situations where such a surge could bring economic benefits. In this case, though, we don’t get very much at all. Repealing the tax credits will slash $1 trillion from GDP over the next decade, according to the nonpartisan group Energy Innovation. Texas will be particularly hard hit — it could lose up to $100 billion in energy investment. Across the country, household energy costs will rise 2% to 7% by 2035, on top of any normal market-driven volatility, according to the energy research firm the Rhodium Group. The country will become more reliant on foreign oil imports, yet domestic oil production will budge up by less than 1%.
In other words, in exchange for more pollution, Americans will get less economic growth but higher energy costs. The country’s capital stock will be smaller than it would be otherwise, and Americans will work longer hours, according to the Tax Foundation.
But this numbers-driven approach actually understates the risk of repealing the IRA’s tax credits. The House megabill raises two big risks to the economy, as I see it — risks that are moresignificant than the result of any one energy or economic model.
The first is that this bill — its policy changes and its fiscal impact — will represent a double hit to the capacity of America’s energy system. The Inflation Reduction Act’s energy tax credits were designed to lower pollution and reduce energy costs by bringing more zero-carbon electricity supply onto the U.S. power grid. The law didn’t discriminate about what kind of energy it encouraged — it could be solar, geothermal, or nuclear — as long as it met certain emissions thresholds.
This turned out to be an accidentally well-timed intervention in the U.S. energy supply. The advent of artificial intelligence and a spurt of factory building has meant that, in the past few years, U.S. electricity demand has begun to rise for the first time since the 1990s. At the same time, the country’s ability to build new natural gas plants has come under increasing strain. The IRA’s energy tax credits have helped make this situation slightly less harrowing by providing more incentives to boost electricity supply.
Republicans are now trying to remove these tax bonuses in order to finance tax cuts for high-earning households. But removing the IRA alone won’t pay for the tax credits, so they will also have to borrow trillions of dollars. This is already straining bond markets, driving up interest rates for Americans. Indeed, a U.S. Treasury auction earlier this week saw weak demand for $16 billion in bonds, driving stocks and the dollar down while spiking treasury yields.
Higher interest rates will make it more expensive to build any kind of new power plant. At a moment of maximum stress on the grid, the U.S. is going to pull away tax bonuses for new electricity supply and make it more expensive to do any kind of investment in the power system. This will hit wind, solar, and batteries hard; because renewables don’t have to pay for fuel, their cost variability is largely driven by financing. But higher interest rates will also make it harder to build new natural gas plants. Trump’s trade barriers and tariff chaos will further drive up the cost of new energy investment.
Republicans aren’t totally oblivious to this hazard. The House Natural Resource Committee’s permitting reform proposal could reduce some costs of new energy development and encourage greater power capacity — assuming, that is, that the proposal survives the Senate’s byzantine reconciliation rules. But even then, significant risk exists for runaway energy cost chaos. Over the next three years, America’s liquified natural gas export capacity is set to more than double. Trump officials have assumed that America will simply be able to drill for more natural gas to offset a rise in exports, but what if higher interest rates and tariff charges forbid a rise in capacity? A power price shock is not off the table.
So that’s risk No. 1. The second risk is arguably of greater strategic import. As part of their megabill, House Republicans have stripped virtually every demand-side subsidy for electric vehicles from the bill, including a $7,500 tax credit for personal EV purchases. At the same time, Senate Republicans and the Trump administration have gutted state and federal rules meant to encourage electric vehicle sales.
Republicans have kept, for now, some of the supply-side subsidies for manufacturing EVs and batteries. But without the paired demand-side incentives, American EV sales will fall. (The Princeton energy team projects an up to 40% decline in EV sales nationwide.) This will reduce the economic rationale for much of the current buildout in electric vehicle manufacturing and capacity happening across the country — it could potentially put every new EV and battery factory meant to come online after this year out of the money.
This will weaken the country’s economic competitiveness. Batteries are a strategic energy technology, and they will undergird many of the most important general and military technologies of the next several decades. (If you can make an EV, you can make an autonomous drone.) The Trump administration has realized that the United States and its allies need a durable mineral supply chain that can at least parallel China’s. But they seem unwilling to help any of the industries that will actually usethose minerals.
Does this mean that Republicans will kill America’s electric vehicle industry? Not necessarily. But they will dent its growth, strength, and expansion. They will make it weaker and more vulnerable to external interference. And they will increase the risks that the United States simply gives up on ever understanding battery technology and doubles down on internal combustion vehicles — a technology that, like coal-powered naval ships, is destined to lose.
It is, in other words, risky. But that is par for the course for this bill. It is risky to make the power grid so exposed to natural gas price volatility. It is risky to jack up the federal deficit during peacetime for so little gain. It is risky to cede so much demand for U.S.-sourced critical minerals. It is risky to raise interest rates in an era of higher trade barriers, uncertain supply shocks, and geopolitical instability.
This is what worries me most about the Republican megabill: It takes America’s flawed but fixable energy policy and replaces it with, well, a longshot parlay bet that nothing particularly bad will happen anytime soon. Will the Senate take such a bet? Now we find out.
And more of the week’s top conflicts around renewable energy
1. Worcester County, Massachusetts – The town of Oakham is piping mad about battery energy storage.
2. Worcester County, Maryland – A different drama is going down in a different Worcester County on Maryland’s eastern shore, where fishing communities are rejecting financial compensation from U.S. Wind tied to MarWin, its offshore project.
3. Lackawanna County, Pennsylvania – A Pivot Energy solar project is moving ahead with getting its conditional use permit in the small town of Ransom, but is dealing with considerable consternation from residents next door.
4. Cumberland County, North Carolina – It’s hard out here for a 5-megawatt solar project, apparently.
5. Barren County, Kentucky – Remember the Geenex solar project getting in the fight with a National Park? The county now formally has a restrictive ordinance on solar… that will allow projects to move through permitting.
6. Stark County, Ohio – Stark Solar is no more, thanks to the Ohio Public Siting Board.
7. Cheboygan County, Michigan – A large EDP Renewables solar project called the Northern Waters Solar Park is entering the community relations phase and – stop me if you’ve heard this before – it’s getting grumbles from locals.
8. Adams County, Illinois – A Summit Ridge Energy solar project located near the proposal in the town of Ursa we’ve been covering is moving forward without needing to pay the city taxes, due to the project being just outside city limits.
9. Cottonwood County, Minnesota – National Grid Renewables has paused work on the Plum Creek wind farm despite having received key permits to build, a sign that economic headwinds may be more powerful than your average NIMBY these days.
10. Oklahoma County, Oklahoma – Turns out you can’t kill wind in Oklahoma that easily.
11. Washoe County, Nevada – Trump’s Bureau of Land Management has opened another solar project in the desert up for public comment.
12. Shasta County, California – The California Energy Commission this week held a public hearing on the ConnectGen Fountain Wind project, which we previously told you already has gotten a negative reaction from the panel’s staff.
A conversation with Heather Cooper, a tax attorney at McDermott Will & Emery, about the construction rules in the tax bill.
This week I had the privilege of speaking with Heather Cooper, a tax attorney at McDermott Will & Emery who is consulting with renewables developers on how to handle the likelihood of an Inflation Reduction Act repeal in Congress. As you are probably well aware, the legislation that passed the House earlier this week would all but demolish the IRA’s electricity investment and production tax credits that have supercharged solar and wind development in the U.S., including a sharp cut-off for qualifying that requires beginning construction by a date shortly after the bill’s enactment.
I wanted to talk to Heather about whether there was any way for developers to creatively move forward and qualify for the construction aspect of the credits’ design. Here’s an abridged version of our conversation, which happened shortly after the legislation passed the House Thursday morning.
How would this repeal affect projects that are already in the pipeline?
Projects in the pipeline are likely going to be safe harbored or grandfathered from these repeals, assuming they’ve gone far enough into their development to meet certain tax rules.
For projects that are less far along in the pipeline and haven’t had any outlays or expenditures yet, those developers right now are scrambling and I’ve gotten probably about 100 emails from my clients today asking me questions about what they can do to establish construction has begun on their project.
If they don’t satisfy those construction rules under the tax bill, they will be completely ineligible for the energy generating credits — the investment tax credit and production tax credit. A pretty significant impact.
What are the questions your clients are asking you?
I’m being asked how these credits are being repealed, if there’s any grandfathering, and how it’s impacting transferability. Also, they’re asking if these rules are tied to construction or placing in service or tax years generally. But also, it seems like people are asking what folks need to do to technically begin construction.
How much will this repeal affect fights between developers and opposition? I spoke to an attorney who told me this repeal could empower NIMBYs, for example.
I don’t know if it empowers them as much as NIMBYs will have less to worry about. If these projects are no longer economical, if these are no longer efficient to build, then the projects just won’t get built. NIMBYs and opponents will be happy.
I don’t think anything about the particular structure of the repeal, though, is empowering opponents. It is what it is.
Like, you can begin construction by entering into procurement contracts for equipment to build your facility so if you’re building a project you can enter into a contract today to get modules, warehouse those modules, and then use those modules to cause one or more projects as having begun construction based on when they were purchased.
If a developer today is able to enter into those contracts, that’ll be outside the scope of anything an opponent would have anything to do with.
Are we expecting people to make decisions before the Senate has acted on this bill or are people in a holding pattern?
When the election happened in November I had increased interest in clients who were concerned about a worst-case scenario like this, that credits would be repealed at or around the time of enactment. We had clients betting not that this would happen but [there was still] a 1% chance or a 5% chance. And folks asked then, how do we re-up thinking about how to begin construction on projects as a precautionary measure.
A lot of my clients were thinking about the worst case scenario beforehand. This is probably just escalating their thinking.
I don’t think people have a lot of time to think about what to do, though, given the 60-day cut off after enactment.
What is the silver lining here? Is there any? If I were to talk to a developer right now, is there an on the bright side here?
The short answer is no. Maybe it makes power projects a lot more expensive and American energy a lot more expensive and therefore those building power projects can make more money from their existing projects? That’s whether they’re renewable or otherwise. Other than higher power costs – for consumers, regular old taxpayers – there’s not really a bright side.
So, what you’re saying is, you don’t have any good news?
The good news is the Senate is still out there and needs to review this. There are a few senators who’ve expressed strong support of these credits – I’m not super optimistic, but four senators tend to have a bit more sway than congresspeople do.