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Catching up with David Funk of Zero Emissions Northwest on policy whiplash and complications from tariffs.

With previously obligated funding for programs backed by the Inflation Reduction Act and the Infrastructure Investment and Jobs Act beginning to be reinstated, individuals and businesses are fearing whiplash as they restart programming against a backdrop of increasing political and economic uncertainty.
Take David Funk, the founder and president of Zero Emissions Northwest, which works to connect farmers and small business owners in the rural Pacific northwest with grant opportunities through the Department of Agriculture’s Rural Energy for America Program. The last time I talked with Funk, he had just laid off his three employees in the wake of President Trump’s day one freeze on funds granted under the IRA and infrastructure law. Without these federal grants, Funk had no money to pay himself or his employees, and a number of his customer’s energy efficiency projects — things such as solar installations, upgraded appliances, or heat pumps — hung in limbo.
Last month, the USDA restored funding for Rural Energy for America, as well as a number of other related programs, so long as project applicants “remove harmful DEIA and far-left climate features” from their project proposals. I caught up with Funk today about what ZEN has been up to since its funding has been reinstated, and how his organization and customers are reacting to a moment when nearly everything seems to be in flux. Our conversation has been edited for length and clarity.
So we last spoke at the very end of January, soon after Trump’s funding freeze went into effect and you had to lay off your employees. What’s happened with ZEN since then?
About a month later, I was able to bring [my employees] back because of a Washington state unemployment program called SharedWork. [The program allows employees to work on a part-time basis while also collecting unemployment to help compensate for lost wages.] But I didn’t have the cash flow to pay everybody for this indefinite amount of time with our major contract being frozen. And then about a month after that, you get this press release from the USDA that they have reauthorized the Rural Energy for America program and several other ones. And maybe three days after that, we got our check.
Simultaneously, we won an additional contract with the USDA called the Energy Audit and Renewable Energy Development Assistance Program. It allows us to work with agricultural producers and do more comprehensive energy audit work, so sitting down with a farmer in a more consultative approach to say, here’s where you’re using energy today, and here’s some easy, low-hanging fruit that we can work on.
What were the repercussions for your staff and for your customers of that two-month funding freeze?
It’s a lot of wasted effort. For the first month when this was happening, I was trying to keep the ship afloat, trying to figure out how to take care of my employees, communicating so much uncertainty to my customer base, and recognizing that there’s a very wide spectrum of political viewpoints with my customer base. It takes so much delicate wordsmithing to write an email to all of my customers to say, this is the news that came out this week and this is how I’m interpreting this.
Now what we’re doing is calling our customers being like, “let’s restart your project, grants are getting paid.” I fully anticipate, as we’re going through our long tail of customers, that some projects are just going to stall out and never happen, which is disappointing. People’s attention goes elsewhere. Farmers are not really interested in taking on more debt than they need to. If you don’t have the cash reserves, and your commodity prices are low, and you’re looking at increased fertilizer costs and everything, there’s a limited window to make this all happen, and the uncertainty and the volatility in the economy has increased. So I anticipate there are going to be some people going, this was a great idea nine months ago, but not a good business decision right now.
Did you have to — or are you planning to — change any of the language in your grant applications to remove any mention of climate benefits or equity?
No, we haven’t. And largely, that’s because what we’re deploying, it’s technical, it’s hardware, it’s insulation. There’s no DEIA component. We’re trying to help businesses control their energy and financial future, and energy efficiency is apolitical. So if you can find an opportunity that has a good payback period, it’s a good use of your dollars. It just needs to make financial sense.
What we do focus on is energy production, energy dominance. We use a lot of that language because especially in our communities, resilience is important.
What other unknowns are making this a tricky business environment for your customers at the moment?
We’re looking at solar and going, what’s it going to cost? It’s so hard to plan for all of this stuff, because the supply chain is becoming a risk. I’ve had contractors after tariffs are announced go, “let me call my vendor and reprice this.” So that just doesn’t make anybody feel super comfortable. We know that the [clean electricity] tax credits are going to probably be on the negotiating table this summer. And I don’t want anybody to start a project that might not finish this year because who knows what the tax credits are going to be. So I can absolutely see some people just say, I’m not going to do anything right now. I’ll wait it out, or I’ll focus on my core business of farming.
Farmers are no strangers to the turbulence of Trump’s trade policies, as they were also hit hard after Trump imposed tariffs on China in his first administration. How are Trump’s latest tariffs, as well as China’s retaliatory tariffs, impacting your customers?
Under the first Trump administration, there was a bailout for agriculture. Under this administration, there might be a bailout for agriculture, but it’s nowhere near compensating these farmers enough for losing out on the commodity prices. If China stops buying wheat, that might be $1 off the wheat price, which is going to be a lot more significant than a $50,000 bailout that a farmer might get to compensate them for that.
Already the supply chain was pretty challenged through COVID, and now with tariffs, if you have a mission-critical piece of equipment — whether it’s irrigation or electrical or a tractor — and a part is manufactured abroad, and tariffs are throwing that supply chain into chaos and something breaks, how quickly can you get it? And what are you going to have to do to harvest your crop?
I don’t see many things going in the right direction. And I think that’s the common sentiment, which is, where’s the good news? It’s definitely going to be a lot clearer in 12 months after we get through a growing season.
How are you thinking about the future of ZEN given the general atmosphere of uncertainty and changing priorities?
As a small company, this funding pause really highlighted that a lot of our eggs are in one basket. What happens in the future if the USDA is not here and our contract goes away? We are trying to find new markets and find new programs and new opportunities. One of the areas that we’re looking at is really schools, because we’ve built up a strong professional reputation in rural areas — well, rural schools need help too. And you know, when I think about rural communities, it’s impossible not to think about resiliency. I think resiliency is always going to be a winning argument if you can make the numbers work.
Probably because we provide services to rural agricultural communities, many of which voted largely in favor of this president, we are benefiting from that favoritism. But there are so many programs that I think are being paused or unjustly canceled, and a lot of good work is being stalled out or just terminated. So it’s very bittersweet. And while you know we’re on the winning team right now, I think overall it’s a net loss.
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The company plans to invest in domestic manufacturing for its high-heat magnets.
Our electricity system runs on magnets. Every transformer stepping voltage up or down, every inductor smoothing out electrical current, and every motor turning electricity into motion relies on the same basic physics: magnetic fields that control the flow of electrons, converting, filtering, and transporting power at every stage. But as AI and electrification push the grid to its limits, better magnetic materials can help power electronics — and our grid itself — keep up.
That’s the bet behind CorePower Magnetics, a Pittsburgh-based startup which raised a $10.5 million funding round co-led by Engine Ventures and Material Impact, announced on Thursday. The startup is developing more efficient, power-dense components such as inductors and transformers using proprietary nanocrystalline magnetic materials, whose ultra-fine grains reduce energy loss. While these materials have historically been brittle and limited to operating at temperatures below 150 degrees Celsius, CorePower says it engineered alloys that can perform above 200 degrees while maintaining durability.
That higher temperature ceiling is critical. As surging electricity demand meets our increasingly complex grid, power electronics like inductors and transformers are being pushed to handle more power, greater voltages, and higher frequencies than ever before. Magnetic material that can run hotter allows engineers to push more power through smaller components. In the context of a data center, for example, that could equate to about a 10% overall reduction in power demand, CorePower’s CEO Sam Kernion told me
“Data centers are the tip of the spear for this really big push into power electronics,” Kernion explained. “If you look more broadly, electricity demand is growing, but the grid itself is becoming a lot more complex, and data centers are just a great example of that.”
Traditionally, electricity flowed unidirectionally from large, centralized power plants to homes, businesses, and other end users. But now the system must support a wider array of both generation and demand sources. Distributed energy resources like rooftop solar panels can generate power directly where it’s consumed, while batteries (and soon electric vehicles) can both draw power and send it back to the grid. Today’s standard electrical equipment isn’t built to handle the bidirectional power flow and real-time current and voltage conversions that this new ecosystem demands.
Solid-state transformer startups such as Heron Power and DG Matrix are tackling this same challenge, using advanced semiconductor technology to convert voltage electronically while also handling functions like bidirectional power flow and alternating-to-direct current conversion. But even these newer systems still generally rely on conventional magnetic materials, which CorePower says have become a key bottleneck.
“We’re taking a car engine, and now we’re going to a jet engine in terms of how different this is,” Kernion told me regarding the demands of this new, higher performance operating environment.
CorePower is designing its advanced, medium-frequency transformers to operate across a broad range of frequencies, from 10 kilohertz to 100 kilohertz. Eventually it plans to sell these transformers to power electronics manufacturers, which will build complete, solid-state systems around the startup’s magnetic core, adding components such as semiconductors and capacitors along with their own software and control systems.
While CorePower hasn’t disclosed any customers to date, it did launch its first product last year, a standardized, low-voltage inductor that’s smaller, lighter, and more efficient than the industry standard. The device smooths out current in power conversion systems, including data center distribution equipment, EV chargers, and inverters that convert DC electricity to AC. Next, CorePower is preparing to launch its standardized transformer product.
The company’s magnet tech could ultimately find numerous applications beyond inductors and transformers. “We’re also able to supply onboard magnetic components for EVs, or uninterruptible power supplies at data centers, or inverters for renewables,” Kernion explained. “Every electron everywhere passes through a magnetic component at some point, so there’s a whole bunch of opportunity out there.”
It’s certainly a fortuitous time to be a domestic power electronics manufacturer. Last month, President Trump signed an executive order banning the import of certain foreign-made bulk power equipment, including substation transformers and grid-connected inverters. While CorePower is mainly focused on producing high-performance equipment that Kernion says can’t currently be sourced domestically or abroad, the push to shore up domestic manufacturing is providing a tailwind for another of its new business lines: amorphous ribbon, a traditional alternative to the electric steel used in conventional distribution transformers on the grid.
With this latest funding, CorePower plans to expand its team and increase manufacturing capacity at its 10,000 square foot pilot manufacturing facility in Pittsburgh, which it was able to complete thanks to a $5 million ARPA-E grant. The company is eventually looking to move into a larger, 100,000 square foot facility in the region to scale its material and component manufacturing further, though there’s no confirmed timeline for this yet.
One of the largest companies in the world says its products pose catastrophic peril. Sound familiar?
This is an edition of Heatmap Daily, an evening review of the day’s news written by our executive editor. Sign up for it here.
Imagine, for a moment, a vast and growing firm — a conglomerate that could be said to define its era of American capitalism. Over the past several years, this firm’s products have become the biggest story in the U.S. economy. Its products are so mindbogglingly expensive to produce that they have driven new types of financial and infrastructural innovation, yet nevertheless the company seems to be quite profitable.
And little wonder: Everyone wants what they have. Investors, policymakers, and economists believe that America’s ongoing economic growth and competitiveness depend on ample access to this company’s products. The sitting Republican president has staked his administration on making sure Americans can get as much of it as they want — regulations be damned.
But there is a problem. One of the company’s researchers has become convinced that the company’s products are dangerous — so harmful, in fact, that their continued use and growth trajectory portends catastrophic risk for humanity. He attempts to alert the company’s executives to this fact. What happens next?
Perhaps you know the story. In the late 1970s and early 1980s, Exxon’s internal scientists concluded that the ongoing growth of fossil fuels would raise global temperatures and have “potentially catastrophic” effects on the planet’s climate. They presented these results to Exxon’s executives. A senior scientist warned that humanity had a brief window — “five to 10 years” — before “the need for hard choices regarding changes in energy strategies might become critical.”
Exxon led a large research effort into climate change, affirming its scientific validity. But then in the late 1980s, its CEO decided to go in the other direction. Its executives chose not to warn the public about climate change — and instead began a successful disinformation campaign meant to convince the public that climate change was not settled science.
But what if things had gone differently? We’re getting a taste of that pathway now. Last week, Sam Coxon, a researcher at the artificial intelligence company Anthropic, resigned because he feared the AI industry was too close to building an “out of control” intelligence. He quit his job just a few months before his corporate equity would have vested, giving up what would have likely been life-changing wealth to warn about what he believes to be existential risks. Humanity only had a brief period of time — perhaps a year — to steer the technology to a better path, he said.
Anthropic researchers who remain at the company affirmed his analysis. “We really do earnestly believe AI could kill all humans,” a senior scientist at the company posted on the social network X.
But this time, Anthropic’s CEO, Dario Amodei, did not respond as Exxon’s leadership did three decades ago. Instead, Amodei basically agreed with Coxon: He asked for the government to regulate artificial intelligence and “pace the frontier,” meaning that it should enforce a slower rate of cutting-edge artificial intelligence development.
I’ve thought of these two examples over the past few days as I’ve tried to make sense of the surge in public concern about AI and existential risk.
It seems to me that climate change is looming over the AI conversation and shaping the assumptions, outlook, and behavior of many key players and observers. President Trump, of course, is reading from the old playbook and has deemed AI to be a “hoax”; Coxon, appearing on Fox News, has downplayed climate change’s existential risk as compared to runaway AI. Yet even beyond those reruns and revisions, the analogy goes deeper: Just as nuclear non-proliferation agreements structured early attempts to regulate global greenhouse emissions, climate policy is now shaping how people understand AI risk.
And not for lack of cause. In some important ways, the problems — or alleged problems, depending on your perspective on AI — resemble each other. For instance, because technology exists in a global commons, any successful AI diplomacy must involve the United States and China. And since China’s AI development currently lags the United States, American politicians must persuade China that their proposals to regulate AI are not just concealed attempts to restrain China’s development.
This dynamic has long bedeviled climate negotiations, too. Since economic growth has (until very recently) required fossil fuels, China and other middle-income countries have long feared that any global climate treaty would constrain their future economic development. The Kyoto Protocol tried to finesse this problem by splitting countries into two groups, rich and not-rich; the Paris Agreement did it by imposing no collective restrictions on fossil fuel consumption at all.
Neither approach has worked, exactly, but each offer examples, counterexamples, and tools for thought. Perhaps the Montreal Protocol, which has successfully limited global production of the pollutants destroying stratospheric ozone — and has shown how to stop the growth of a dangerous but hard-to-manufacture technology that presents near-term existential risk — is a superior model.
There is at least one big way the two risks differ. Climate change is a chemical problem that arises from the size and scale of global fossil fuel consumption. Scientists have known that the greenhouse effect is real since the early 20th century. Climate change’s physics are rudimentary enough that Exxon’s in-house scientists could predict the path of future warming with some accuracy. It is a verifiable risk.
AI’s alleged existential risks, on the other hand, emerge from a lab pushing the technological frontier too far and drilling, like Tolkien’s dwarves, too deep. AI concern relies not on empirical observations, but on a story about exponential change and runaway growth. In this way, it’s a harder risk to predict, and a harder one to accept.
Climate advocates have long wondered what would have happened if Exxon’s leaders had embraced reality and warned the public in the 1980s that global warming is real and caused by fossil fuels. Inside Climate News once called it a “road not taken.” I can’t help but wonder if we’re watching it.
The Federal Reserve raised the federal funds rate by a quarter point, the central bank announced Wednesday afternoon, its first rate change since Chairman Kevin Warsh took his seat in May and its first rate hike in over three years.
The federal funds rate will now sit between 3.75% and 4%. According to projections by regional Federal Reserve presidents and members of the Board of Governors, the central bank expects to hike rates one more time this year.
In its now characteristically brief statements, the Federal Open Market Committee said that the hike “will support a timelier return to the Committee's 2 percent goal” for inflation. Inflation is currently running at 3.4% and has been above the Fed’s 2% target since 2021.
The FOMC’s (brief) statement explaining the hike pointed to “resilient” domestic spending and “robust” capital investment. It characterized the economy as “expanding at a solid pace,” albeit with “elevated” uncertainty due to “geopolitical developments.”
This combination of factors — high oil prices due to the partial shutdown of the Strait of Hormuz and high investment in data centers — have helped push up yields on Treasury bonds, which helped maneuver the Federal Reserve into its rate hike. These rising Treasury yields have made raising capital more difficult for sectors besides artificial intelligence, very much including the capital-intensive renewable and clean energy industries.
Warsh attributed higher Treasury yields to “economic strength, competition for capital, and geopolitics,” in his press conference following the rate announcement. The yield on the 10-year treasury bond, often used as a benchmark for the cost of money throughout the economy, rose to over 5% on the news, the highest level since 2007.