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What the Council on Foreign Relations’ new climate program gets drastically wrong.
Let’s start with two basic facts.
First, the climate crisis is here now, killing people, devastating communities, and destroying infrastructure in Los Angeles and Asheville and Spain and Pakistan and China. And it will get worse.
Second, Donald Trump is the President of the United States. He began the process to withdraw the United States from the Paris Agreement on January 20, 2025, his first day in office in his second term. (He, of course, did this in his first term as well.) He illegally froze funding for climate programs that had passed and became law during the Biden administration, and his administration continues to ignore court orders to unfreeze these monies. He has signed numerous executive orders, including on reinvigorating clean [sic] coal, reversing state-level climate policies, “Zero-based regulatory budgeting to unleash American energy,” and “unleashing” American energy, the last of which revoked more than a dozen Biden era executive orders.
How do we address a world that is increasingly shaped by these two facts?
One attempt can be seen in the Council on Foreign Relations’s new “Climate Realism Initiative.” Its statement of purpose attempts to make climate action palatable to MAGA world by securitizing it, framing climate change as a foreign threat to Fortress America. It calls for investing in next-generation technologies and geoengineering in the hopes of leapfrogging the Chinese-led clean energy revolution that is beginning to decarbonize the world today is the best realistic way forward.
This attempt is doomed to failure. Real climate realism for the United States is to stop the destruction of American state capacity, and then to reflect and build on areas of core strength including finance and software.
CRI’s launch document does not call for the U.S. to reduce its own emissions. I’ll say that again: There is no call for the U.S. to reduce its own emissions in the essay establishing the mission and objectives of the Climate Realism Initiative. Written by Varun Sivaram, formerly chief strategy and innovation officer at wind energy developer Orsted and now the leader of the initiative, the essay proposes that four dug-in “fallacies” are getting in the way of effective policy-making: that climate change “poses a manageable risk” to the U.S.; that “the world’s climate targets are achievable;” that the clean energy transition is a “win-in for U.S. interests and climate action;” and that “reducing U.S. domestic greenhouse gas emissions can make a meaningful difference.” For Sivaram, the problem is always other places and their emissions.
He then goes on to propose three “pillars” of climate realism: the need for America to prepare for a world “blowing through climate targets;” to “invest in globally competitive clean technology industries;” and to “lead international efforts to avert truly catastrophic climate change.” How an America that does not commit to reduce its own emissions will have any credibility or standing to lead international efforts is left unstated.
Sivaram attempts to trick the reader into overlooking America’s emissions by ignoring the facts of the past and focusing instead on guesses about the future. It’s true that in 2023, China produced more than a quarter of new global carbon pollution — more than the United States, Europe, and India combined. But no country has contributed more to the blanket of pollution that traps additional heat in our atmosphere than the United States, which has emitted over 430 billion tons of CO2, or 23% of the world’s total historical emissions. Even in 2023, the U.S. remained the world’s number two carbon polluter.
Sivaram goes further than merely minimizing the U.S. role in creating our current climate problems. Indeed, he sets up climate change as a problem that foreign countries are imposing on Americans. “Foreign emissions,” he writes, “are endangering the American homeland,” and the effects of climate disasters “resemble those if China or Indonesia were to launch missiles at the United States.” There is something to this rhetoric that is powerful — we should think about climate-induced disasters as serious threats and respond to them with the kind of resources that we lavish on the military industrial complex. But the idea that it is foreign emissions that are the primary source of this danger is almost Trumpian.
The initiatives proposed in the Climate Realism launch are the initiatives of giving up. Investing in resilience and adaptation is needed in any scenario, but tying this spending on adaptation to Trumpian notions of protecting our borders reeks of discredited lifeboat ethics, which only cares to save ourselves and leaves others to suffer for our sins. And while supporting next-generation technologies is an appropriate piece of the policy puzzle, they should be like the broccoli at a steakhouse: off to the side and mostly superfluous compared with the meat and potatoes of deployment and mitigation to decarbonize today.
Sivaram may argue that there’s no point in trying to compete against China in the technologies of today when Chinese firms are so dominant and apparently willing to make these products while earning minimal profits. And from a parochial profit-maximizing perspective, there is a business case that firms should not be building lots of new solar cell manufacturing facilities given global manufacturing capacity.
But if American automotive firms simply ignore the coming EV wave and hope against hope that some breakthrough in solid state batteries will allow them to leapfrog over the firms vying today, they are fooling themselves. Electric vehicle giant BYD and world-leading battery manufacturer CATL have both announced batteries that can charge a car in five minutes. Both are also moving in the solid state space, and CATL is pushing into sodium ion batteries.
The notion that U.S. firms ought to sit out this fight for strategic reasons also ignores how China has come to dominate these sectors — by investing in today’s state of the art and pushing it forward through incremental process improvements at scale. The Thielian notion that “competition is for losers” leads to an immense amount of waste as wannabe founders search for unbreakable technological advantages. If venture capitalists want to fund such bets, I’m not going to stop them. But as a policy prescription for climate realism, it fails.
The final gambit of the essay is to advocate for America-controlled geoengineering. This, too, is an area where research may be needed. But regardless, it is the kind of emergency backup plan that you hope that you never need to use, rather than something that should be central to anyone’s policy strategy. Trump is currently decimating American capacity to research hard problems, whether they be cancer or vaccines or social science or anything else, so it is difficult to imagine that this administration is likely to spend real resources to investigate geoengineering.
The Climate Realism Initiative pitches itself as “bipartisan.” But where is the MAGA coalition that supports this? Even simple spending on adaptation and resilience seems unlikely to find much of a political home given the Trump administration’s drastic cuts in weather and disaster forecasting. Sivaram even mentions the need to balance the budget as part of climate realism, which must be a sick joke. For all of the fanfare over cuts to the federal government under Trump, the budget deficit is the last thing that they care about. Tax cuts remain the coin of the realm, with the House budgetary guidelines expanding the deficit by $2.8 trillion. Elon Musk’s Department of Government Efficiency, similarly, has a distorted notion of government efficiency, ignoring the returns to government investments and gutting the tax collection capacity of the IRS.
The Biden administration had plans — “all of the above” energy among them — that were coherent, if not necessarily the most appealing to the world. They were based on the idea that a resilient climate coalition in the U.S. required more than just deploying Chinese-made products.
CRI seems to want to engage instead in a fantasy conversation where anti-Chinese nationalism can unite Americans to fight climate change — an all-form, no-content negative sum realpolitik that does little to address the real, compelling, and deeply political questions that the climate crisis poses.
Alternative visions are possible. The American economy is services based. Americans and American firms will inevitably make some of the hardware components of the energy transition, but the opportunities that play to our strengths are mostly on the software side.
It is critical to remember that the clean technologies that power the energy transition are categorically different from the fossil fuels that the world burned (and still burns) for energy. We do not require a constant stream of these technologies to operate our economy. The solar panels on your roof or in the field outside of town still generate electricity even if you can’t buy new ones because of a trade war. Same with wind turbines. In fact, renewables are a source of energy security because the generation happens from domestic natural resources — the sun and wind. Yet smart thinkers like Jake Sullivan fall into the trap of treating “dependence” on Chinese renewable technologies as analogous to European dependence on Russian natural gas.
Even China’s ban on U.S.-bound rare earth exports won’t make much of a dent. Despite the name, rare earths aren’t that rare, and while China does dominate their processing, it’s a tiny industry; in making fun of the “critical” nature of rare earths, Bloomberg opinion writer Javier Blas noted that the total imports of rare earths from China to the U.S. in 2024 was $170 million, or about 0.03% of U.S.-China trade. That being said, the major concern is if supplies fall to zero then major processes that require tiny amounts of rare earths (like Yttria and turbine construction) could be completely halted with serious fallout.
The American government should carefully choose what industries it would like to support. Commodity factories that have little-to-no profits, like solar cells, seem unattractive. There are many more jobs in installing solar than there are in manufacturing it, after all.
On the other hand, sectors with a much larger existing domestic industry, such as wind turbines and especially automobiles, should not be left to wither. But rather than a tariff wall to protect them, the U.S. auto firms should be encouraged to partner with the leading firms — even if those firms are Chinese — to build joint ventures in the American heartland, so that they and the American people can participate in the EV shift.
But the core of real climate realism for the United States is not about new factories. It’s about playing to our strengths. The United States has the best finance and technology sectors in the world, and these should be used to help decarbonize at home and around the world. This climate realism agenda can come in left- and right-wing flavors. A leftist vision is likely state-led with designs, guides, and plans, while the right-wing vision relies on markets.
Take Texas. On May 7, 2020, the Texas grid set a record with 21.4 gigawatts of renewable electricity generation. Just five years later, that figure hit 41.9 gigawatts. Solar and batteries have exploded on the grid, with capacity hitting 30 gigawatts and 10 gigawatts respectively. They have grown so rapidly because of the state’s market-based system, with its low barriers to interconnection and competitive dynamics.
Of course, not every location is blessed with as much wind, sun, and open space as Texas. But there’s no reason why its market systems can’t be a template for other states and countries. This, too, is industrial policy — not just the factory workers building the technologies or even the installers deploying them. There is lots of work for the lawyers and power systems engineers and advertisers and policy analysts and bankers and consultants, as well.
Yet instead of seizing these real chances to push climate action forward at home and abroad, the Trump administration is eviscerating American state capacity, the rule of law, and global trust in the government. The whipsawing of Trump’s tariffs generates uncertainty that undercuts investment. The destruction of government support for scientific exploration hits at the next-generation moonshots that Sivaram is so enamored of, as well as the institutions that educate our citizens and train our workforce. Trump’s blatant disregard for court orders and his regime’s cronyism undercut belief in the rule of law, and that investments will rise and fall based on their economics rather than how close they are to the President.
But it’s not just Trump. Texas legislators are on the verge of destroying the golden goose of cheap electricity through rapid renewables deployment out of a desire to own the libs. Despite the huge economic returns to rural communities that have seen so much utility-scale expansion in the state, some Republican legislators are pushing bills that would stick their fingers into the electricity market pie, undercutting the renewable expansion and mandating expensive gas expansion.
The Trump business coalition, which was mostly vibes in the first place, is fracturing. There are conflicting interests between those who want to fight inflation and those who see low oil prices as a problem. Pushing down oil prices by pressuring OPEC+ to pump more crude and depressing global economic outlooks with the trade war (Degrowth Donald!) has hurt the frackers in Texas. Ironically, one way to lower their costs is to electrify operations, so they don’t have to rely on expensive diesel.
Climate change is here, but so is Donald Trump. Ignoring either one is a recipe for disaster as they both create destructive whirlwinds and traffic in uncertainty. The real solution to both is mitigation — doing everything possible today to stop as much of the damage as possible before it happens.
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The state quietly refreshed its cap and trade program, revamped how it funds wildfire cleanup, and reorganized its grid governance — plus offered some relief on gas prices.
California is in the trenches. The state has pioneered ambitious climate policy in the United States for more than two decades, and each time the legislature takes up the issue, the question is not whether to expand and refine its strategy, but how to do so in a politically and economically sustainable way.
With cost of living on everyone’s minds — California has some of the highest energy costs in the country — affordability drove this year’s policy negotiations. After a bruising legislative session, however, California emerged in late September with six climate bills signed into law that attempt to balance decarbonization with cost-reduction measures — an outcome that caught many climate advocates off guard.
“It was definitely touch and go whether this was all going to come together,” Victoria Rome, the director of California government affairs for the Natural Resources Defense Council, told me. “It was a lot of complicated policy to put forward in a relatively short time frame.”
The package reauthorizes California’s signature cap and trade program, rebranded as “cap and invest,” with a slight tweak that will help lower electricity bills. It clears a major hurdle to creating a more integrated Western electricity market that has the potential to deliver cleaner energy throughout the region at lower cost. It replenishes a rapidly diminishing wildfire fund that ensures utilities don’t go belly-up when they’re found liable for wildfires — and offsets the cost to customers by limiting how much of the cost of transmission upgrades utilities are allowed to pass on. And lastly — and most controversially — in an attempt to stabilize gasoline prices, it streamlines approval of new oil wells in Kern County, California.
Not everyone was happy with the compromise. The Center for Biological Diversity condemned the oil and gas bill, while environmental justice advocates were angry that lawmakers did not do more to protect low-income communities in the reform of cap and trade. It also remains to be seen how much the cost containment measures will help. Some of them, like the new Western electricity market, likely won’t pay off for many years. The cap and trade extension could ultimately exacerbate costs.
A few other groundbreaking climate-related bills are still sitting on Newsom’s desk, such as one that would set a safe maximum indoor temperature, requiring landlords to provide cooling to tenants, and another that would override local zoning rules to allow taller, denser housing to be built near public transit. He has until next Monday to sign them. But even without those, the package illustrates how California Democrats are at least trying to leverage the new politics of affordability to advance their climate goals, and the ways in which the two are difficult to align.
Here’s a breakdown of the major changes.
California’s cap and trade program is the state’s centerpiece climate policy. It puts a price on pollution by requiring dirty industries to buy and retire state-auctioned “allowances” for every ton of carbon they emit, with a declining amount of allowances released into the market each year. Funds raised through allowance sales are funneled into utility bill credits for consumers as well as climate-friendly projects throughout the state.
Prior to last month’s legislation, the program was only authorized to continue through 2030, and the closer that date got, the greater the uncertainty became about whether it would continue. According to one analysis, that uncertainty cost the state $3.6 billion in revenues over the year ending in May 2025 as companies relied on allowances they’d stocked up on in previous years, when they were cheaper and more plentiful. If the program was going to expire in 2030, there was less incentive to collect more — or to invest in emission-reducing solutions like replacing their boilers with industrial heat pumps.
The legislature extended cap and trade through 2045, rebranding as “cap and invest” — a more politically resonant title originating in Washington State that highlights the revenue-raising aspect of the program. It also introduced several key reforms. By 2031, earnings from the program reserved for utility credits will go exclusively toward electric bill savings, i.e. it will no longer subsidize residential gas. “The general idea was that almost every gas customer is an electric customer,” Danny Cullenward, a California-based climate economist and lawyer, told me. “And so if you shift the same total dollars from gas and electric to just electric, you concentrate the benefits on the electric side, which supports building decarbonization, but you don’t take any dollars away from the customer.”
California has the highest electric rates in the continental U.S., and so right now, switching from using natural gas to all-electric appliances is not in everyone’s best interest. Providing more relief on the electric side will help with that — especially as the price of allowances increases in the coming years, translating into more revenue to fund bill credits. The legislation also directs electric utilities to apply the credits over the summer, when bills are highest, rather than on the twice-a-year schedule they used previously.
The other major reform has to do with the way carbon offsets are integrated into the program. Previously, companies could purchase offsets instead of allowances to account for a certain amount of their emissions, giving them a cheaper way to comply. Now, every time a company retires an offset instead of an allowance, the state will also retire an allowance. This is an implicit recognition by lawmakers that carbon offsets haven’t been effective at reducing emissions, Cullenward told me.
While he called the extension of cap and invest a “profound and important accomplishment,” Cullenward also raised major concerns about its future impacts on affordability. The program literally puts a price on carbon, after all, and that price is now set to rise, pervading much of California’s economy, from the pump to the cost of goods and services. “Outside of my hope that this will be a net benefit for electric utility ratepayers, which I think is a very good and positive thing, this is not an affordability bill,” he told me.
Lawmakers have done nothing to mitigate the program’s effect on gasoline and diesel costs, he pointed out. They also haven’t addressed the elephant in the room — a $95 price ceiling on allowances that, if they ever get there, may be politically untenable. (Right now prices are around $30.) State regulators now have a chance to revise the price ceiling, Cullenward said, ideally with an eye toward balancing ambition with consumer cost impacts. “That’s the main part of the work that is completely not yet done,” he said.
Energy nerds throughout the West have been scheming to unite its disparate grids for years. Unlike the entire eastern half of the country, where utilities buy and sell energy across state lines in competitive markets on both a daily and realtime basis, and work together to plan transmission upgrades throughout their territories, most Western states do all of their energy trading through longer-term bilateral contracts.
After years of failed efforts to change that, lawmakers have finally given California’s grid operator their blessing to work with other states in the region on creating such a market. Proponents argue that more competition and coordination between utilities in the West will create efficiencies that save money, improve reliability, and accelerate decarbonization. For example, California, which often produces more solar energy than it can use during the day, would be able to sell more of that power to other states. When there’s a heat wave coming, it’ll have more supply to draw from.
To be clear, California was already working on all this prior to last month’s legislation. The state’s grid operator launched a realtime electricity trading market in 2014, which now has 21 utility participants throughout the West. Next year it will launch an extended day-ahead market, enabling utilities to buy power about a week in advance of when they’ll need it. That will initially have just two participants, PacifiCorp and Portland General Electric, with five others planning to join in later years.
But seven companies does not a competitive market make. To grow to its fullest potential, the day-ahead market will need many more participants. That was always going to be a tough sell so long as California was in charge, Vijay Satyal, the deputy director of regional markets at the nonprofit Western Resource Advocates, told me. CAISO, California’s grid operator, is overseen by a governor-appointed board, “which is one reason why the larger West never wanted to be part of CAISO, if the governance and decision making would be controlled by the governor of one state,” he said.
An effort is already underway between state officials, utilities, and other stakeholders, including those from California, to create an independently-governed Western Energy Market called the West-Wide Governance Pathways Initiative. The new legislation grants CAISO permission to transition governance of its realtime and day-ahead markets to the organization that comes out of that effort — as long as the group meets certain requirements around transparency and engagement with state leadership.
“Now there’s opportunity for all the utilities across the West to come together and for clean energy developers to be part of a larger market and be transparent, independent, and not controlled by one state’s policies,” Satyal told me. The other advantage of having this regional organization is that it can engage in more coordinated transmission planning — another potential cost-saving measure.
Wildfires have been a huge part of California’s electricity affordability crisis. Case in point: Since 2019, Californians have had to pay an extra fee on top of their electric bills that goes into a state Wildfire Fund to help utilities cover post-wildfire loss and damage claims — a sort of insurance mechanism to prevent utility insolvency.
This year, lawmakers were under pressure to add more money to the pot. Experts worried that without another infusion, payments related to January’s Eaton Fire in Los Angeles, which the U.S. Department of Justice alleges was caused by faulty utility equipment, would deplete much of what’s left.
The legislature extended the fee, adding $18 billion to the Wildfire Fund that will be split evenly between ratepayers and utility shareholders over the next decade. But it also passed several measures that will help offset that cost by minimizing future rate increases. First, utilities will be prohibited from earning a profit on the first $6 billion they spend on wildfire mitigation projects, such as burying power lines, starting next year. Companies will be required to finance this spending more cheaply through ratepayer-backed bonds rather than through equity, which commands a higher rate of return.
On top of that, the legislature directed the governor’s office to create a “Transmission Infrastructure Accelerator,” a program that will develop public financing options for new transmission lines, such as low-cost loans, revenue bonds, or even partial public ownership of the projects. The program will have a dedicated “Revolving Fund” that will be replenished each year with a portion of cap and invest revenue.
“It is the largest electricity affordability measure in the whole package,” Sam Uden, the co-founder and managing director for the nonprofit policy shop Net Zero California, told me — to the tune of $3 billion in savings per year once the new lines are constructed, according to an analysis his group commissioned.
Gavin Newsom has not necessarily been a friend to the oil industry. He’s instituted distance requirements for new oil wells barring drilling near homes and schools, and given local jurisdictions more authority over drilling. But gasoline prices — ever a political issue in California — have tested his resolve. The price at the pump in California has averaged around a dollar higher than the rest of the U.S. for the past several years, and that margin has crept up closer to $1.30 this year. After two of the state’s refineries announced they would close this year and next, threatening to drive prices higher, Newsom backed a bill this session to increase oil production in Kern County.
Uden of Net Zero California justified the bill as a “short term measure.” The provisions that streamline drilling permits only apply through 2036. “We are really trying to grapple with what is a very difficult transition,” he told me. “We’ve got to phase down oil, but we can’t do it in a way that just spikes gas prices.”
It’s unclear, however, whether more drilling in Kern County will do much to address the problem — especially if the cap and invest program continues to drive up prices, as Cullenward fears. At least to date, the state’s high gasoline prices have not been caused by a lack of gasoline supply, according to University of California, Berkeley, economist Severin Borenstein. The bigger factors driving price increases are taxes and environmental fees and the special blend of gasoline required by the state’s air quality regulators.
What will drive prices up are refinery closures. Lawmakers are making a bet that increased in-state oil production will prevent further closures by giving refineries access to cheaper crude. But Borenstein notes that the state will continue to rely on crude imports, meaning the price of gasoline will still be tied to the global market. His preferred solution to keep prices in check is to remove barriers to importing more refined gasoline.
“The longer run challenge is to balance refining supply and demand, which oil production doesn’t address,” Borenstein wrote.
Michael Wara, a senior research scholar at Stanford University’s Woods Institute for the Environment, agreed on the urgency of opening a new import terminal. He told me he saw the Kern County bill as a way to buy time. “We’ve done the kind of stopgap measure. The increased permits will help stabilize Northern California refineries for probably a couple years,” he said. “But if we don’t use that couple of years in the right way, then we will be in big trouble.”
Wara also wasn’t too worried about the measure creating some kind of oil Renaissance. “Permits are one thing. The decision to actually drill a well is an economic decision that’s going to be driven by oil prices, which are pretty low right now. I don’t think anybody thinks that handing out more permits is going to stem the decline in that industry.”
On stronger uranium, Elon Musk’s big gamble, and Japan’s offshore headwinds
Current conditions: A warm front coming from the Southwest is raising temperatures up to 30 degrees Fahrenheit above average across the Upper Midwest • A heat wave nearly 200 miles north of Montreal in La Tuque, Quebec, is sending temperatures to nearly 80 degrees today • Typhoon Matmo has made landfall in southern China, forcing thousands to evacuate amid peak holiday season.
The United States’ beleaguered offshore-wind industry has found a new ally in its effort to fend off President Donald Trump’s assault: Big Oil. On Sunday, the Financial Times published an interview with Shell’s top executive in the U.S., in which she called the administration’s decision to halt permitting on seaborne turbines “very damaging” to investment and warned that a future Democratic president could use the precedent Trump set to attack the oil and gas industry. “However far the pendulum swings one way, it’s likely that it’s going to swing just as far the other way,” Colette Hirstius, president of Shell USA, told the newspaper when asked about the Trump administration’s stop-work orders on offshore wind farms. “I certainly would like to see those projects that have been permitted in the past continue to be developed. Similarly, if you think of the business I run offshore [Gulf of Mexico], that type of permitting uncertainty has been utilized to undermine the permits that we have in the past — and that’s equally as damaging.”
As I reported last month in this newsletter, a federal judge blocked Trump’s stop-work order on the 80% complete wind farm off Rhode Island’s coast. But the administration’s multi-agency onslaught against the offshore wind industry, which Heatmap’s Jael Holzman called a “total war,” is already taking a toll. Danish wind giant Orsted, for example, was forced to raise money via an unusual offering of new shares — which it then sold at a nearly 70% discount.
The Trump administration said Friday it would delay $2.1 billion in funding for transit projects in Chicago amid negotiations with Democrats in Congress to approve a federal budget. The move comes after Russ Vought, the director of the Office of Management and Budget, announced cuts to major New York City infrastructure projects, in what Heatmap’s Matthew Zeitlin interpreted as Trump’s “seeking retribution from New Yorkers” for the ongoing government shutdown, since Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries both hail from the city.
The Federal Emergency Management Agency, meanwhile, is withholding more than $300 million in emergency preparedness grants from states until they can prove that the population estimates used to calculate the funding awards do not include people who have been deported as part of the administration’s immigration crackdown. A group representing state emergency management agencies called the move “a never-before-seen provision” that amounts to “further delaying resources intended to strengthen disaster preparedness and emergency response,” The New York Times reported Friday.
The Nuclear Regulatory Commission gave fuel giant Urenco’s U.S. subsidiary the green light last week to produce reactor pellets enriched with up to double the normal concentration of uranium-235. This past spring, the utility giant Southern Company made history by loading one of the older reactors at the nation’s most powerful nuclear station in Georgia with what’s known as LEU+, a version of low-enriched uranium that goes beyond the roughly 5% enrichment limit regulators typically set for the fuel. Uranium enriched up to 10% with U-235, the fissile isotope that can produce energy through atom-splitting, leaves behind less waste and can keep a reactor going for longer. In a press release, Urenco said the federal permit to produce LEU+ at its Eunice plant in New Mexico “will create new opportunities for the current U.S. reactor fleet by allowing for longer operating cycles and fewer refueling outages.”
Elon Musk will need to spend at least $18 billion to buy roughly 300,000 more Nvidia microchips to complete his sprawling Memphis data center complex, The Wall Street Journal reported Sunday. The project, called Colossus, has a colossal appetite for electricity. In July, Musk bought a former gas plant in Mississippi. In August, green groups accused xAI of violating federal air pollution rules with its use of gas-fired turbines to power its servers. The federally owned Tennessee Valley Authority’s aggressive push to build more nuclear reactors is often discussed as a means of supplying Musk’s demand with cleaner power, but those projects are still years away from producing electrons.
Over the course of one year, Musk’s xAI has surged to become the second-largest taxpayer in the Tennessee county, after FedEx, as the company burns through cash at what the newspaper called “a breakneck clip.” Earlier this year, xAI raised $10 billion through a combination of debt and equity, and its billionaire founder has turned to his privately held SpaceX to chip in $2 billion. “In typical xAI and Elon fashion, the company’s future is highly unpredictable,” Dylan Patel, chief executive of the semiconductor and artificial intelligence research firm SemiAnalysis, told the Journal. “Elon will do everything he can to not lose to Sam Altman.” He’s struggling. On Monday morning, Altman’s OpenAI inked a deal to buy chips from AMD, just weeks after signing a $100 billion agreement with Nvidia, The New York Times reported.
Japan last week “delayed indefinitely” an auction to set government funding levels for offshore wind projects in what Bloomberg called “the latest blow to the country’s push to expand renewable energy supplies.” The Ministry of Economy, Trade and Industry put the auction, which had been scheduled to start on October 14 and run for two weeks, on hold to give officials time to reassess the effects of higher interest rates and rising material costs. In August, Japanese industrial giant Mitsubishi Corp. announced its withdrawal from several projects won via a previous auction, citing escalating construction costs.
Scientists have long wondered when and how otophysans, the supergroup of fish that accounts for two-thirds of all freshwater fish and includes catfish, carps, and tetras, evolved to live outside saltwater oceans. A fossil of a tiny fish found in southwestern Alberta has provided some answers. The four-centimeter specimen from the Late Cretaceous period — between 100.5 million and 66 million years ago, when the iconic Tyrannosaurus Rex lived — showed the distinct first four vertebrae that otophysans evolved to transmit vibrations to the ear from the swim bladder. The discovery of the species, named Acronichthys maccognoi, “fills a gap in our record of the otophysans supergroup,” Neil Banerjee, a Western University scientist and co-author of the study, said in a press release. “It is the oldest North America member of the group and provides incredible data to help document the origin and early evolution of so many freshwater fish living today.”
Republicans have blamed Democrats for unleashing Russ Vought on federal spending. But it doesn’t take much to see a bigger plan at work.
Russ Vought, the director of the Office of Management and Budget, has been waiting for this moment his whole adult life — or that’s what President Trump and the Republican Congressional leadership would like you to believe. As they put it, Vought is a fanatical budget cutter who, once unleashed, cannot be controlled. Who knows what he’ll cut if the Democrats continue to keep the government shut down?
Substantial staffing cuts that go beyond the typical shutdown furloughs are “the risk of shutting down the government and handing the keys to Russ Vought,” Senate Majority Leader John Thune told Politico on Thursday. “We don’t control what he’s going to do.”
House Speaker Mike Johnson told reporters Thursday morning that Democrats “have now, effectively, turned off the legislative branch,” and have “turned it over to the executive.”
“I have a meeting today with Russ Vought, he of PROJECT 2025 Fame, to determine which of the many Democrat Agencies, most of which are a political SCAM, he recommends to be cut, and whether or not those cuts will be temporary or permanent,” Trump wrote Thursday on Truth Social. “I can’t believe the Radical Left Democrats gave me this unprecedented opportunity.”
In short, any cuts — even ones some Republicans might find distasteful — are the Democrats’ fault, according to Republican leadership.
This is not the first time we’ve seen an eager budget cutter ascend to power in this administration. Let’s take a moment to flash back to the very first days and months of Trump’s second presidency, when young staffers from Elon Musk’s Department of Government Efficiency were marching into government offices, demanding data and deleting programs.
Though he operated at the time with the full support of the president and spurred on by the enthusiasm of his supporters, Musk quickly ran into conflict with the people actually running the departments he had essentially appointed himself to oversee.
Musk and Treasury Secretary Scott Bessent got into “a heated shouting match in earshot of President Trump and other officials in the White House,” according to Axios, over leadership of the IRS. Musk and Secretary of State Marco Rubio got into an argument in front of Trump, The New York Times reported, when Musk accused Rubio of not firing enough people. Transportation Secretary Sean Duffy has gone public with his own account of a dispute with Musk over who had the authority to make staffing decisions in the Transportation Department, during which Duffy insisted that “we are not going to fire air traffic controllers,” he told the New York Post in August.
Musk also stirred up conflict with Vought himself. The Times reported that the OMB director “could barely contain his frustration” when Musk’s team exceeded his own plans for federal staffing cuts.
Bessent, Rubio, Duffy, and Vought are all still around. Musk is not. The cabinet secretaries and congressional leadership wrested back their prerogatives over federal spending and staffing, and some staffers that were let go have been hired back.
But the shutdown threatens to introduce a volatile new dynamic, in which another aggressive budget cutter in the highest echelons of the government — in this case, Vought — gets the upper hand without the intra-party blowback.
That’s because unlike Musk, the space entrepreneur and car manufacturer who had only recently become a Republican, Vought is a career conservative, whose command of the levers of power has been honed over years of experience in government. This may be Vought’s moment to make permanent changes in the size and structure of the federal government — or at least credibly threaten to do so — with particular attention to programs he views as a “cartel” between Congress and the federal bureaucracy, as well as spending programs that tend to advance progressive ends, including mitigating or preventing climate change.
Vought has been teeing up dramatic budget cuts and aggressive defunding maneuvers since the first Trump administration — it was his move to delay aid to Ukraine that resulted in Trump’s first impeachment. He then spent his four years in exile from power at a think tank he founded, expanding on his vision of a budgetary process more controlled by the executive branch.
But as my colleague Robinson Meyer wrote back in January, during the first Trump administration Vought would regularly draw up budgets that would feature dramatic cuts and then Republicans in Congress would undo them and spending would continue on in a bipartisan manner.
This time, Trump has gotten Voughtier, and Republicans in Congress have gotten more compliant. Vought has already said he wants to take the normally bipartisan appropriations process and turn into a partisan one, in part by letting the president control spending that’s authorized by Congress. Though the president and Republican leadership in Congress might want the public to see a budget director run amok, it’s clear that all of the above relish the prospect of Vought as a kind of wildcard, unleashed with a red pen on the federal budget.
Echoes of Vought’s ideology have made their way into policymaking across branches of government. The White House has already struck some foreign aid programs authorized by Congress, and the Supreme Court recently allowed those cuts to stand. Republicans in Congress passed a rescissions package that cut previously appropriated funding for public broadcasting and other foreign aid. Vought also effectively shuttered the Consumer Financial Protection Bureau, a formerly independent agency, while cuts to the Department of Education have left it a shell of itself.
The cuts Vought has announced so far during the shutdown, including funding for a bunch of clean energy and sustainability projects largely in blue states and transit projects in New York, New Jersey, and Illinois, aren’t entirely shutdown-related. It doesn’t take a tremendous leap to arrive at the idea that they might have been planned all along and timed to punish Democrats.
At least some of the cuts seem to be intended to be permanent and would not revert when the shutdown inevitably ends. Secretary of Energy Chris Wright told CNN on Thursday that the grant cancellation decisions were made by the Department of Energy, and that “projects will not be restored” once the government is funded again.
It remains unclear the full extent of the cuts Vought will attempt to make, and how the judicial process will ultimately handle them. But the prospect of further major cuts — especially in contrast to the Republican offer of a continuing resolution to resolve the spending standoff — has raised eyebrows among at least a few congressional Republicans.
Kevin Cramer, a Republican senator from North Dakota, told Semafor that Vought is “less politically in tune than the president,” and that by using the shutdown to pursue large cuts, Republicans risk ceding the “moral high ground” in the shutdown fight. Susan Collins, the Maine moderate who chairs the Appropriations Committee, has also criticized some legally aggressive cuts.
But most in the majority, especially in leadership, have expressed no problem with Vought’s prospective cuts, or see them purely as something Democrats are responsible for due to failing to vote yes on their continuing resolution. Which could mean the cuts, if they come, could prove more enduring than Musk’s more slapdash efforts.
The shutdown could cement a shift in the balance of power between Vought and figures in the administration or Congress who are more cautious about the slash and burn approach. This may overwhelm any sense of caution from Cabinet secretaries or congressional leaders defending their turf. They’re all still Republicans at the end of the day.