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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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A renewable energy project can only start construction if it can get connected to the grid.
The clock is ticking for clean energy developers. With the signing of the One Big Beautiful Bill Act, wind and solar developers have to start construction (whatever that means) in the next 12 months and be operating no later than the end of 2027 to qualify for federal tax credits.
But projects can only get built if they can get connected to the grid. Those decisions are often out of the hands of state, local, or even federal policymakers, and are instead left up to utilities, independent system operators, or regional trading organizations, which then have to study things like the transmission infrastructure needed for the project before they can grant a project permission to link up.
This process, from requesting interconnection to commercial operation, used to take two years on average as of 2008; by 2023, it took almost five years, according to the National Renewable Energy Laboratory. This creates what we call the interconnection queue, where likely thousands of gigawatts of proposed projects are languishing, unable to start construction. The inability to quickly process these requests adds to the already hefty burden of state, local, and federal permitting and siting — and could mean that developers will be locked out of tax credits regardless of how quickly they move.
There’s no better example of the tension between clean energy goals and the process of getting projects into service than the Mid-Atlantic, home to the 13-state electricity market known as PJM Interconnection. Many states in the region have mandates to substantially decarbonize their electricity systems, whereas PJM is actively seeking to bring new gas-fired generation onto the grid in order to meet its skyrocketing projections of future demand.
This mismatch between current supply and present-and-future demand has led to the price for “capacity” in PJM — i.e. what the grid operator has greed to pay in exchange for the ability to call on generators when they’re most needed — jumping by over $10 billion, leading to utility bill hikes across the system.
“There is definitely tension,” Abe Silverman, a senior research scholar at Johns Hopkins University and former general counsel for New Jersey’s utility regulator, told me.
While Silverman doesn’t think that PJM is “philosophically” opposed to adding new resources, including renewables, to the grid, “they don’t have urgency you might want them to have. It’s a banal problem of administrative competency rather than an agenda to stymie new resources coming on the grid.”
PJM is in the midst of a multiyear project to overhaul its interconnection queue. According to a spokesperson, there are around 44,500 megawatts of proposed projects that have interconnection agreements and could move on to construction. Of these, about I calculated that about 39,000 megawatts are solar, wind, or storage. Another 63,000 megawatts of projects are in the interconnection queue without an agreement, and will be processed by the end of next year, the spokesperson said, likely making it impossible for wind and solar projects to be “placed in service” by 2028.
Even among the projects with agreements, “there probably will be some winnowing of that down,” Mark Repsher, a partner at PA Consulting Group, told me. “My guess is, of that 44,000 megawatts that have interconnection agreements, they may have other challenges getting online in the next two years.”
PJM has attempted to place the blame for project delays largely at the feet of siting, permitting, and operations challenges.
“Some [projects] are moving to construction, but others are feeling the headwinds of siting and permitting challenges and supply chain backlogs,” PJM’s executive vice president of operations, planning, and security Aftab Khan said in a June statement giving an update on interconnection reforms.
And on high prices, PJM has been increasingly open about blaming “premature” retirements of fossil fuel power plants.
In May, PJM said in a statement in response to a Department of Energy order to keep a dual-fuel oil and natural gas plant in Pennsylvania open that it “has repeatedly documented and voiced its concerns over the growing risk of a supply and demand imbalance driven by the confluence of generator retirements and demand growth. Such an imbalance could have serious ramifications for reliability and affordability for consumers.”
Just days earlier, in a statement ahead of a Federal Energy Regulatory Commission conference, PJM CEO Manu Asthana had fretted about “growing resource adequacy concerns” based on demand growth, the cost of building new generation, and, in a direct shot at federal and state policies that encouraged renewables and discouraged fossil fuels, “premature, primarily policy-driven retirements of resources continue to outpace the development of new generation.”
The Trump administration has echoed these worries for the whole nation’s electrical grid, writing in a report issued this week that “if current retirement schedules and incremental additions remain unchanged, most regions will face unacceptable reliability risks.” So has the North American Electric Reliability Corporation, which argued in a 2024 report that most of the U.S. and Canada “faces mounting resource adequacy challenges over the next 10 years as surging demand growth continues and thermal generators announce plans for retirement.”
State officials and clean energy advocates have instead placed the blame for higher costs and impending reliability gaps on PJM’s struggles to connect projects, how the electricity market is designed, and the operator’s perceived coolness towards renewables.
Pennsylvania Governor Josh Shapiro told The New York Times in June that the state should “re-examine” its membership in PJM following last year’s steep price hikes. In February, Virginia Governor Glenn Youngkin wrote a letter calling for Asthana to be fired. (He will leave the transmission organization by the end of the year, although PJM says the decision was made before Youngkin’s letter.)
That conflict will likely only escalate as developers rush to start projects — which they can only do if they can get an interconnection services agreement from PJM.
In contrast to Silverman, Tyson Slocum, director of Public Citizen’s energy program, told me that “PJM, internally and operationally, believes that renewables are a drag on the grid and that dispatchable generation, particularly fossil fuels and nuclear, are essential.”
In May, for instance, PJM announced that it had selected 51 projects for its “Reliability Resource Initiative,” a one-time special process for adding generation to the grid over the next five to six years. The winning bids overwhelmingly involved expanding existing gas-fired plants or building new ones.
The main barrier to getting the projects built that have already worked their way through the queue, Repsher told me, is “primarily permitting.” But even with new barriers thrown up by the OBBBA, “there’s going to be appetite for these, these projects,” thanks to high demand, Repsher said. “It’s really just navigating all the logistical hurdles.”
Some leaders of PJM states are working on the permitting and deployment side of the equation while also criticizing the electricity market. Pennsylvania’s Shapiro has proposed legislation that would set up a centralized state entity to handle siting for energy projects. Maryland Governor Wes Moore signed legislation in May that would accelerate permitting for energy projects, including preempting local regulations for siting solar.
New Jersey, on the other hand, is procuring storage projects directly.
The state has a mandate stemming from its Clean Energy Act of 2018 to add 2,000 megawatts of energy storage by 2030. In June, New Jersey’s utility regulator started a process to procure at least half of that through utility-scale projects, funded through an existing utility-bill-surcharge.
New Jersey regulators described energy storage as “the most significant source of near-term capacity,” citing specifically the fact that storage makes up the “bulk” of proposed energy capacity in New Jersey with interconnection approval from PJM.
While the regulator issued its order before OBBBA passed, the focus on storage ended up being advantageous. The bill treats energy storage far more generously than wind and solar, meaning that New Jersey could potentially expand its generation capacity with projects that are more likely to pencil due to continued access to tax credits. The state is also explicitly working around the interconnection queue, not raging against it: “PJM interconnection delays do not pose a significant obstacle to a Phase 1 transmission-scale storage procurement target of 1,000 MW,” the order said.
In the end, PJM and the states may be stuck together, and their best hope could be finding some way to work together — and they may not have any other choice.
“A well-functioning RTO is the best way to achieve both low rates for consumers and carbon emissions reductions,” Evan Vaughan, the executive director of MAREC Action, a trade group representing Mid-Atlantic solar, wind, and storage developers, told me. “I think governors in PJM understand that, and I think that they’re pushing on PJM.”
“I would characterize the passage of this bill as adding fuel to the fire that was already under states and developers — and even energy offtakers — to get more projects deployed in the region.”
On Neil Jacobs’ confirmation hearing, OBBBA costs, and Saudi Aramco
Current conditions: Temperatures are climbing toward 100 degrees Fahrenheit in central and eastern Texas, complicating recovery efforts after the floods • More than 10,000 people have been evacuated in southwestern China due to flooding from the remnants of Typhoon Danas • Mebane, North Carolina, has less than two days of drinking water left after its water treatment plant sustained damage from Tropical Storm Chantal.
Neil Jacobs, President Trump’s nominee to head the National Oceanic and Atmospheric Administration, fielded questions from the Senate Commerce, Science, and Transportation Committee on Wednesday about how to prevent future catastrophes like the Texas floods, Politico reports. “If confirmed, I want to ensure that staffing weather service offices is a top priority,” Jacobs said, even as the administration has cut more than 2,000 staff positions this year. Jacobs also told senators that he supports the president’s 2026 budget, which would further cut $2.2 billion from NOAA, including funding for the maintenance of weather models that accurately forecast the Texas storms. During the hearing, Jacobs acknowledged that humans have an “influence” on the climate, and said he’d direct NOAA to embrace “new technologies” and partner with industry “to advance global observing systems.”
Jacobs previously served as the acting NOAA administrator from 2019 through the end of Trump’s first term, and is perhaps best remembered for his role in the “Sharpiegate” press conference, in which he modified a map of Hurricane Dorian’s storm track to match Trump’s mistaken claim that it would hit southern Alabama. The NOAA Science Council subsequently investigated Jacobs and found he had violated the organization’s scientific integrity policy.
The Republican budget reconciliation bill could increase household energy costs by $170 per year by 2035 and $353 per year by 2040, according to a new analysis by Evergreen Action, a climate policy group. “Biden-era provisions, now cut by the GOP spending plan, were making it more affordable for families to install solar panels to lower utility bills,” the report found. The law also cut building energy efficiency credits that had helped Americans reduce their bills by an estimated $1,250 per year. Instead, the One Big Beautiful Bill Act will increase wholesale electricity prices almost 75% by 2035, as well as eliminate 760,000 jobs by the end of the decade. Separately, an analysis by the nonpartisan think tank Center for American Progress found that the OBBBA could increase average electricity costs by $110 per household as soon as next year, and up to $200 annually in some states.
EIA
Saudi Arabia’s state-owned oil company Saudi Aramco is in talks with Commonwealth LNG in Louisiana to buy liquified natural gas, Reuters reports. The discussion is reportedly for 2 million tons per year of the facility’s 9.4 million-ton annual export capacity, which would help “cement Aramco’s push into the global LNG market as it accelerates efforts to diversify beyond crude oil exports” and be the “strongest signal yet that Aramco intends to take a material position in the U.S. LNG sector,” OilPrice.com notes. LNG demand is expected to grow 50% globally by 2030, but as my colleague Emily Pontecorvo has reported, President Trump’s tariffs could make it harder for LNG projects still in early development, like Commonwealth, to succeed. “For the moment, U.S. LNG is still interesting,” Anne-Sophie Corbeau, a research scholar focused on natural gas at Columbia University’s Center on Global Energy Policy, told Emily. “But if costs increase too much, maybe people will start to wonder.”
Ford confirmed this week that its $3 billion electric vehicle battery plant in Michigan will still qualify for federal tax credits due to eleventh-hour tweaks to the bill’s language, The New York Times reports. Though Ford had said it would build its factory regardless of what happened to the credits, the company’s executive chairman had previously called them “crucial” to the construction of the facility and the employment of the 1,700 people expected to work there. Ford’s battery plant is located in Michigan’s Calhoun County, which Trump won by a margin of 56%. The last-minute tweaks to save the credits to the benefit of Ford “suggest that at least some Republican lawmakers were aware that cuts in the bill would strike their constituents the hardest,” the Times writes.
Italy and Spain are on track to shutter their last remaining mainland coal power plants in the next several months, marking “a major milestone in Europe’s transition to a predominantly renewables-based power system by 2035,” Beyond Fossil Fuels reported Wednesday. To date, 15 European countries now have coal-free grids following Ireland’s move away from coal in 2025.
Italy is set to complete its transition from coal by the end of the summer with the closure of its last two plants, in keeping with the government’s 2017 phase-out target of 2025. Two coal plants in Sardinia will remain operational until 2028 due to complications with an undersea grid connection cable. In Spain, the nation’s largest coal plant will be entirely converted to fossil gas by the end of the year, while two smaller plants are also on track to shut down in the immediate future. Once they do, Spain’s only coal-power plant will be in the Balearic Islands, with an expected phase-out date of 2030.
“Climate change makes this a battle with a ratchet. There are some things you just can’t come back from. The ratchet has clicked, and there is no return. So it is urgent — it is time for us all to wake up and fight.” — Senator Sheldon Whitehouse of Rhode Island in his 300th climate speech on the Senate floor Wednesday night.
Some of the Loan Programs Office’s signature programs are hollowed-out shells.
With a stroke of President Trump’s Sharpie, the One Big Beautiful Bill Act is now law, stripping the Department of Energy’s Loan Programs Office of much of its lending power. The law rescinds unobligated credit subsidies for a number of the office’s key programs, including portions of the $3.6 billion allocated to the Loan Guarantee Program, $5 billion for the Energy Infrastructure Reinvestment Program, $3 billion for the Advanced Technology Vehicle Manufacturing Program, and $75 million for the Tribal Energy Loan Guarantee Program.
Just three years ago, the Inflation Reduction Act supercharged LPO, originally established in 2005 to help stand up innovative new clean energy technologies that weren’t yet considered bankable for the private sector, expanding its lending authority to roughly $400 billion. While OBBBA leaves much of the office’s theoretical lending authority intact, eliminating credit subsidies means that it no longer really has the tools to make use of those dollars.
Credit subsidies represent the expected cost to the government of providing a loan or a loan guarantee — including the possibility of a default — and thus how much money Congress must set aside to cover these potential losses. So by axing these subsidies, Congress is effectively limiting the amount of lending that the LPO can undertake, given that many third-party lenders would be reluctant to finance riskier, more novel, or larger projects in the absence of federal credit support.
“The LPO is statutorily allowed to take loans on its books to finance these projects in these categories, but it has no credit subsidy by which to take the risk required to do so,” Advait Arun, senior associate of energy finance at the Center for Public Enterprise and a Heatmap contributor, told me.
The particular programs that have been eliminated support new and improved energy technologies, clean energy infrastructure, fuel efficient vehicles, and help native communities access energy project financing. The long-running Loan Guarantee Program and the advanced vehicles program in particular are behind some of the best known LPO efforts, supporting companies such as Tesla, Ford, and NextEra Energy, and projects such as Georgia’s Vogtle nuclear reactors, the Thacker Pass lithium mine, and Shepherd’s Flat, one of the world’s largest wind farms.
The Loan Guarantees Program is “the big Kahuna,” Arun told me. “This is the longest-standing program of the LPO. So to see this defunded is like, you’re decapitating the LPO’s crown jewel.”
The program only has about $11 million left over in credit subsidies, consisting of funding that it received prior to the IRA’s appropriations. That won’t be enough to make any meaningful loans, Arun said, and is more likely to be used to “keep a skeleton crew online” for any remaining administrative tasks.
Then there’s the Energy Infrastructure Reinvestment Program, which the IRA stood up with a whopping $250 billion in lending authority to transition and transform existing fossil fuel infrastructure for clean energy purposes. Now, OBBBA has axed the program’s remaining $5 billion in credit subsidies and replaced it with $1 billion in new subsidies for projects that “retool, repower, repurpose, or replace” existing energy infrastructure, with a focus on expanding capacity and output as opposed to decarbonizing the economy. It also refashioned the program as the predictably-named “Energy Dominance Financing” initiative.
The new-old program — which the law extended through 2028 — no longer requires LPO-funded infrastructure to reduce or sequester emissions, broadening the office’s lending authority to include support for fossil fuel and critical minerals projects. It also adds language encouraging the LPO to “support or enable the provision of known or forecastable electric supply,” which Arun fears is a “backend way of penalizing the addition of renewable energy” on previously developed land.
“Under the Trump administration’s direction, [the LPO] can use that term, ‘known and forecastable,’ to actually just say, well, guess what? Renewables are not known or forecastable because they are intermittent due to the weather,” Arun told me. So while government and private industry were once excited about, say, turning sites originally developed for coal mining or coal ash disposal into solar and battery facilities, those days are probably over.
Carbon capture in particular stands to suffer from this reprogramming, Arun said, explaining that while the Biden LPO saw potential in adding carbon capture to natural gas and coal plants, its current incarnation will no longer allocate funding in any meaningful amount “because reducing emissions is no longer part of the LPO’s mandate.” Some policymakers and clean energy developers had also hoped that excess renewable energy would make it economically feasible to power the production of hydrogen fuel with renewable energy. But with this law — and really each passing day under Trump — a mass buildout of solar and wind seems less and less likely, making it doubtful that green hydrogen will move down the cost curve.
As bleak as this looks, it’s better than it could have been. There was no guarantee that Trump would keep the LPO around at all. Even in this denuded state, the office can still fund the expansion of existing nuclear projects, and perhaps even the buildout of transmission lines or battery projects on brownfield sites, Arun said, depending on how LPO’s leadership ends up interpreting what it means to “increase the capacity output of operating infrastructure.”
But in many ways, what happened with the LPO looks like another instance of the Trump administration picking winners and losers: Yes to clean, firm energy and fossil fuels, no to solar, wind, and electric vehicles.
Take the Advanced Technology Vehicle Manufacturing Program, for example. OBBBA nixed both its credit subsidies and its tens of billions of dollars in lending authority. That’s hardly a surprise, given that the Bush administration created the program in 2007 explicitly to support the domestic development and manufacture of fuel-efficient vehicles and components. But it means that unlike the LPO programs for which lending authority still stands, even if Congress wanted to, it could not redesign the advanced vehicles program to serve a more Trump-aligned purpose. Safer, I suppose, to cut off any opening for funding EVs and hybrids.
The latest LPO rescissions add to the growing list of reasons the private sector has to be wary of the consistently inconsistent landscape for federal funding, Arun told me. He worries that slashing the LPO’s authority at the same time as there’s so much uncertainty around tax credit eligibility will lead some companies to forgo federal funding opportunities altogether.
“We’ll see if private developers even want to play around with the LPO,” Arun told me, “given the uncertainty around the rest of the federal landscape here.”