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A year and a half ago, President Biden signed the Inflation Reduction Act, the biggest climate law in American history — and arguably in world history. The law will spend an estimated $500 billion in grants and tax credits to incentivize people and businesses to switch from burning fossil fuels to using cleaner, zero-carbon technologies.
That’s the goal, at least. But is the IRA actually working? Now, 18 months after its passage, we’re starting to be able to answer that question. A new report from a coalition of major energy analysts — including MIT, the Rhodium Group, and our cohost Jesse Jenkins’ lab at Princeton — looks at data from the power and transportation sectors and concludes that yes, the law is starting to decarbonize the American economy.
But it isn’t working in the way many people might expect, because while electric vehicles are on track to meet the IRA’s climate goals, the power sector is not.
That’s the opposite of what you might think from reading the popular press, which has bemoaned an alleged slowdown in new EV sales. But the new report finds that the transportation sector actually came in at the upper end of what modelers expected to see this year. About 9.2% of new cars sold last year in the United States were zero-emissions vehicles; after the IRA passed, modelers had expected EVs to come in anywhere from 8.1 to 9.4% of sales.
But the power sector is lagging behind what modelers had expected to see. While the three groups had projected that 46 to 79 gigawatts of new zero-carbon power would come online last year, only 32.3 gigawatts of new capacity actually did. That is primarily due to a drop in new onshore wind projects, which fell below the installation levels achieved in 2020 and 2021. While solar and batteries continued to go gangbusters, exceeding previous records, they could not make up for the drop in wind. That means that the power sector is not on track to cut emissions 40% by 2030, as compared to 2005 levels, as the bill’s supporters have hoped.
Jesse Jenkins, an energy systems expert and professor at Princeton University, and I dive into the details on the latest episode of Shift Key.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Robinson Meyer: First, let's do the moment of truth. Let’s just first get into the data. So in the power sector, what do we see?
Jesse Jenkins: What we see in the electricity sector is a new record set for zero carbon electricity generation and storage capacity additions. So that's new power plant and battery storage construction.
In aggregate, we saw over 32,000 megawatts or 32 gigawatts of new zero carbon generation and storage added to the U.S. grid in 2023. That's about a 32% increase from the rate in 2022. And it edges out a previous record that we saw in 2021 of about 31.6 gigawatts. So good news is we're setting new record growth rates in total in terms of wind and solar and battery additions.
Unfortunately, that does fall on the lower end of what we were projecting in most of the modeling results. We were looking for, on average, about 46 to 79 gigawatts, so call it 40 to 80 gigawatts on average of additions in 2023 and 2024. We fell short of the low end of that range at 32.3 gigawatts. So unless the pace accelerates substantially in 2024, we're probably going to fall a bit behind schedule in terms of capacity additions.
Meyer: And do we have a sense of what's driving that? Because I think that's a very surprising finding, that we're behind schedule in the power sector, where I think people feel pretty good generally about the pace of decarbonization. Or I think where the common wisdom, at least, is that the pace of decarbonization is like proceeding apace. What's driving this underperformance of the model?
Jenkins: So it's really the difference between solar and wind additions.
The solar sector added about 18.4 gigawatts of capacity in 2023. That's up massively from just about 11 gigawatts in 2022. It's about double what we had seen in 2020, which was kind of our reference when we were doing our modeling as we started the REPEAT project in 2021. And so that's looking encouraging and in fact is running ahead of schedule with the average pace of additions that we saw in REPEAT project results.
Batteries are growing way faster than we expected.
And that helps really make the most of those solar capacity additions because solar and batteries are kind of like peanut butter and jelly, they go together quite well. And that's because solar has this nice, regular daily fluctuation, right? From the sun rising and setting. And that pairs really well with batteries, which today in a way lithium ion batteries are best suited for, you know, only a few hours of storage. So they'll charge for three or four hours in the middle of the day when we've got an abundance of sun. And then they'll discharge in the evening to help meet the evening peak of demand when everybody's coming home from work.
The batteries basically helped shift the solar output from the middle of the day to hit that evening peak. And that's, that's really helpful. Where things are running behind schedule is really in the wind sector, where we only built about half of the peak rate, actually less than half that we've seen historically in 2023. Additions of wind power in 2023 were only about 6.3 gigawatts, and that's down from nearly 15 gigawatts in each of 2020 and 2021.
So that's a step backwards at a time when we should be smashing new record growth rates across all of these sectors. And that's giving me the biggest concern as we look at in the next couple of years.
Meyer: And that's, I mean, last show we talked about offshore wind and the troubles in offshore wind and how it seems like some big offshore wind projects that we thought might be coming online in the middle of this decade might not be coming online till the end of the decade. But when we talk about wind underperforming in terms of the whole country over the past year, we're really still talking about onshore wind. This is like big turbines in the middle of the Great Plains, not big turbines off the coast of New York, New Jersey, right?
Jenkins: That's right. Yeah, I think I don't think we had any significant offshore wind capacity additions coming in 2024. You know, most of that we were expecting would come in between 2026 and 2030 or 2035. So this is really a story about onshore wind, where if we look at the economics of onshore wind across the country, there's a tremendous number of sites that look very economic given the incentives provided by the Inflation Reduction Act.
And unfortunately, we're just not building out at the pace that would be economically justified. And that is really an indicator that there are a substantial number of other non-economic frictions or barriers to deployment of wind in particular at the pace that we want to see.
The full transcript is here.
This episode of Shift Key is sponsored by Advanced Energy United, KORE Power, and Yale …
Advanced Energy United educates, engages, and advocates for policies that allow our member companies to compete to power our economy with 100% clean energy, working with decision makers and energy market regulators to achieve this goal. Together, we are united in our mission to accelerate the transition to 100% clean energy in America. Learn more at advancedenergyunited.org/heatmap
KORE Power provides the commercial, industrial, and utility markets with functional solutions that advance the clean energy transition worldwide. KORE Power's technology and manufacturing capabilities provide direct access to next generation battery cells, energy storage systems that scale to grid+, EV power & infrastructure, and intuitive asset management to unlock energy strategies across a myriad of applications. Explore more at korepower.com — the future of clean energy is here.
Build your skills in policy, finance, and clean technology at Yale. Yale’s Financing and Deploying Clean Energy certificate program is a 10-month online certificate program that trains and connects clean energy professionals to catalyze an equitable transition to a clean economy. Connect with Yale’s expertise, grow your professional network, and deepen your impact. Learn more at cbey.yale.edu/certificate.
Music for Shift Key is by Adam Kromelow.
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Talking with Dan Hartinger, the land conservation group’s senior policy director.
This week’s Q&A is with Dan Hartinger, senior policy director for The Wilderness Society, a prominent land conservation organization in D.C. that this week called for a moratorium on data center development on public land. The public statement was relatively scant on details about the group’s stance, and a decade of reporting on policy in Washington has taught me that its positions are quite influential, especially in more traditional outdoor recreation and conservationist circles that are also often bipartisan. So I reached out and asked if someone could further explain the society’s position, and Dan obliged.
The following chat was lightly edited for clarity.
Let’s start at the beginning. What brought The Wilderness Society to make a call for a moratorium against data centers on public lands?
Like many others, we were concerned about news reporting on industrial-scale data centers being proposed on public lands. When we saw the scale of what was proposed – covering tens of thousands of acres of public lands, being pushed through without public input about whether this was an acceptable use of this land – it became clear we needed to hit the brakes and give the public a chance to evaluate this.
Our mission and vision for The Wilderness Society is not on the broader debate about AI data centers. It’s on public lands. Those are a shared resource we need to manage for the benefit of all Americans. We need to be careful not to sacrifice those for poorly understood impacts from the data center boom.
You called for Congress to do this during the lame duck session. Why call for this now?
We think this is urgently needed now. If we allow public lands to be sacrificed for a data center boom, we could very well never get them back, so we think it’s urgently necessary a moratorium is enacted. We’d love to see the administration institute a moratorium, and we’re rightly skeptical given what boosters they’ve been. It really just kind of leaves it in the hands of Congress.
There’s legislation introduced by Rep. Rashida Tlaib to institute a moratorium on data centers on federal lands, including Interior, Department of Defense, and Energy property. Do you support that bill?
We don’t have any expertise on Department of Energy or Department of Defense lands. I know Sen. Ron Wyden introduced a bill recently to ban data centers on public land managed by the Agriculture and Interior Departments. Our focus right now is on calling for a moratorium. When you’re contemplating a novel industrial use, the public needs time to understand.
Your call doesn’t include the Department of Energy or Defense lands?
We’re not national security experts. We haven’t waded in on whether there are some limited use cases where maybe there’s national security reasons, I guess.
So you want this to happen in a lame duck, when right now the likeliest thing Congress debates is instead building things faster through permitting reform. Does your organization have any stance on the impacts that the permitting reform effort underway in Congress could have regarding data centers on public lands?
We’re still wading through our stance on the [Senate] bill. I don’t know I have much to share on that. We’re concerned about some of the impacts that bill could have on public lands, but there’s also a whole lot of other factors from that bill to weigh.
Talking to folks who are more public about their stances on the bill, and looking at the set of projects even preliminarily underway on federal lands, it’s hard to imagine that changing NEPA and other environmental laws makes things on public lands go slower. I understand you’re still figuring out where you as an organization stand on the bill, but can you speak to the current state of infrastructure development on federal land and changes the administration has made to permitting?
I think through the lens of data centers, narrowly, all of the project reviews and approvals – which is a limited number – have been attempted without additional NEPA analysis. We saw with the Townsite project in Nevada, they tried to claim a solar farm was essentially the same as a data center. There have been authorizations for data centers’ geotechnical surveys approved through categorical exclusions under NEPA.
Certainly, we’re seeing the administration in every single possible opportunity eliminate or shortcut public input and review, and the permitting bill certainly seems to be pointing further in that direction.
The whole rush for speed-to-power over the next few years makes the rest of the Trump administration, should the permitting reform bill become law, feel more important. How does that timing weigh on your organization as you approach the lame duck session? You’re calling for a moratorium on data centers on public lands as we approach a conversation about whether to make it easier to build on federal lands.
That’s why we’re calling for a moratorium eyes open. It’s an uphill push. But if you look at the backlash happening, a lot of it is because the public is concerned these are being pushed forward with very little transparency, or regardless of whether the public supports them, and often done through mechanisms that hide the scale and scope of their impacts. That’s one of the big motivators behind seeking a moratorium. Because this is proceeding so fast, it’s even more essential we pump the brakes and give the public a chance for input.
What do you want to see come after a moratorium? What are the appropriate safeguards? Or do you just not want to see these projects on Interior land?
There are fundamental questions we need answered, including whether the BLM has clear authority to permit and authorize these large projects on public lands. They haven’t answered sufficient questions about that. There’s also the question of the public’s view on this. We don’t want to pre-suppose what the future post moratorium will look like.
There’s just this huge, novel use case, and the public needs to weigh in. If they’re ever given a chance to actually say something, all the polling we’ve seen says the public doesn’t want these on public lands at all. And so, we hope this is also a conversation about what we want for our public lands generally.
Plus more of the week’s biggest development fights.
1. Central Michigan – I regret to inform you of this back-and-forth between candidates running for Congress and a would-be constituent because it’s a warning sign for the renewable energy sector (and sort of broke my brain).
2. Doña Ana County, New Mexico – I suggest you pay closer attention to the federal permitting fight playing out over Oracle’s Project Jupiter.
3. Phoenix, Arizona – Does anyone want to tell me what happened to the Lava Run wind and solar Project?
4. Nashville, Tennessee – Data center developer DC Blox is hitting a roadblock in Nashville. Let’s hope it doesn’t turn into a legal zoo.
The Senate’s compromise bill enters the chat at a moment when federal land and anti-pipeline advocates are already quite activated.
The AI data center backlash is getting louder in D.C. ahead of the midterms – and it’s poised to collide head-on with the new permitting reform deal being negotiated in Congress.
This week, major environmental advocacy organizations are taking large public steps to lean in on the data center fight. The League of Conservation Voters and Natural Resources Defense Council, I’ve been told, are imminently announcing a $250,000 ad buy in the Washington, D.C. market focused entirely on decrying fossil fuel-powered data centers and Trump administration policies to speed up their construction. The Wilderness Society, a prominent land conservation organization, announced it now supports a moratorium against data centers on “public lands” focused on the roughly half billion acres under the Interior Department’s stewardship. And Earthjustice on Thursday did a detailed report claiming that 80% of the data centers under development “bringing their own power” are going to rely on gas generation.
“We are trying to reach a D.C. audience and add to the conversation on data centers,” Sara Chieffo, LCV’s head of government affairs, told me of the ad buy. “We’re at a time when there have been no regulations passed at the federal level on Big Tech, or data centers, and we have communities from very many different backgrounds, across the political spectrum, really shouting for enforceable safeguards to be put in place for data center development. For their pocket book, for air and water, and for having a say in what their actual communities look like.”
In a vacuum, all of this action would feel normal – what environmental organization isn’t focused on data centers right now? And if this much fossil fuel is going to be burned in the name of computing, why wouldn’t these groups be focused so intently on the problem?
But there’s another wrinkle: It’s impossible to ignore the elephantesque permitting debate in the room, given any progress on a bill would undoubtedly help data centers with any kind of federal nexus, as well as some of the large fossil power infrastructure they’re demanding.
Last week, we all learned of the Bipartisan American Affordability and Jobs Act, or BAAJA, which would radically change federal permitting for essentially all large infrastructure projects with a federal nexus. The bill, negotiated by top Republicans and Democrats in the U.S. Senate, aims to expedite bureaucratic review processes for industrial projects with any presence on federal lands, water pollution risk covered under the Clean Water Act, and/or potential impacts to federally-protected species habitat and historic sites. Many of these changes, like significantly narrowing claims under the National Environmental Policy Act, could mean quicker permitting decisions from the federal government; other policies in the bill, like a truncated statute of limitations for lawsuits, could mean developers avoid significant and costly litigation risk as they apply for federal permits.
There’s a lot to potentially love in this bill for decarb hawks – transmission reforms and permitting certainty, among other things. But the bill is incredibly divisive, especially amongst those interested in seeing renewable energy boosted without undue compromise for fossil fuel development and preserving the existing legal framework for protecting the environment through litigation. So controversial is this bill that all of the organizations I’ve mentioned – LCV, Sierra Club, NRDC, Wilderness Society, Earthjustice – have so far eschewed explicit formal statements opposing the bill, instead expressing caution about air and water impacts while saying they need more time to review it and speak with lawmakers.
It’s clear though the environmentalist community wants people to think about data centers as debate on the bill approaches. Those who publicly oppose the bill at this moment say its enactment under the current administration would fully unlock federal acreage for the worst incarnation of an unfettered fossil-powered data center boom. “In any permutation, this bill is a good thing for data centers,” said Brett Hartl, director of government affairs for Center for Biological Diversity. After the bill was introduced, an organizing call between environmentalists leaked revealing discussions on how to stop it from gaining traction. One idea raised, per a transcript of the call published by Punchbowl News, was leaning heavily into talking about AI data center permitting.
I asked Chieffo if the LCV ad buy was related to the permitting debate in D.C. She told me it was in the works before senators introduced the bipartisan permitting deal last week. “This is a longstanding focus of ours, to make sure the buildout of data centers do not perpetuate dirty energy or exacerbate the climate crisis,” she told me. Then I asked, if this isn’t about the permitting bill, but it is about federal policy about approving data centers, then how do AI data centers play into the conversation around permitting reform? Do you see the AI data center conversation playing a role in the permitting reform debate?
“The way I would answer that is, well, there are equities and impacts that permitting reform has on the ability to build data centers in this country. And there’s a much larger conversation that should be happening – and isn’t yet happening – around fully holding data centers and Big Tech accountable for their environmental and consumer impacts, safety, and broader regulation. It’s a much bigger conversation than just permitting conversations,” Chieffo told me.
Then she added something else: “The provisions in conversation right now in the Senate do not cover the full suite of what we believe we need to see to hold data centers accountable and address the environmental impacts, let alone the other impacts folks are concerned about with jobs, safety and the rest.”
There’s absolutely a hypothetical risk that enacting such sweeping permitting legislation could enable a faster fossil-powered AI data center buildout, particularly in two ways: federal land development and easier pipeline permits.
We know that President Trump’s executive order encouraging data centers on federal land has led to interest in developing large projects on Interior Department acreage in Arizona, Idaho, Nevada, Oregon, and Utah. How many of these projects are serious is unclear, partially because the federal land permitting process is opaque, and also due to some permitting applications gleaning more early-stage speculation than a commitment (see: Clearway’s reversal on this project). At least some of this development would be powered by gas, as we’ve previously covered.
There’s also the pipelines. We’ve previously covered how the bill’s changes to the Clean Water Act would take away a provision under the law previously cited by Democratic governors to block pipeline expansions, while limiting state and tribe authority under the law to cite impacts other than direct water discharges when rejecting or blocking permits. In the name of project certainty, the bill would also enshrine protections against approval revocation for all kinds of energy facilities, including pipelines. Many of the pipelines under development today are capacity expansions and not explicitly for data centers, and many of them may be approved regardless of whether BAAJA becomes law. But it’s almost impossible to divorce new gas projects from the data center industry’s fortunes, given climbing demand.
Advocates for decarbonizing the U.S. economy who support the bill say the legislation offers a safer trade-off than critics suggest. They put forward that most data center development is not on federal lands, rendering much of the actual AI infrastructure outside the scope of the bill’s impacts. In addition, they argue there are potential upsides, like the bill’s provisions unlocking new transmission development, expediting interconnection queue processing, and making data center developers pay for new energy grid upgrades, all of which could be good for renewable energy development.
Grayson Flood, a senior fellow at Groundwork Collaborative, told me he believes the bill will actually incentivize more data center developers to hook up to the grid and may result in fewer projects relying on off-grid gas plants constructed purely for operating GPUs. Studies have shown building off-grid can be almost twice as expensive. By reducing barriers to connection, and encouraging new transmission that unlocks renewable energy, Flood said one can easily see a pathway to a cleaner data center sector in the future under the bill.
“At the end of the day, if you want these data centers to be powered by clean, firm capacity, anything from solar and storage to wind and storage to nuclear, geothermal, and hydropower, you’re going to need to have a grid that can bring those sources to the data centers, and right now we really don’t have that,” said Flood, who previously worked as legislative director for Rep. Alexandria Ocasio-Cortez. “At a macro level, we need the bulk power system built out to see the power we want to see, and this bill makes data centers pay more than any other piece of proposed federal legislation to make that happen.”
Where does this leave us? Over the next month, we’ll live through a midterms election cycle chock full of ads activating anti-data center sentiments on both sides of the aisle. Then, right afterwards, the energy sector will pivot its attention span back to Congress and fight to pass a permitting bill that will not primarily benefit data centers, but clearly has upsides its opponents will want to call attention to.
Editor’s note: This story has been updated to correct the organization collaborating on the ad buy with LCV.