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Rob and guest host Jillian Goodman talk atomic politics with Third Way’s Josh Freed.
Over the past two months, the country’s biggest tech companies have announced a flurry of deals with advanced and conventional nuclear companies. At the same time, Democratic candidates running for federal office — including Kamala Harris and a handful of Senate candidates — have touted their support of building new nuclear power plants. Has nuclear’s moment finally arrived?
On this week’s episode of Shift Key, we have Josh Freed, the senior vice president of Third Way’s climate and energy program, discussing why nuclear might be about to boom, why Democrats are embracing nuclear, and whether a Trump administration could derail the investments. This episode of Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jillian Goodman, Heatmap’s deputy editor.
Shift Key co-host Jesse Jenkins, a professor of energy systems engineering at Princeton University, is out this week.
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: There’s a set of conflicting facts, or slightly contradicting pieces of analysis about this that I believe can all be accommodated together, but I’m still trying to understand how they all fit together. Which is at this point, when we look at the sources of power demand growth in the U.S., as we’ve covered on Shift Key, demand for electricity in the U. S. is rising now for the first time in 20 years. It’s a big deal.
When you look at where that demand growth is coming from, very little of it — or not a ton of it — is actually coming from data centers. It’s coming from EVs, it’s coming from new factories, it’s coming from electrification, it’s coming from air conditioning, it’s coming from all these more typical sources of demand growth in the economy — lots of places, by the way, where we want demand to grow. Because part of how we’re going to transition is that we’re going to move people from combusting fossil fuels to using electricity.
The IEA also just said in a report — it’s big global wrap of energy — last week that it was not very concerned about data centers for AI driving energy scarcity because data centers ultimately are only going to use, even in a high-growth situation, they’ll only use as much electricity as desalination plants. And, yeah, these tech companies are acting as if … Microsoft is seemingly acting as if it’s ready to pay between four and five times the market cost for electricity for the next 20 years because of how much it anticipates its power needs going up.
So on the one hand, data centers are not driving electricity demand growth. On the other hand, they do seem to be driving this new set of deals. How do we work that out?
Josh Freed: Yeah, look, I think the first thing: My approach to all of these issues is the reality — having worked in the energy and climate space since 2009 — is that it is a very humbling sector. And whatever assumptions we’re operating under today are going to be proven wildly wrong in a year or two or five years. So the simplest answer is, we just don’t know. And I think that companies like Microsoft and Google and Amazon are looking at the potential need for a significant amount of clean, firm electricity in specific parts of the grid, and saying, Let’s get ahead of this and ensure that as we’re planning, we have clean electricity in the right places, built at roughly the timeframe we expect need to escalate significantly, so that we have certainty for planning purposes.
And in some cases there’s, I think, also the expectation that there is enough electricity demand growth, both domestically and in other advanced or rapidly modernizing economies, that being a partner with an advanced nuclear company or another company that is going to be able to provide a lot more electricity is a win-win for them.
This episode of Shift Key is sponsored by …
Watershed’s climate data engine helps companies measure and reduce their emissions, turning the data they already have into an audit-ready carbon footprint backed by the latest climate science. Get the sustainability data you need in weeks, not months. Learn more at watershed.com.
As a global leader in PV and ESS solutions, Sungrow invests heavily in research and development, constantly pushing the boundaries of solar and battery inverter technology. Discover why Sungrow is the essential component of the clean energy transition by visiting sungrowpower.com.
Intersolar & Energy Storage North America is the premier U.S.-based conference and trade show focused on solar, energy storage, and EV charging infrastructure. To learn more, visit intersolar.us.
Music for Shift Key is by Adam Kromelow.
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White House policy might not even be the biggest issue.
If you look at the polls, the presidential election — now exactly two weeks away — is very close. If you listen to the prognosticators, Trump has a slight edge. And if you look at the markets, whether prediction markets or Wall Street, Trump’s chances are looking pretty good, with a sweep of the White House and both houses of Congress now firmly on the table.
“Politics prediction market data have tilted toward a win by former President Trump, and markets have responded in line with this development,” Morgan Stanley analyst Michael Wilson wrote in a note to clients Monday. “Such an outcome should now be taken seriously,” wrote Jefferies global head of equity strategy Christopher Wood in a separate note last week.
And seriously is exactly how the market appears to be taking it, with a range of assets now seeming to be pricing in a Trump victory. Yields on Treasury bonds are also rising, which may be because traders see fewer interest rate cuts coming in a more inflationary Trump economy fueled by tax cuts, spending, and an icing of tariffs on top. Gold and Bitcoin prices have risen in the past month as well.
But what about the clean energy economy? Trump often speaks critically of the Inflation Reduction Act, clean energy in general, and wind energy in particular. With Republicans in control of Congress, those sentiments are more likely to be be turned into policy ... of some kind.
For investors in clean energy companies, Trump's improving odds make for nervous times. In the initial days after a Trump victory, as the reality solidifies, you’ll likely see some big price swings. Eight years ago, on Wednesday, November 9, 2016, an exchange traded fund that tracks around 100 clean energy stock called iShares Global Clean Energy, which is used as a benchmark for the industry as a whole, fell almost 5%, even as stocks overall jumped. In 2020, the fund rose more than 6.5% percent between close on election day and the following Monday, after networks had called the race for Joe Biden.
“I think stocks will trade on sentiment” following a win in either direction, Maheep Mandloi, an analyst at Mizuho, told me. “We’ll probably see that knee-jerk reaction.”
The iShares fund has been falling recently, dropping from $14.77 on September 27, when Kamala Harris peaked at 58.1% in Nate Silver’s polling models, to 47% on Monday, when Trump’s probability to win reached 52.7%.
“Renewables underperformed last week,” Mandloi wrote in a note to clients on Tuesday, with the iShares ETF down compared to the S&P 500 index. That sluggishness mostly came from solar stocks, particularly residential companies like Sunnova, Sunrun, Enphase, and Solaredge — “likely due to election, concerns” Mandloi added.
The fall has been even more dramatic for companies more exposed to Trump’s particular (dis)taste in energy, namely wind. U.S.-traded shares in Vestas, the Danish wind turbine manufacturer, have fallen over 16% since Harris peaked in the forecasts last month through Monday.
But a number of analysts are more sanguine about the fate of the IRA and the clean energy economy it has fostered. For one, the politics of repeal might not hold up in a Trumpified Washington. In August, 18 House Republicans in competitive districts wrote a letter to House Speaker Mike Johnson asking him not to target the clean energy tax credits at the core of the law. These same House Republicans have supported Johnson’s speakership where he’s taken flack from the body’s most conservative members, so this is hardly a constituency he can afford to ignore.
Even if a reconciliation bill passed next year were to scrap some or all of the IRA’s clean energy tax credits, the Internal Revenue Service could — as it has in the past when tax credits were about to expire — write rules that allow projects to claim the credits for years to come, Mandloi told me.
In any case, people in the tax credit market don’t seem to think the IRA tax credits are particularly at risk. “Political uncertainty has slowed the development of some industries,” analysts at LevelTen, a clean energy financial infrastructure company, wrote in a report last week. “It it hasn’t stopped the tax credit market from growing.” They assigned a low likelihood to a complete gutting of the IRA, noting that “there is bipartisan support for the investments catalyzed by the IRA across the nation.”
While it's possible that the bipartisan enthusiasm for investments stemming from the Inflation Reduction Act could protect much of the bill, the parts of the bill that directly support manufacturers may be the safest, namely the advanced manufacturing tax credit that has been especially popular in the solar industry.
These credits have been complemented by aggressive trade policy as well. Some of Trump’s earliest tariffs were on solar panels, and the Biden administration has also tried to protect the domestic solar manufacturing industry from “overproduction” in China and Southeast Asia. First Solar has thrown itself into domestic manufacturing with the wind of the Inflation Reduction Act’s manufacturing tax credits at its back. Bonuses for solar developers whose systems are made up of “domestic content” have helped, as well.
Morningstar analyst Brett Castelli wrote to investors a note last month acknowledging the risk to solar stocks from a change in White House party control. First Solar specifically, however, “would likely benefit from proposed trade policies, such as higher tariffs, under a Republican administration.”
The company’s stock is up 14% so far this year through Monday, although it has dipped as Harris has dipped in election forecast. The Invesco Solar ETF, which tracks the broad solar industry, is down 13% on the year.
“First Solar is unique in our view in the fact that it is relatively indifferent regardless of outcome,” Castelli told me this week. It’s helped by sheer size. “They have the largest U.S. presence for manufacturing solar panels here, domestically,” he said. “The biggest competitive threat to those factories would be cheap imports from China or Southeast Asia.”
But while the renewable energy industry is always at the risk of public policy shifts, for good and for ill, there’s another, harder to predict and harder to tame factor: interest rates.
Despite the spigot from Washington due to the IRA, many renewables companies have not been doing great in the stock market in recent years, and high interest rates are likely the reason why.
For renewables, most of the cost comes from simply building the thing. The “fuel,” whether it be photons or wind, is free. This means that renewables projects are highly sensitive to the price of the borrowed money they need for construction. While the Federal Reserve has finally begun to cut rates and anticipates continuing doing so through the end of next year, it’s by no means something it’s mandated to do, especially if there's a major change in fiscal policy going forward.
Predicting the path of interest rates is something people get paid far, far more than journalists’ salaries to do, and they’re often wrong. That being said, it’s not hard to see a world where a sizable Trump win keeps rates elevated.
As president, he showed zero appetite for fiscal restraint, and going into round two has indicated a desire for sizable tax cuts and almost nothing specific for any large scale cuts in spending, policy preferences that may be more likely to be indulged in a Washington under unified Republican control. “Interest Rates Will Be Higher in the Future, Especially if Trump Is President,” the Wall Street Journal declared earlier this month.
The “downside scenario” for stocks envisioned by Jonathan Golub, chief U.S. equity strategist at UBS investment bank, largely follows this scenario. “A combination of fiscal and monetary stimulus causes a reacceleration in inflation, forcing the Fed to abandon their rate cut plans,” he wrote to clients earlier this month. Clean energy could be hardest hit, no matter what happens to the IRA.
On critical minerals, climate voters, and EV battery recycling
Current conditions: Tropical Storm Trami is taking aim at the Philippines • Heavy downpours triggered severe flooding in South Africa’s Eastern Cape • The southern Alaskan mainland is bracing for a major storm system that is expected to bring high winds and flooding.
There could be between 5 million and 19 million tons of lithium underground in southwest Arkansas, according to a new study from the United States Geological Survey. Researchers said that even the low-end of this estimate “would meet projected 2030 world demand for lithium in car batteries nine times over.” Lithium, of course, is a critical mineral for the energy transition, and demand is expected to grow in coming years. Most lithium is produced in Australia and South America, and then processed in China. “The potential for increased U.S. production to replace imports has implications for employment, manufacturing, and supply-chain resilience,” said USGS director David Applegate.
The Smackover Formation in Arkansas could hold vast lithium reserves.USGS
The Supreme Court yesterday agreed to take on a handful of cases that could determine which federal courts can hear challenges to Environmental Protection Agency rules. The move “could undercut the nation’s top environmental regulator by opening the door to industry groups and Republican-led states seeking to challenge certain EPA rules in more favorable courts,” explainedE&E News. The Clean Air Act stipulates that legal challenges to national EPA rules must go through the D.C. Court of Appeals, which leans liberal. But if lawsuits go through regional courts, they may have more favorable outcomes for groups challenging things like pollution laws. The Supreme Court decision is expected by next summer.
Nearly 50,000 first-time climate voters have already cast ballots in the 2024 U.S. presidential election, according to the nonpartisan nonprofit Environmental Voter Project. By examining early voting data, the group determined that climate voters are turning out at higher rates than the general electorate in key swing states like Pennsylvania, North Carolina, and Nevada. The one exception EVP found is Georgia, where climate voters are underperforming in early voting. “Early voting is not predictive of overall turnout, and so I never get too excited or too despondent from the data,” EVP founder and executive director Nathaniel Stinnett told Heatmap. “But what we can see is that in 18 of our 19 states, people who list climate as their number-one priority are early voting at a higher rate than the overall electorate, so I feel really good about that.”
EVP
Sarah Kapnick, previously the National Oceanic and Atmospheric Administration’s chief scientist, is rejoining the JPMorgan Chase as global head of climate advisory, where she will “advise its corporate and investment banking clients on how to navigate the impacts of climate change,” Bloombergreported. Kapnick has worked for JPMorgan Chase before as a senior climate scientist and sustainability strategist for the company’s asset and wealth management business.
Mercedes-Benz yesterday announced the opening of Europe’s first battery recycling plant. The facility, located in Kuppenheim, southern Germany, uses an “integrated mechanical-hydrometallurgical process” that the automaker says can recover 96% of used battery materials, such as critical minerals, for recycling into new EV batteries. With this development, Mercedes-Benz is “the first car manufacturer worldwide to close the battery recycling loop with its own in-house facility.”
Alcon Entertainment, the production company behind Blade Runner 2049, is suing Tesla CEO Elon Musk for using AI to create images that look similar to scenes from the film to promote the Cybercab.
Instead of rocket fuel, they’re burning biomass.
Arbor Energy might have the flashiest origin story in cleantech.
After the company’s CEO, Brad Hartwig, left SpaceX in 2018, he attempted to craft the ideal resume for a future astronaut, his dream career. He joined the California Air National Guard, worked as a test pilot at the now-defunct electric aviation startup Kitty Hawk, and participated in volunteer search and rescue missions in the Bay Area, which gave him a front row seat to the devastating effects of wildfires in Northern California.
That experience changed everything. “I decided I actually really like planet Earth,” Hartwig told me, “and I wanted to focus my career instead on preserving it, rather than trying to leave it.” So he rallied a bunch of his former rocket engineer colleagues to repurpose technology they pioneered at SpaceX to build a biomass-fueled, carbon negative power source that’s supposedly about ten times smaller, twice as efficient, and eventually, one-third the cost of the industry standard for this type of plant.
Take that, all you founders humble-bragging about starting in a dingy garage.
“It’s not new science, per se,” Hartwig told me. The goal of this type of tech, called bioenergy with carbon capture and storage, is to combine biomass-based energy generation with carbon dioxide removal to achieve net negative emissions. Sounds like a dream, but actually producing power or heat from this process has so far proven too expensive to really make sense. There are only a few so-called BECCS facilities operating in the U.S. today, and they’re all just ethanol fuel refineries with carbon capture and storage technology tacked on.
But the advances in 3D printing and computer modeling that allowed the SpaceX team to build an increasingly simple and cheap rocket engine have allowed Arbor to move quickly into this new market, Hartwig explained. “A lot of the technology that we had really pioneered over the last decade — in reactor design, combustion devices, turbo machinery, all for rocket propulsion — all that technology has really quite immediate application in this space of biomass conversion and power generation.”
Arbor’s method is poised to be a whole lot sleeker and cheaper than the BECCS plants of today, enabling both more carbon sequestration and actual electricity production, all by utilizing what Hartwig fondly refers to as a “vegetarian rocket engine.” Because there’s no air in space, astronauts have to bring pure oxygen onboard, which the rocket engines use to burn fuel and propel themselves into the stratosphere and beyond. Arbor simply subs out the rocket fuel for biomass. When that biomass is combusted with pure oxygen, the resulting exhaust consists of just CO2 and water. As the exhaust cools, the water condenses out, and what’s left is a stream of pure carbon dioxide that’s ready to be injected deep underground for permanent storage. All of the energy required to operate Arbor’s system is generated by the biomass combustion itself.
“Arbor is the first to bring forward a technology that can provide clean baseload energy in a very compact form,” Clea Kolster, a partner and Head of Science at Lowercarbon Capital told me. Lowercarbon is an investor in Arbor, alongside other climate tech-focused venture capital firms including Gigascale Capital and Voyager Ventures, but the company has not yet disclosed how much it’s raised.
Last month, Arbor signed a deal with Microsoft to deliver 25,000 tons of permanent carbon dioxide removal to the tech giant starting in 2027, when the startup’s first commercial project is expected to come online. As a part of the deal, Arbor will also generate 5 megawatts of clean electricity per year, enough to power about 4,000 U.S. homes. And just a few days ago, the Department of Energy announced that Arbor is one of 11 projects to receive a combined total of $58.5 million to help develop the domestic carbon removal industry.
Arbor’s current plan is to source biomass from forestry waste, much of which is generated by forest thinning operations intended to prevent destructive wildfires. Hartwig told me that for every ton of organic waste, Arbor can produce about one megawatt hour of electricity, which is in line with current efficiency standards, plus about 1.8 tons of carbon removal. “We look at being as efficient, if not a little more efficient than a traditional bioenergy power plant that does not have carbon capture on it,” he explained.
The company’s carbon removal price targets are also extremely competitive — in the $50 to $100 per ton range, Hartwig said. Compare that to something like direct air capture, which today exceeds $600 per ton, or enhanced rock weathering, which is usually upwards of $300 per ton. “The power and carbon removal they can offer comes at prices that meet nearly unlimited demand,”Mike Schroepfer, the founder of Gigascale Capital and former CTO of Meta, told me via email. Arbor benefits from the fact that the electricity it produces and sells can help offset the cost of the carbon removal, and vice versa. So if the company succeeds in hitting its cost and efficiency targets, Hartwig said, this “quickly becomes a case for, why wouldn’t you just deploy these everywhere?”
Initial customers will likely be (no surprise here) the Microsofts, Googles and Metas of the world — hyperscalers with growing data center needs and ambitious emissions targets. “What Arbor unlocks is basically the ability for hyperscalers to stop needing to sacrifice their net zero goals for AI,” Kolster told me. And instead of languishing in the interminable grid interconnection queue, Hartwig said that providing power directly to customers could ensure rapid, early deployment. “We see it as being quicker to power behind-the-meter applications, because you don’t have to go through the process of connecting to the grid,” he told me. Long-term though, he said grid connection will be vital, since Arbor can provide baseload power whereas intermittent renewables cannot.
All of this could serve as a much cheaper alternative, to say, re-opening shuttered nuclear facilities, as Microsoft also recently committed to doing at Three Mile Island. “It’s great, we should be doing that,” Kolster said of this nuclear deal, “but there’s actually a limited pool of options to do that, and unfortunately, there is still community pushback.”
Currently, Arbor is working to build out its pilot plant in San Bernardino, California, which Hartwig told me will turn on this December. And by 2030, the company plans to have its first commercial plant operating at scale, generating 100 megawatts of electricity while removing nearly 2 megatons of CO2 every year. “To put it in perspective: In 2023, the U.S. added roughly 9 gigawatts of gas power to the grid, which generates 18 to 23 megatons of CO2 a year,” Schroepfer wrote to me. So having just one Arbor facility removing 2 megatons would make a real dent. The first plant will be located in Louisiana, where Arbor will also be working with an as-yet-unnamed partner to do the carbon storage.
The company’s carbon credits will be verified with the credit certification platform Isometric, which is also backed by Lowercarbon and thought to have the most stringent standards in the industry. Hartwig told me that Arbor worked hand-in-hand with Isometric to develop the protocol for “biogenic carbon capture and storage,” as the company is the first Isometric-approved supplier to use this standard.
But Hartwig also said that government support hasn’t yet caught up to the tech’s potential. While the Inflation Reduction Act provides direct air capture companies with $180 per ton of carbon dioxide removed, technology such as Arbor’s only qualifies for $85 per ton. It’s not nothing — more than the zero dollars enhanced rock weathering companies such as Lithos or bio-oil sequestration companies such as Charm are getting. “But at the same time, we’re treated the same as if we’re sequestering CO2 emissions from a natural gas plant or a coal plant,” Hartwig told me, as opposed to getting paid for actual CO2 removal.
“I think we are definitely going to need government procurement or involvement to actually hit one, five, 10 gigatons per year of carbon removal,” Hartwig said. Globally, scientists estimate that we’ll need up to 10 gigatons of annual CO2 removal by 2050 in order to limit global warming to 1.5 degrees Celsius. “Even at $100 per ton, 10 gigatons of carbon removal is still a pretty hefty price tag,” Hartwig told me. A $1 trillion price tag, to be exact. “We definitely need more players than just Microsoft.”