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Rob and Jesse assess the climate geopolitics of Trump’s latest trade moves.
Donald Trump has implemented what is easily the most chaotic set of American economic policies in recent memory. First, the U.S. declared a trade war on the entire world, imposing breathtaking tariffs on many of the country’s biggest trading partners. He’s paused that effort — but scaled up punitive tariffs on China, launching what would be the 21st century’s biggest global economic realignment without any apparent plan. Now Trump says that more levies are coming on semiconductors and pharmaceuticals, no matter where we get them.
All of this is a disaster for the U.S. economy — but it’s also ruinous for any potential American role in decarbonization or the fight against climate change. Even more than Trump’s deregulatory actions, his trade war could spell the end of a long-held U.S. decarbonization dream.
On this week’s episode of Shift Key, Rob and Jesse chat about what Trump’s chaotic economic policy could mean for the global fight against climate change. What happens to global decarbonization if the U.S. no longer participates? If the U.S. kills its research sector, what happens next? And could China seize this moment to expand its clean tech sector? Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
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:
Jesse Jenkins: Just to put a pin in the second point you raised, too, on finance — this is such, I think, a critical piece of the potential role, as you said, of the United States and others in influencing development paths in emerging economies. In many cases, the sovereign risks of those markets — the risks related to the potential lack of rule of law or presence of corruption or currency risk and uncertainty or fiscal risk, other things that characterize these environments that, in contrast typically, historically, at least, to the United States and its stability — lead to higher financial costs for everything in these countries, whatever you’re trying to build. And since so many components of the clean energy transition are capital intensive assets — investing in a wind farm, or a solar farm, or manufacturing capacity, or new low-carbon steel production, these all require huge amounts of upfront capital investment.
And so if the U.S. and other international partners can help lower the interest rates and costs of financing that are needed for deployment of these technologies abroad, that has a pretty substantial influence on the actual competitiveness or relative competitiveness of this infrastructure and the ability of emerging economies to afford to deploy it. So that’s one of the kind of key levers that I think is often underappreciated in this stor, and I appreciated that you called that out.
Robinson Meyer: And I would say historically, it’s also something we’ve totally underperformed. It’s a hugely important lever, and it’s also something that Republican and Democratic administrations alike — Republican more than Democratic, but both kinds of administrations have really not contributed enough to the financial cause, here. And so the argument is that the Trump administration, with its broad array of policies, but also with this specific reckless, unplanned, and pretty idiotic trade war that it’s begun in the past two weeks, has undermined all of those advantages for the United States and undermined America’s ability to play any of those roles in a global context.
I would add to all of this that I think there’s another part of the story that I hint at, but don’t go into, which is that obviously the U.S. has withdrawn again from the Paris Agreement, or is in the process of withdrawing again from the Paris Agreement. Beyond Paris alone, climate change is a public problem for the world. It’s a problem of the global public. That’s not the only kind of problem it is — it’s also a developmental problem, as we’ve been discussing. But it is generally higher on the Maslow Hierarchy of Needs for governments than other things they might need to attend to. And so addressing climate change is only possible in a world that is peaceful, rule-following, generally ordered by norms and something approaching laws, rather than a simple imperial prerogative. And of course, the Trump administration’s actions — not only in this trade war, but also over the course of a few months — have been disastrous for that. I think that’s worth stipulating going forward.
Part of what I was trying to do with this piece was, we know that Donald Trump is waging war on the regulatory state. We know that he’s waging war on international climate treaties, and people are very used to thinking about that. But I think understanding this most recent imbecilic action, this trade war that he’s launched against the entire world and then kind of focused on China, also massively undercuts any kind of climate action. And we should be unafraid to say that — at least any kind of climate action that the United States would play a role in.
Music for Shift Key is by Adam Kromelow.
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Rob and Jesse hang with Dig Energy co-founder and CEO Dulcie Madden.
Simply operating America’s buildings uses more than a third of the country’s energy. A major chunk of that is temperature control — keeping the indoors cool in the summer and warm in the winter. Heating eats into families’ budgets and burns a tremendous amount of fuel oil and natural gas. But what if we could heat and cool buildings more efficiently, cleanly, and cheaply?
On this week’s episode of Shift Key, Rob and Jesse talk to Dulcie Madden, the founder and CEO of Dig Energy, a New Hampshire-based startup that is trying to lower the cost of digging geothermal wells scaled to serve a single structure. Dig makes small rigs that can drill boreholes for ground source heat pumps — a technology that uses the bedrock’s ambient temperature to heat and cool homes and businesses while requiring unbelievably low amounts of energy. Once groundsource wells get built, they consume far less energy than gas furnaces, air conditioners, or even air-dependent heat pumps.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University. Jesse is an adviser to Dig Energy.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, 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:
Jesse Jenkins: We’ve been throwing a few different terms around here to describe this. We talked about geothermal heating and cooling, ground source heat pumps, geoexchange. There’s a little bit of ambiguity here in the language people used to talk about these things. What’s your favorite way to talk about this product and why?
Dulcie Madden: Ugh.
Jenkins: Or is this just an endless debate that is not resolved?
Madden: It is a great question. It’s a big debate. When I think of geoexchange, just so everyone knows, it’s really about, like, are you able to basically create a larger array, potentially, across buildings, more like exchanging heating and cooling, like both point source and — I think about it more in the context of Princeton, where it’s also across buildings, right? And that starts to move into what some people call a thermal energy network. And so there’s some work there.
There is a lot of back and forth between geothermal heat pump and ground source heat pump, and a lot of people will use them interchangeably. I think that there is technically a differentiation, but I don’t know if there’s a didactic, like, This is what it is. It’s just … you have to be interchangeable.
Jenkins: Yeah, I’m curious, I don’t know what the best marketing term is, what people actually resonate with beyond the technical crowd. I was describing what you guys were doing when you closed your seed series round on X or BlueSky, and somebody jumped into the replies. That’s not geothermal energy, it’s ground source heat pump. And it’s like, okay. And I guess the argument is that, because it’s basically just using it as a source for heat exchange in the heat pump operation as opposed to extracting heating out of the ground — which you can do. I mean, you can just do direct heating from geothermal.
Madden: Right.
Jenkins: Deep geothermal drilling, as well. It’s something that Eavor, which is an Alberta-based deep geothermal company that I advise, as well, is working on their first commercial project in Bavaria. That’s gonna go into a district heating system. So they’re going produce a little bit of power, but a lot of that is just direct heat. But again, they’re drilling, five, six kilometers deep and pulling out heat at high temperatures. And so it’s because it’s kind of back and forth, you’re using this kind of buffer for both heating and cooling. I think that’s why people might push back on the idea that it’s geothermal. But you’re using the heat in the ground.
Mentioned:
TechCrunch: “Geothermal is too expensive, but Dig Energy’s impossibly small drill rig might fix that”
Princeton University’s Geo-Exchange System
Jesse’s downshift; Rob’s downshift.
This episode of Shift Key is sponsored by …
Hydrostor is building the future of energy with Advanced Compressed Air Energy Storage. Delivering clean, reliable power with 500-megawatt facilities sited on 100 acres, Hydrostor’s energy storage projects are transforming the grid and creating thousands of American jobs. Learn more at hydrostor.ca.
A warmer world is here. Now what? Listen to Shocked, from the University of Chicago’s Institute for Climate and Sustainable Growth, and hear journalist Amy Harder and economist Michael Greenstone share new ways of thinking about climate change and cutting-edge solutions. Find it here.
Music for Shift Key is by Adam Kromelow.
Though high costs have become central to the upcoming election, they’re mostly out of the state’s control.
New Jersey suffers from some of the highest and fastest-rising retail electricity prices in the nation, according to Energy Information Administration data. From July 2024 to this year, retail prices exploded by more than 20%. Now, energy policy is at the forefront of the state’s gubernatorial election, in which Democratic nominee Mikie Sherrill has promised to cap electricity rate increases in the course of fighting off a strong challenge from Republican Jack Ciattarelli.
So what did the Garden State do to deserve this? “The short answer is that it’s a variety of factors, including transmission and distribution costs and higher capacity prices, largely driven by data centers,” Abraham Silverman, a research scholar at Johns Hopkins and former New Jersey utility regulator, told me.
New Jersey is a microcosm of how and why electricity prices are rising faster than inflation. The system is expensive to maintain and operate. It exists within an electricity market that has seen some of the fastest data center growth in the country. And it has struggled to bring on new supply quickly.
A lot of this comes down to the electricity market the state is in — PJM Interconnection, the country’s largest grid operator. Over the past two years, the cost of guaranteeing that the grid will be able to meet peak demand has skyrocketed to $16.1 billion, from just $2.2 billion in 2023.
These prices are set at auction, in which generators tell the market how much they’d need to be paid to be around in times when the grid is most in need. “PJM’s capacity market — its primary means of incenting investment in new power plants — has not worked as designed since 2018,”, Silverman testified before the New Jersey legislature in March. (The auctions are supposed to be held annually, but were delayed several times toward the end of the last decade as PJM and the Federal Energy Regulatory Commission reviewed proposed rule changes.)
In February, the New Jersey Board of Public Utilities said that its own auction to procure services from PJM, which follows the prices set in the PJM auction, would result in roughly 20% increases in retail electricity bills. “PJM’s recent capacity auction results are the main driver of these increases,” Christine Guhl-Sadovy, the board’s president said in a statement. In practical terms, that’s about a $20 increase per residential electricity bill on average, according to the non-profit urban planning group the Regional Plan Association.
When Silverman analyzed the components of New Jersey’s electricity price increases, he identified an 8.5% increase in energy prices paid through PJM from 2023 to 2024, a five-fold increase in capacity prices, and transmission costs that had doubled over the previous decade, including a 9% increase in just the previous year.
As for what’s behind those skyrocketing capacity price increases, I’ll give you one guess.
“Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices,” PJM’s independent market monitor said in a report on the 2024 capacity auction, attributing over $9 billion of the increase to the demands on the grid due to data centers.
While much of that data center demand has been in other PJM states like Virginia, Ohio and Pennsylvania, within the service territory for New Jersey’s largest utility, Public Service Electric & Gas, “interconnection inquiries from data centers and other large customers have increased dramatically, from 400 megawatts a year ago to 4,700 megawatts today,” PJM official Jason Stanek said in testimony before the New Jersey State Senate in March. He also referred to “a shrinking supply of energy and capacity,” which was a polite way of saying that PJM has failed to get new resources through its interconnection queue at a pace that matches planned retirements of older, fossil fuel-fired resources. That, “combined with increasing demand, will result in upward pressure on wholesale and retail prices,” Stanek said.
For years, PJM’s auctions, when they happened, were arguably delivering prices that were too low, leaving the market short of capacity as data center construction and interconnection requests boomed, leading prices to shoot up dramatically, shouldering retail ratepayers with rising bills but not quickly resolving the system’s potential reliability issues.
Still, New Jersey is one of 13 states in PJM, but it has seen some of the sharpest electricity increases among that group. In neighboring Pennsylvania, for instance, electricity prices are about a fifth lower and have only risen around 12%.
A major study of recent electricity price increases by the Lawrence Berkeley National Laboratory and the Brattle Group identified New Jersey as an especially severe case — the worst, in fact — even within the dramatic price increases throughout PJM. “New Jersey is experiencing some of the highest price increases of all PJM states in summer of 2025,” the study found.
New Jersey is also exceptionally exposed to natural gas prices. About 60% of its electricity generation comes from natural gas — although that explains more of the price increases in the years immediately following the Russian invasion of Ukraine, and less of the recent price hikes, according to the Lawrence Berkeley and Brattle Group researchers.
New Jersey is the nation’s most population-dense state, but it is also at the mercy of national markets and other states for its power, explained Kyle Mason, an associate planner at the Regional Plan Association.
“A major New Jersey factor is that it’s a net importer,” Mason told me, meaning that the state can’t always satisfy its own demands with home-grown power. “So in times of peak demand, they have to import energy from other states within PJM, and that makes them more reliant on PJM markets, particularly their capacity market,” Mason said.
New Jersey has been working to maintain and expand its existing clean energy generation, including subsidizing nuclear power plants when prices were low and investing in distributed solar power.
But it could do more. Silverman pointed to this in his testimony when he said that “a number of New Jersey-based storage projects have already survived the interconnection gauntlet and could be deployed quickly with the right incentives” — that is, they’ve been approved by PJM but have yet to be built.
New Jersey's offshore wind efforts — which would have provided large amounts of in-state clean generation — have been stymied by a combination of supply chain challenges and Donald Trump. Ciattarelli, the Republican candidate for governor, has said he would ban offshore wind, while both he and Sherrill support more nuclear power.
But even the governor of New Jersey can only do so much. “They are at the mercy of the federal government and the larger PJM body,” Mason said.
It’s an electric vehicle success story, but based on its new future guidance for investors, GM is still getting hammered by the shift in federal policy.
General Motors is on a hot streak with its electric cars. The Chevrolet Equinox EV topped 25,000 in sales during the third quarter of this year, becoming America’s best-selling electric vehicle that’s not a Tesla. The revived Chevy Bolt is due to arrive just after the new year at a starting price under $30,000, and the company promises that more low-cost EVs are on the way. And a variety of new electric offerings have, at the very least, breathed new life and intrigue into the struggling Cadillac brand.
With its Ultium platform helping GM to scale up production of these battery-powered cars, the Detroit giant seems well-positioned among the legacy carmakers to find success in the EV era. Yet last week, GM put out information for investors that predicted a loss of $1.6 billion compared to its previous outlook on the EV market.
Blame chaos. Automakers crave the boring and the predictable. It can take years to tweak the looks or the specs of an existing vehicle, to say nothing of the half-decade or more required to design and build a new car from scratch. With so much time and money on the line, car companies want to know what kind of world will greet their new creations.
But because of the shifting political winds in America, predictability has been hard to come by. Automakers planned and publicized big pushes into electric cars on the assumption that federal policy would continue to move the nation in that direction. They started to move manufacturing into the U.S. to satisfy Biden-era rules for tax credit eligibility. Then they were jerked in the opposite direction by a Trump administration that killed those federal incentives, slapped on haphazard new tariffs that penalize EVs, and got rid of the pollution penalties that nudged carmakers toward a cleaner future.
GM says its newly gloomy outlook is based partly on a decrease in predicted demand. In the absence of federal tax credits that made it more affordable for drivers to choose EVs (gone as of October 1), GM revised down the number of electric cars it expected Americans to buy. As the car market abruptly changes direction — again — GM must change plans to keep up, which means retooling factories to produce fewer EVs and more still-profitable ICE vehicles.
As GM says in its official investor release: “Following recent U.S. government policy changes, including the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations, we expect the adoption rate of EVs to slow. These charges include non-cash impairment and other charges of $1.2 billion as a result of adjustments to our EV capacity.” Another $400 million in estimated losses come from “contract cancellation fees and commercial settlements associated with EV-related investments,” which is how they arrive at the total of $1.6 billion.
The conglomerate says that this bit of bad news won’t affect its current lineups. But its predicament is emblematic of how the car giants find themselves stuck between the past and the future. In China and other nations around the world, EV adoption continues apace, but the established big automakers simply can’t compete there with the rock-bottom prices of Chinese-made EVs. In the West, meanwhile, the new wave of EV antagonism is pushing the industry back toward the fossil fuels that provided their profits in the past — despite the billions they’ve already invested in electrification.
GM is not alone in this, of course. Ford has gone through several rounds of whiplash during its electrification process — first losing billions on its early EVs, then slowing its EV development plans to retreat toward the easy profitability of combustion, before recently unveiling a different vision to make its EVs scalable and affordable. Companies like Hyundai, which tried to win the EV race, find themselves penalized for trying to qualify for the now-dead Biden tax incentives. Those that dragged their feet, like Toyota, are well-positioned to keep making money in this weird moment.
The end result is that for the sake of survival, companies like GM find themselves talking out of both sides of their mouth. At the end of the previous decade, when it looked as though the 2020s would be the era of EVs, GM pledged itself to a zero-emissions future. And while GM has been an EV success story of late, the Detroit giant also has spent enormous amounts to lobby the federal government against clean air regulations whose disappearance would make its combustion sector more profitable.
If there’s a positive sign from GM’s sour note, it is the statement from James Cain, executive director for finance and sales communications, that, regarding its stable of current EVs, “we will build them to demand.” In other words, it’s not as though GM is throwing in the towel — if Americans keep buying electric Cadillacs and Chevys despite the mess of a market, it’ll keep making them. Even if that means changing plans and retooling factories again.