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The president isn’t trying to cut emissions as fast possible. He’s doing something else.
Here’s the problem with President Joe Biden’s climate policy: From a certain point of view, it makes no sense.
Take his electricity policy. At the top level, Biden has committed to eliminating greenhouse-gas pollution from the power sector by 2035. He wants to accomplish this largely by making clean energy cheaper — that’s the goal of the Inflation Reduction Act, of course — and he has also changed federal rules so it’s slightly easier to build power lines and large-scale renewable projects. He has also added teeth to that goal in the form of new Environmental Protection Agency rules cracking down on coal and natural gas.
Yet at the same time, Biden has seemingly also made it more difficult to decarbonize. Last week, he raised tariffs on cheap solar panels and grid-scale batteries made in China. And he ended the two-year “solar bridge,” a tariff exemption for some Chinese-based solar manufacturers that operated in other countries. That means that as soon as next month, some eye-watering tariffs — possibly as high as 254% — could apply to many U.S. solar imports.
Then there’s Biden’s policy on electric cars. The president wants 50% of all new vehicles sold in the U.S. to be EVs or plug-in hybrids by 2030, and he has overseen billions of dollars of spending aimed at building a national charging network. His climate law discounts the price of many EVs by $7,500 and directly subsidizes virtually every battery and vehicle made in America. Yet he recently put 100% tariffs on EV imports from China, the country that makes some of the world’s cheapest and best electric cars.
This combination is, frankly, a little confusing. And it has confounded critics around the world: It can sometimes seem like the president is cutting the cost of clean energy with one hand while raising it with another. “The Biden effect will be to raise the U.S. domestic price of EVs, solar panels and other green inputs and delay America’s energy transition,” writes Edward Luce of the Financial Times. The Economist, in high dudgeon, lectured Biden for forgetting his David Ricardo.
There is certainly much to criticize about Biden’s climate policy, but reading coverage of it, I’m often struck by how little the commentator seems to understand what the policy is trying to do. There is, as Noah Smith and Matt Yglesias have written, a strong national-security component to the tariffs announced last week. But there’s more to these policies than national security alone. Although the president’s actions can sometimes seem contradictory, there is in fact a logic to what Biden is trying to do on climate change. And without defending the policy, I think it is important to describe it accurately.
Let’s back up. For the past 30 years, climate advocates tried to raise the cost of fossil fuels in America by imposing a carbon price. Taxing carbon pollution is the most elegant and economically efficient way to solve climate change, and — at least in theory — it doesn’t require the kind of fine-tuned economic tampering that the Biden administration is engaged in. Or at least that’s what the economists say — I remain skeptical that a carbon tax alone would have succeeded in decarbonizing the economy without additional policy.
And in any case, the point is moot: Climate advocates never succeeded in passing such a price. Voters were understandably resistant to raising the cost of energy, especially gasoline, and no coalition emerged to persuade politicians that the political costs of a carbon tax would be worth bearing. During many of those years, too, the American economy was so understimulated that passing a revenue-raising tax made little political sense: There was effectively no public constituency for deficit reduction.
By 2020, Democrats had largely given up on this approach. Although many still believe that a carbon tax could be an effective decarbonization tool, they instead adopted a new political economic philosophy. Simplified somewhat, it goes something like:
1. The biggest obstacle to passing American climate policy is the lack of a domestic coalition that supports the deep and continued decarbonization of the domestic economy.
2. Passing climate policy has been so hard historically because a powerful and geographically diverse set of companies, unions, state, and local officials, and political donors — largely but not entirely in the fossil fuel industry — don’t want to see the U.S. move away from oil and natural gas. They’re backed up by status-quo-favoring consumers.
3. The central aim of near-term climate policy, then, should be to create an enduring coalition to support the continued decarbonization of the U.S. economy.
This is the guiding logic of Biden’s climate policy: that American politics must have a powerful, durable, and flexible pro-decarbonization coalition if the U.S. is to succeed in reaching net zero. Achieving this coalition is the underlying aim of the IRA, the EPA rules, and — yes — the recent tariffs.
This is what I wish critics understood about the president’s climate strategy: Biden’s strategy won’t have succeeded if the U.S. makes some headway on emissions but imports all of its decarbonization tech from China. The U.S. actually has to develop its own supply chain and manufacturing base to build the kind of deep economic coalition that can sustain long-term decarbonization. This is why trade restrictions have become so central to the administration’s world view.
I should add that for all that the administration emphasizes “good-paying union jobs” in its messaging around climate policy, jobs alone aren’t necessarily the goal of this strategy. Critics of American industrial policy sometimes point out that, even in China, the labor share of manufacturing is falling; indeed, one of China’s great manufacturing advantages is the extent to which it has automated its assembly lines. But that may not necessarily matter to coalition politics: As the political scientist Nina Kelsey has shown in her research on the Montreal Protocol, companies tend to support environmental policy when doing so will help their large-scale, fixed investments — essentially, their factories — not their labor force.
There are big risks to Biden’s strategy. The next administration — which in this moment looks likely to be helmed by Donald Trump — could repeal the production and installation subsidies for renewables but leave the tariffs in place. That would devastate the finances of domestic solar manufacturers and significantly slow down the decarbonization of America’s grid, and it would mean that Americans who want to import cheap solar panels wouldn’t be able to. That would essentially freeze America’s decarbonization effort while the rest of the world races ahead.
Even if Biden wins, the kind of economic management that he’s trying to do may simply not be possible in the federal system — or, for that matter, with the existing Democratic coalition. There may be too many interest groups to placate or too many obstacles to building. California offers a warning about how well-intentioned liberal policy can prevent enough new infrastructure from getting built.
Still a third risk is that the American solar manufacturing industry meets domestic demand but doesn’t become very competitive, so it doesn’t reduce costs aggressively. A relatively small number of firms actually make solar panels in the United States, and they have to compete for engineering talent with more established industries like software. What has brought down the cost of solar in China isn’t subsidies per se, but an intensely competitive and very large domestic market. It isn’t clear that the American market for solar power will attain such scale or efficiency.
These would, obviously, be lasting setbacks for American decarbonization. But even in critiquing this set of policies, I hope the world notes what a different problem America faces when taking on climate change as compared to the rest of the world. Most countries import more oil than they produce, meaning their fossil-fuel addiction shackles their currencies and economies to a volatile global commodity. They are only too happy to move away from fossil fuels, and especially oil, provided that a cheap and acceptable alternative is available. In the United Kingdom, for instance, cross-partisan support for decarbonization policy has existed since the era of Margaret Thatcher.
In the United States, with our oil-drenched politics, the task is different. Only a sufficiently powerful pro-climate coalition will be able to unseat the fossil fuels enthroned atop our economy. Forging this coalition — even if it slows down decarbonization for a few years — is Biden’s true goal. Whether that’s worth it is another story.
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Ecolectro, a maker of electrolyzers, has a new manufacturing deal with Re:Build.
By all outward appearances, the green hydrogen industry is in a state of arrested development. The hype cycle of project announcements stemming from Biden-era policies crashed after those policies took too long to implement. A number of high profile clean hydrogen projects have fallen apart since the start of the year, and deep uncertainty remains about whether the Trump administration will go to bat for the industry or further cripple it.
The picture may not be as bleak as it seems, however. On Wednesday, the green hydrogen startup Ecolectro, which has been quietly developing its technology for more than a decade, came out with a new plan to bring the tech to market. The company announced a partnership with Re:Build Manufacturing, a sort of manufacturing incubator that helps startups optimize their products for U.S. fabrication, to build their first units, design their assembly lines, and eventually begin producing at a commercial scale in a Re:Build-owned factory.
“It is a lot for a startup to create a massive manufacturing facility that’s going to cost hundreds of millions of dollars when they’re pre-revenue,” Jon Gordon, Ecolectro’s chief commercial officer, told me. This contract manufacturing partnership with Re:Build is “massive,” he said, because it means Ecolectro doesn’t have to take on lots of debt to scale. (The companies did not disclose the size of the contract.)
The company expects to begin producing its first electrolyzer units — devices that split water into hydrogen and oxygen using electricity — at Re:Build’s industrial design and fabrication site in Rochester, New York, later this year. If all goes well, it will move production to Re:Build’s high-volume manufacturing facility in New Kensington, Pennsylvania next year.
The number one obstacle to scaling up the production and use of cleaner hydrogen, which could help cut emissions from fertilizer, aviation, steelmaking, and other heavy industries, is the high cost of producing it. Under the Biden administration, Congress passed a suite of policies designed to kick-start the industry, including an $8 billion grant program and a lucrative new tax credit. But Biden only got a small fraction of the grant money out the door, and did not finalize the rules for claiming the tax credit until January. Now, the Trump administration is considering terminating its agreements with some of the grant recipients, and Republicans in Congress might change or kill the tax credit.
Since the start of the year, a $500 million fuel plant in upstate New York, a $400 million manufacturing facility in Michigan, and a $500 million green steel factory in Mississippi, have been cancelled or indefinitely delayed.
The outlook is particularly bad for hydrogen made from water and electricity, often called “green” hydrogen, according to a recent BloombergNEF analysis. Trump’s tariffs could increase the cost of green hydrogen by 14%, or $1 per kilogram, based on tariff announcements as of April 8. More than 70% of the clean hydrogen volumes coming online between now and 2030 are what’s known as “blue” hydrogen, made using natural gas, with carbon capture to eliminate climate pollution. “Blue hydrogen has more demand than green hydrogen, not just because it’s cheaper to produce, but also because there’s a lot less uncertainty around it,” BloombergNEF analyst Payal Kaur said during a presentation at the research firm’s recent summit in New York City. Blue hydrogen companies can take advantage of a tax credit for carbon capture, which Congress is much less likely to scrap than the hydrogen tax credit.
Gordon is intimately familiar with hydrogen’s cost impediments. He came to Ecolectro after four years as co-founder of Universal Hydrogen, a startup building hydrogen-powered planes that shut down last summer after burning through its cash and failing to raise more. By the end, Gordon had become a hydrogen skeptic, he told me. The company had customers interested in its planes, but clean hydrogen fuel was too expensive at $15 to $20 per kilogram. It needed to come in under $2.50 to compete with jet fuel. “Regional aviation customers weren’t going to spend 10 times the ticket price just to fly zero emissions,” he said. “It wasn’t clear to me, and I don’t think it was clear to our prospective investors, how the cost of hydrogen was going to be reduced.” Now, he’s convinced that Ecolectro’s new chemistry is the answer.
Ecolectro started in a lab at Cornell University, where its cofounder and chief science officer Kristina Hugar was doing her PhD research. Hugar developed a new material, a polymer “anion exchange membrane,” that had potential to significantly lower the cost of electrolyzers. Many of the companies making electrolyzers use designs that require expensive and supply-constrained metals like iridium and titanium. Hugar’s membrane makes it possible to use low-cost nickel and steel instead.
The company’s “stack,” the sandwich of an anode, membrane, and cathode that makes up the core of the electrolyzer, costs at least 50% less than the “proton exchange membrane” versions on the market today, according to Gordon. In lab tests, it has achieved more than 70% efficiency, meaning that more than 70% of the electrical energy going into the system is converted into usable chemical energy stored in hydrogen. The industry average is around 61%, according to the Department of Energy.
In addition to using cheaper materials, the company is focused on building electrolyzers that customers can install on-site to eliminate the cost of transporting the fuel. Its first customer was Liberty New York Gas, a natural gas company in Massena, New York, which installed a small, 10-kilowatt electrolyzer in a shipping container directly outside its office as part of a pilot project. Like many natural gas companies, Liberty is testing blending small amounts of hydrogen into its system — in this case, directly into the heating systems it uses in the office building — to evaluate it as an option for lowering emissions across its customer base. The equipment draws electricity from the local electric grid, which, in that region, mostly comes from low-cost hydroelectric power plants.
Taking into account the expected manufacturing cost for a commercial-scale electrolyzer, Ecolectro says that a project paying the same low price for water and power as Liberty would be able to produce hydrogen for less than $2.50 per kilogram — even without subsidies. Through its partnership with Re:Build, the company will produce electrolyzers in the 250- to 500-kilowatt range, as well as in the 1- to 5-megawatt range. It will be announcing a larger 250-kilowatt pilot project later this year, Gordon said.
All of this sounded promising, but what I really wanted to know is who Ecolectro thought its customers were going to be. Demand for clean hydrogen, or the lack thereof, is perhaps the biggest challenge the industry faces to scaling, after cost. Of the roughly 13 million to 15 million tons of clean hydrogen production announced to come online between now and 2030, companies only have offtake agreements for about 2.5 million tons, according to Kaur of BNEF. Most of those agreements are also non-binding, meaning they may not even happen.
Gordon tied companies’ struggle with offtake to their business models of building big, expensive, facilities in remote areas, meaning the hydrogen has to be transported long distances to customers. He said that when he was with Universal Hydrogen, he tried negotiating offtake agreements with some of these big projects, but they were asking customers to commit to 20-year contracts — and to figure out the delivery on their own.
“Right now, where we see the industry is that people want less hydrogen than that,” he said. “So we make it much easier for the customer to adopt by leasing them this unit. They don’t have to pay some enormous capex, and then it’s on site and it’s producing a fair amount of hydrogen for them to engage in pilot studies of blending, or refining, or whatever they’re going to use it for.”
He expects most of the demand to come from industrial customers that already use hydrogen, like fertilizer companies and refineries, that want to switch to a cleaner version of the fuel, or hydrogen-curious companies that want to experiment with blending it into their natural gas burners to reduce their emissions. Demand will also be geographically-limited to places like New York, Washington State, and Texas, that have low-cost electricity available, he said. “I think the opportunity is big, and it’s here, but only if you’re using a product like ours.”
On coal mines, Energy Star, and the EV tax credit
Current conditions: Storms continue to roll through North Texas today, where a home caught fire from a lightning strike earlier this week • Warm, dry days ahead may hinder hotshot crews’ attempts to contain the 1,500-acre Sawlog fire, burning about 40 miles west of Butte, Montana• Severe thunderstorms could move through Rome today on the first day of the papal conclave.
The International Energy Agency published its annual Global Methane Tracker report on Wednesday morning, finding that over 120 million tons of the potent greenhouse gas were emitted by oil, gas, and coal in 2024, close to the record high in 2019. In particular, the research found that coal mines were the second-largest energy sector methane emitter after oil, at 40 million tons — about equivalent to India’s annual carbon dioxide emissions. Abandoned coal mines alone emitted nearly 5 million tons of methane, more than abandoned oil and gas wells at 3 million tons.
“Coal, one of the biggest methane culprits, is still being ignored,” Sabina Assan, the methane analyst at the energy think tank Ember, said in a statement. “There are cost-effective technologies available today, so this is a low-hanging fruit of tackling methane.” Per the IEA report, about 70% of all annual methane emissions from the energy sector “could be avoided with existing technologies,” and “a significant share of abatement measures could pay for themselves within a year.” Around 35 million tons of total methane emissions from fossil fuels “could be avoided at no net cost, based on average energy prices in 2024,” the report goes on. Read the full findings here.
Opportunities to reduce methane emissions in the energy sector, 2024
IEA
The Environmental Protection Agency told staff this week that the division that oversees the Energy Star efficiency certification program for home appliances will be eliminated as part of the Trump administration’s ongoing cuts and reorganization, The Washington Post reports. The Energy Star program, which was created under President George H.W. Bush, has, in the past three decades, helped Americans save more than $500 billion in energy costs by directing them to more efficient appliances, as well as prevented an estimated 4 billion metric tons of greenhouse gas from entering the atmosphere since 1992, according to the government’s numbers. Almost 90% of Americans recognize its blue logo on sight, per The New York Times.
President Trump, however, has taken a personal interest in what he believes are poorly performing shower heads, dishwashers, and other appliances (although, as we’ve fact-checked here at Heatmap, many of his opinions on the issue are outdated or misplaced). In a letter on Tuesday, a large coalition of industry groups including the Air-Conditioning, Heating, and Refrigeration Institute, the Association of Home Appliance Manufacturers, and the U.S. Chamber of Commerce wrote to EPA Administrator Lee Zeldin in defense of Energy Star, arguing it is “an example of an effective non-regulatory program and partnership between the government and the private sector. Eliminating it will not serve the American people.”
House Speaker Mike Johnson suggested that the electric vehicle tax credit may be on its last legs, according to an interview he gave Bloomberg on Tuesday. “I think there is a better chance we kill it than save it,” Johnson said. “But we’ll see how it comes out.” He estimated that House Republicans would reveal their plan for the tax credits later this week. Still, as Bloomberg notes, a potential hangup may be that “many EV factories have been built or are under construction in GOP districts.”
As we’ve covered at Heatmap, President Trump flirted with ending the $7,500 tax credit for EVs throughout his campaign, a move that would mark “a significant setback to the American auto industry’s attempts to make the transition to electric vehicles,” my colleague Robinson Meyer writes. That holds true for all EV makers, including Tesla, the world’s most valuable auto company. However, its CEO, Elon Musk — who holds an influential position within the government — has said he supports the end of the tax credit “because Tesla has more experience building EVs than any other company, [and] it would suffer least from the subsidy’s disappearance.”
Constellation Energy Corp. held its quarterly earnings call on Tuesday, announcing that its operating revenue rose more than 10% in the first three months of the year compared to 2024, beating expectations. Shares climbed 12% after the call, with Chief Executive Officer Joe Dominguez confirming that Constellation’s pending purchase of natural gas and geothermal energy firm Calpine is on track to be completed by the end of the year, and that the nuclear power utility is “working hard to meet the power needs of customers nationwide, including powering the new AI products that Americans increasingly are using in their daily lives and that businesses and government are using to provide better products and services.”
But as my colleague Matthew Zeitlin reported, Dominguez also threw some “lukewarm water on the most aggressive load growth projections,” telling investors that “it’s not hard to conclude that the headlines are inflated.” As Matthew points out, Dominguez also has some reason to downplay expectations, including that “there needs to be massive investment in new power plants,” which could affect the value of Constellation’s existing generation fleet.
The Rockefeller Foundation aims to phase out 60 coal-fired power plants by 2030 by using revenue from carbon credits to cover the costs of closures, the Financial Times reports. The team working on the initiative has identified 1,000 plants in developing countries that would be eligible for the program under its methodology.
Rob and Jesse go deep on the electricity machine.
Last week, more than 50 million people across mainland Spain and Portugal suffered a blackout that lasted more than 10 hours and shuttered stores, halted trains, and dealt more than $1 billion in economic damage. At least eight deaths have been attributed to the power outage.
Almost immediately, some commentators blamed the blackout on the large share of renewables on the Iberian peninsula’s power grid. Are they right? How does the number of big, heavy, spinning objects on the grid affect grid operators’ ability to keep the lights on?
On this week’s episode of Shift Key, Jesse and Rob dive into what may have caused the Iberian blackout — as well as how grid operators manage supply and demand, voltage and frequency, and renewables and thermal resources, and operate the continent-spanning machine that is the power grid. 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.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
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Here is an excerpt from our conversation:
Robinson Meyer: So a number of people started saying, oh, this was actually caused because there wasn’t enough inertia on the grid — that Spain kind of flew too close to the sun, let’s say, and had too many instantaneous resources that are metered by inverters and not by these large mechanical generators attached to its grid. Some issue happened and it wasn’t able to maintain the frequency of its grid as needed. How likely do you think that is?
Jesse Jenkins: So I don’t think it’s plausible as the precipitating event, the initial thing that started to drive the grid towards collapse. I would say it did contribute once the Iberian grid disconnected from France.
So let me break that down: When Spain and Portugal are connected to the rest of the continental European grid, there’s an enormous amount of inertia in that system because it doesn’t actually matter what’s going on just in Spain. They’re connected to this continen- scale grid, and so as the frequency drops there, it drops a little bit in France, and it drops a little bit in Latvia and all the generators across Europe are contributing to that balance. So there was a surplus of inertia across Europe at the time.
Once the system in Iberia disconnected from France, though, now it’s operating on its own as an actual island, and there it has very little inertia because the system operator only scheduled a couple thousand megawatts of conventional thermal units of gas power plants and nuclear. And so it had a very high penetration on the peninsula of non-inertia-based resources like solar and wind. And so whatever is happening up to that point, once the grid disconnected, it certainly lacked enough inertia to recover at that point from the kind of cascading events. But it doesn’t seem like a lack of inertia contributed to the initial precipitating event.
Something — we don’t know what yet — caused two generators to simultaneously disconnect. And we know that we’ve observed oscillation in the frequency, meaning something happened to disturb the frequency in Spain before all this happened. And we don’t know exactly what that disturbance was.
There could have been a lot of different things. It could have been a sudden surge of wind or solar generation. That’s possible. It could have been something going wrong with the control system that manages the automatic response to changes in frequency — they were measuring the wrong thing, and they started to speed up or slow down, or something went wrong. That happened in the past, in the case of a generator in Florida that turned on and tried to synchronize with the grid and got its controls wrong, and that causes caused oscillations of the frequency that propagated all through the Eastern Interconnection — as far away as North Dakota, which is like 2,000 miles away, you know? So these things happen. Sometimes thermal generators screw up.
Music for Shift Key is by Adam Kromelow.