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It’s the unofficial start of COP28.
Today marks the start of international climate negotiations in Bonn, Germany that will set the stage for COP28, the much splashier, more decisive U.N. climate meeting in Abu Dhabi this November.
The Bonn talks are an annual affair, something like a prep meeting for the main event. Heads of state don’t typically attend, and the meetings don’t attract crowds of climate activists the way COPs do. But the rest of each country’s team of experts and negotiators will be there to pick up where the previous COP left off and start to hammer out how to continue the progress at the next one.
“This is when the work gets done,” explained Mandy Rambharos, the vice president of global climate cooperation at the Environmental Defense Fund. Rambharos was a negotiator for the South African government for 20 years before joining the U.S. nonprofit. “You get down to the nitty gritty of it, in preparation for further negotiations at COP — the idea being that we should get to as much agreement as we can between the parties.”
The main item on this year’s agenda has a grandiose title — the first global stocktake. As part of the Paris Agreement, countries decided to come together every five years, starting in 2023, to do a comprehensive assessment of how much progress has been made toward its goals on climate mitigation, adaptation, and finance. The Bonn sessions will finish up what’s called the “technical dialogue” on the global stocktake.
“It really is like standing up in front of the class and presenting your homework and getting criticized on it,” said Rambharos. Delegates will discuss what policies they’ve implemented, what emissions reductions or adaptation solutions they’ve achieved, and what can be done to close the gaps.
You may have come across reports from the United Nations or groups like Climate Action Tracker that evaluate just how behind countries are on the Paris Agreement goals every year. Rambharos said the global stocktake is much more granular, with countries reporting not just what they have or haven’t accomplished, but what they need in order to go further. In that sense it could create a more precise picture of the financial and technological needs of developing countries, which are still waiting for the $100 billion per year they were promised by rich countries for climate solutions. Last week, Reuters published an explosive investigation finding that some of the funds distributed thus far have gone to irrelevant projects like chocolate shops, a hotel, and a feature film.
Ultimately, if the Bonn talks are a success, negotiators will leave having identified gaps in implementation, and will be able to bring recommendations to the table at COP28. When the global stocktake officially ends in December, it will hopefully conclude with a new set of goals and decisions about what to do next, said Rambharos. But it could also end with nothing. The outcome will largely be determined by the president of COP28, Sultan Al Jaber of the United Arab Emirates, who will be under pressure to produce concrete results.
Al Jaber, who is also the CEO of the UAE’s state-owned oil company, one of the largest in the world, has been the subject of intense controversy since he was picked for the job. More than 130 members of the European Parliament and U.S. Congress recently issued a joint letter calling for the removal of Al Jaber from the post. He risked “undermining the negotiations,” they wrote.
The Bonn talks will be a litmus test for the UAE and Al Jaber, and some expect it to reveal climate advocates’ worst fears. Germanwatch, an environmental nonprofit based in Bonn, issued a press release Friday warning that the conference is likely to “ring in challenging months of negotiations” where the UAE “will try to massively push its agenda to prolong the oil and gas age.”
The global stocktake is just one of many agenda items in Bonn. Delegates will also be working through next steps on the momentous “loss and damage” agreement reached in Egypt at last year’s COP. Rich countries finally agreed to provide funding to developing countries to cope with the catastrophic climate damages they have already experienced, like the drought in East Africa and the flooding in Pakistan. But there’s still a lot of details to work out, like the amount of funding to be distributed, and when and how and to whom.
The same goes for the carbon trading agreement reached at COP26 in Glasgow. Delegates have yet to nail down a system to make sure that when one country pays another country to plant trees or switch to electric vehicles, for example, those emission reductions are accounted for accurately and are not counted by both parties.
Bonn isn’t the last chance to make progress before COP28, but it is an important benchmark.
“If we don't get a breakthrough at the Bonn session,” said Rhombaros, “then you can be about 80% sure that we will have a really difficult six months in order to achieve something at COP. If we achieve something at COP.”
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Removing the subsidies would be bad enough, but the chaos it would cause in the market is way worse.
In their efforts to persuade Republicans in Congress not to throw wind and solar off a tax credit cliff, clean energy advocates have sometimes made what would appear to be a counterproductive argument: They’ve emphasized that renewables are cheap and easily obtainable.
Take this statement published by Advanced Energy United over the weekend: “By effectively removing tax credits for some of the most affordable and easy-to-build energy resources, Congress is all but guaranteeing that consumers will be burdened with paying more for a less reliable electric grid.”
If I were a fiscal hawk, a fossil fuel lobbyist, or even an average non-climate specialist, I’d take this as further evidence that renewables don’t need tax credits. The problem is that there’s a lot more nuance to the “cheapness” of renewables than snappy statements like this convey.
“Renewables are cheap and they’ve gotten cheaper, but that doesn’t mean they are always the cheapest thing, unsubsidized,” Robbie Orvis, the senior director of modeling and analysis at Energy Innovation, told me back in May at the start of the reconciliation process. Natural gas is still competitive with renewables in a lot of markets — either where it’s less windy or sunny, where natural gas is particularly cheap, or where there are transmission constraints, for example.
Just because natural gas plants might be cheaper to build in those places, however, doesn’t mean they will save customers money in the long run. Utilities pass fuel costs through to customers, and fuel costs can swing dramatically. That’s what happened in 2022 after Russia invaded Ukraine, Europe swore off Russian gas, and the U.S. rushed to fill the supply gap, spiking U.S. natural gas prices and contributing to the largest annual increase in residential electricity spending in decades. Winter storms can also reduce natural gas production, causing prices to shoot up. Wind and solar, of course, do not use conventional fuels. The biggest factor influencing the price of power from renewables is the up-front cost of building them.
That’s not the only benefit that’s not reflected in the price tags of these resources. The Biden administration and previous Congress supported tax credits for wind and solar to achieve the policy goal of reducing planet-warming emissions and pollution that endangers human health. But Orvis argued you don’t even need to talk about climate change or the environment to justify the tax credits.
“We’re not saying let’s go tomorrow to wind, water, and solar,” Orvis said. “We’re saying these bring a lot of benefitsonto the system, and so more of them delivers more of those benefits, and incentives are a good way to do that.” Another benefit Orvis mentioned is energy security — because again, wind and solar don’t rely on globally-traded fuels, which means they’re not subject to the actions of potentially adversarial governments.
Orvis’ colleague, Mike O’Boyle, also raised the point that fossil fuels receive subsidies, too, both inside and outside the tax code. There’s the “intangible drilling costs” deduction, allowing companies to deduct most costs associated with drilling, like labor and site preparation. Smaller producers can also take a “depletion deduction” as they draw down their oil or gas resources. Oil and gas developers also benefit from low royalty rates for drilling on public lands, and frequently evade responsibility to clean up abandoned wells. “I think in many ways, these incentives level the playing field,” O’Boyle said.
When I reached out to some of the clean energy trade groups trying to negotiate a better deal in Trump’s tax bill, many stressed that they were most worried about upending existing deals and were not, in fact, calling for wind and solar to be subsidized indefinitely. “The primary issue here is about the chaos this bill will cause by ripping away current policy overnight,” Abigail Ross Hopper, the CEO of the Solar Energy Industries Association, told me by text message.
The latest version of the bill, introduced late Friday night, would require projects to start construction by 2027 and come online by 2028 to get any credit at all. Projects would also be subject to convoluted foreign sourcing rules that will make them more difficult, if not impossible, to finance. Those that fail the foreign sourcing test would also be taxed.
Harry Godfrey, managing director for Advanced Energy United, emphasized the need for “an orderly phase-out on which businesses can follow through on sound investments that they’ve already made.” The group supports an amendment introduced by Senators Joni Ernst, Lisa Murkowski, and Chuck Grassley on Monday that would phase down the tax credit over the next two years and safe harbor any project that starts construction during that period to enable them to claim the credit regardless of when they begin operating.
“Without these changes, the bill as drafted will retroactively change tax policy on projects in active development and construction, stranding billions in private investment, killing tens of thousands of jobs, and shrinking the supply of new generation precisely when we need it the most,” Advanced Energy United posted on social media.
In the near term, wind and solar may not need tax credits to win over natural gas. Energy demand is rising rapidly, and natural gas turbines are in short supply. Wind and solar may get built simply because they can be deployed more quickly. But without the tax credits, whatever does get built is going to be more expensive, experts say. Trade groups and clean energy experts have also warned that upending the clean energy pipeline will mean ceding the race for AI and advanced manufacturing to China.
Godfrey compared the reconciliation bill’s rapid termination of tax credits to puncturing the hull of a ship making a cross-ocean voyage. You’ll either need a big fix, or a new ship, but “the delay will mean we’re not getting electrons on to the grid as quickly as we need, and the company that was counting on that first ship is left in dire straits, or worse.”
A new subsidy for metallurgical coal won’t help Trump’s energy dominance agenda, but it would help India and China.
Crammed into the Senate’s reconciliation bill alongside more attention-grabbing measures that could cripple the renewables industry in the U.S. is a new provision to amend the Inflation Reduction Act to support metallurgical coal, allowing producers to claim the advanced manufacturing tax credit through 2029. That extension alone could be worth up to $150 million a year for the “beautiful clean coal” industry (as President Trump likes to call it), according to one lobbyist following the bill.
Putting aside the perversity of using a tax credit from a climate change bill to support coal, the provision is a strange one. The Trump administration has made support for coal one of the centerpieces of its “energy dominance” strategy, ordering coal-fired power plants to stay open and issuing a raft of executive orders to bolster the industry. President Trump at one point even suggested that the elite law firms that have signed settlements with the White House over alleged political favoritism could take on coal clients pro bono.
But metallurgical coal is not used for electricity generation, it’s used for steel-making. Moreover, most of the metallurgical coal the U.S. produces gets exported overseas. In other words, cheaper metallurgical coal would do nothing for American energy dominance, but it would help other countries pump up their production of steel, which would then compete with American producers.
The new provision “has American taxpayers pay to send metallurgical coal to China so they can make more dirty steel and dump it on the global market,” Jane Flegal, the former senior director for industrial emissions in the Biden White House, told me.
The U.S. produced 67 million short tons of metallurgical coal in 2023, according to data from the U.S. Energy Information Administration, more than three-quarters of which was shipped abroad. Looking at more recent EIA data, the U.S. exported 57 million tons of metallurgical coal through the first nine months of 2024. The largest recipient was India, the final destination for over 10 million short tons of U.S. metallurgical coal, with almost 9 million going to China. Almost 7 million short tons were exported to Brazil, and over 5 million to the Netherlands.
“Metallurgical coal accounts for approximately 10% of U.S. coal output, and nearly all of it is exported. Thermal coal produced in the United States, by contrast, mostly is consumed domestically,”according to the EIA.
The tax credit comes at a trying time for the metallurgical coal sector. After export prices spiked at $344 per short ton in the second quarter of 2022 following Russia’s invasion of Ukraine (much of Ukraine’s metallurgical coal production occurs in one of its most hotly contested regions), prices fell to $145 at the end of 2024, according to EIA data.
In their most recent quarterly reports, a number of major metallurgical coal producers told investors they wanted to reduce costs “as the industry awaits a reversal of the currently weak metallurgical coal market,” according to S&P Global Commodities Insights, citing low global demand for steel and economic uncertainty.
There was “not a whisper” of the provision before the Senate’s bill was released, according to the lobbyist, who was not authorized to speak publicly. “No one had any inkling this was coming,” they told me.
But it’s been a pleasant surprise to the metallurgical coal industry and its investors.
Alabama-based Warrior Met Coal, which exports nearly all the coal it produces, reported a loss in the first quarter of 2025,blaming “the combination of broad economic uncertainty around global trade, seasonal demand weakness, and ample spot supply is expected to result in continued pressure on steelmaking coal prices.” Its shares were up almost 6% in afternoon trading Monday.
Tennessee-based Alpha Metallurgical Resources reported a $34 million first quarter loss in May, citing “poor market conditions and economic uncertainty caused by shifting tariff and trade policies,” and said it planned to reduce capital expenditures from its previous forecast. Its shares were up almost 7%.
While environmentalists have kept a hawk’s eye on the hefty donations from the oil and gas industry to Trump and other Republicans’ campaign coffers, it appears that the coal industry is the fossil fuel sector getting specific special treatment, despite being far, far smaller. The largest coal companies are worth a few billion dollars; the largest oil and gas companies are worth a few hundred billion.
But coal is very important to a few states — and very important to Donald Trump.
The bituminous coal that has metallurgical properties tends to be mined in Appalachia, with some of the major producers and exporters based in Tennessee and Alabama, or larger companies with mining operations in West Virginia.
One of those, Alliance Resource Partners, shipped almost 6 million tons of coal overseas. Its chief executive, Joseph Craft, andhis wife, Kelly, the former ambassador to the United Nations, are generous Republican donors. Craft was a guest at the White House during the signing ceremony for the coal executive orders.
Representatives of Warrior, Alpha Metallurgical, and Alliance Resources did not respond to a requests for comment.
While coal companies and their employees tend to be loyal Republican donors, the relative small size of the industry puts its financial clout well south of the oil and gas industry, where a single donor like Continental Resources’s Harold Hamm can give over $4 million and the sector as a whole can donate $75 million. This suggests that Trump and the Senate’s attachment to coal has more to do with coal’s specific regional clout, or even the aesthetics of coal mining and burning compared to solar panels and wind turbines.
After all, anyone can donate money, but in Trump’s Washington, only one resource can be beautiful and clean.
Two former Department of Energy staffers argue from experience that severe foreign entity restrictions aren’t the way to reshore America’s clean energy supply chain.
The latest version of Congress’s “One Big, Beautiful Bill” claims to be tough on China. Instead, it penalizes American energy developers and hands China the keys to dominate 21st century energy supply chains and energy-intensive industries like AI.
Republicans are on the verge of enacting a convoluted maze of “foreign entity” restrictions and penalties on U.S. manufacturers and energy companies in the name of excising China from U.S. energy supply chains. We share this goal to end U.S. reliance on Chinese minerals and manufacturing. While at the U.S. Department of Energy and the White House, we worked on numerous efforts to combat China’s grip on energy supply chains. That included developing tough, nuanced and, importantly, workable rules to restrict tax credit eligibility for electric vehicles made using materials from China or Chinese entities — rules that quickly began to shift supply chains away from China and toward the U.S. and our allies.
That experience tells us that the rules in the Republican bill will have the opposite effect. In reality, they will make it much more difficult for U.S. companies to move supply chains away from Chinese control. The GOP’s proposed restrictions require every developer of a critical minerals project, advanced manufacturing facility, or clean energy power plant to sift through their supply chains and contracts for any relationship with a Chinese (or Russian, Iranian, or North Korean) entity. Using a Chinese technology license, or too many subcomponents, or materials produced in China — even if there are few or no alternatives — would be enough to render a company ineligible for the very incentives they need to finance and build new U.S. energy production or manufacturing facilities.
This would put companies in the position of having to prove the absence of Chinese entanglements (and guarantee that there will be none in the future) to qualify for tax credits, an all but impossible task, particularly given the untested set of new rules. Huge portions of the supply chain have flowed through China for decades, including 65% of global lithium processing and 97% of solar wafer manufacturing. American companies are already working to distance themselves from Chinese expertise and components, but the complex, commingled nature of global supply chains and corporate business structures make it infeasible to flip the switch overnight.
On top of that, the latest version of the bill would impose a brand new tax on any new solar and wind projects that have too much foreign entity “assistance,” while providing the Treasury Secretary carte blanche for determining what that might be. The result: An impossible bind, whereby the very sectors that need the most support to disentangle from China are now the ones most penalized by the new Republican “foreign entity” restrictions.
The fact is that China is ahead, not behind, in many energy sectors, and America desperately needs help playing catch-up. Ford’s CEO has called Chinese battery and electric vehicle technologies “an existential threat” to U.S. automaking. In energy supply chains for nuclear, solar, batteries, and critical minerals, China is not merely producing cheap knockoffs of American inventions, it is churning outcutting-edge battery chemistries, advancedmanufacturing processes, and high-speedcharging systems, all at lower cost. And at least until the Inflation Reduction Act enacted incentives for U.S. manufacturing and deployment, the gap between the U.S. and China waswidening.
These untested foreign entity rules will widen that gap once more. Since the start of the year, developers have abandoned more than $14 billion in domestic clean energy deployment and manufacturing projects, citing the uncertain tariff and tax policy environment, and that was before the new tax on solar and wind. New analysis from Energy Innovation finds that the latest version of the bill would reduce U.S. generation capacity by 300 gigawatts over the next decade — multiple times what we will need to power new data centers for artificial intelligence. Stopping clean energy projects in their tracks is also likely to trigger an energy price shock by constraining the very energy technologies that can be built most quickly. In the end we will cede not only our supply chains to China, but also our competitive edge in the race for AI and manufacturing dominance.
Fortunately, we have all the ingredients in this country already to achieve energy leadership. The U.S. boasts deep capital markets, a highly skilled manufacturing and construction workforce, a strong consumer economy driving demand, and, in spite of recent attacks, the world’s greatest universities and national labs. We simply need policy to provide a workable path for companies to invest with certainty, bring factories back to the United States, hire American workers, and learn to produce these technologies at scale.
With the Inflation Reduction Act’s domestic production incentives and supply chain restrictions, hundreds of companies stepped up over the past few years and made that bet, pouring billions of dollars into American supply chains. Should they be enacted, the reconciliation bill’s foreign entity rules would slam the brakes on all that activity, playing right into China’s hands.
There is a way to apply a set of carefully crafted restrictions to wean us off Chinese supply chains, but we cannot afford to saddle American energy with new taxes and red tape. If we scatter rakes across the floor for companies to step on, they will just throw up their hands and send their investments overseas, leaving us more reliant on China than before.