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What Trump’s victory means for climate policy.
As of early Wednesday morning, Donald Trump seems likely to be re-elected president of the United States, becoming the first commander in chief since Grover Cleveland to serve non-consecutive terms.
Trump’s probable victory has profound implications for America’s economy, security, and leadership in the world. But it will also impact the country’s energy and environmental policy.
During his first term, Trump made his antipathy for climate policy into a centerpiece of his politics, turning the United States into a global pariah on environmental issues. His second term will play out in a different context — one in which the United States has a real climate law on its books, but also where China has seized a commanding lead in many of the most important zero-carbon technologies. That means Trump’s climate decisions will matter to the country’s economic policy in a way that they never did before.
But what will a Trump administration look like? To begin with: Trump’s victory will put climate advocates — and the broader clean energy economy — on defense for the next four years and beyond.
The first few steps taken by the Trump administration are easy to predict. He will pull the United States out of the Paris Agreement, just like he did during the first term; he will approve a new tranche of liquified natural gas export terminals; and he will block and then begin to roll back the Environmental Protection Agency’s climate rules for power plants, cars, and light-duty trucks.
Not all of these rollbacks will make themselves felt at first. The current set of EPA clean car rules, for instance, apply to vehicles sold through model year 2026. That is close enough to the present that automakers have already begun to make the necessary investments to meet those standards. But vehicles sold in the latter half of this decade will likely face much weaker rules or none at all.
Then the bigger climate policy questions will come. First up is whether Trump tries to repeal or otherwise hinder the Inflation Reduction Act, the landmark climate incentives law passed by President Joe Biden. Trump has said that he wants to “terminate” IRA spending, telling the Economic Club of New York that he seeks to “rescind all unspent funds” under the law.
That would — as Trump hopes — set the country and world back in the fight against climate change. But it would also significantly raise taxes on energy companies (and automakers) while hurting Trump’s own voters. The IRA’s hundreds of billions in investments, which are largely tax credits, have overwhelmingly flowed to Republican districts. According to a Washington Post analysis, districts that backed Trump in 2020 have received three times as much IRA funding as those that supported Biden. New factories making EVs, batteries, and solar panels have popped up across purple and red America, including in Georgia, Arizona, and the Sun Belt. That’s why 18 House Republicans have asked Mike Johnson directly not to repeal the law. If Democrats ultimately win the House of Representatives — we will probably not know for some weeks — then Trump will lack the votes to repeal the law outright.
That’s the theory behind the IRA, at least. The climate law, like the Affordable Care Act before it, is meant to protect itself from repeal by tying itself to local economies across the country. Will that theory hold? Will the climate law survive Trump’s first 100 days? Now we will find out.
Even if the law itself stands, Trump may seek other ways to tamper with it. By saying that he might “rescind the [IRA’s] unspent funds,” he is raising the specter of impoundment, the name for when the president delays or refuses to spend funding that Congress has authorized. Impoundment is of dubious legality, and it is regulated by a 1974 law first passed to rein in Richard Nixon, but Trump might nonetheless try to pause some IRA payments for a time. The first impeachment case against him in 2019 concerned his impoundment of defense funding for Ukraine.
Beyond the IRA, though, there are a number of lurking fissures in a second Trump administration’s climate and environmental policy. Trump has ascended to the White House with the assistance of a strange coalition. It includes Elon Musk, an EV and defense contracting billionaire, and Robert F. Kennedy, Jr., an environmental lawyer turned anti-vaccine crusader and roadkill enthusiast. Trump has promised to put Kennedy in charge of public health policy, and Musk is supposedly going to oversee a new Department of Government Efficiency.
These men agree on some policies. But they do not agree on everything, including in the realm of energy policy. Even during his victory speech, Trump jokingly warned Kennedy to “stay away from the liquid gold,” referencing domestic oil production.
Kennedy is also a lifelong opponent of nuclear energy, and one of his greatest career victories is shutting down New York’s nuclear reactor Indian Point. Musk champions nuclear energy and has said shuttering reactors is “total madness.” The likely next vice president, JD Vance, also tacitly supports nuclear. But Trump, who has officially called for the U.S. to build more nuclear reactors, has sounded more skeptical of nuclear energy lately.
Other fault lines risk dividing this cohort. Kennedy has campaigned against the chemical industry. Will he back the buildout of refineries and chemical plants that Trump has promised? Elon Musk has said that repealing the IRA could benefit Tesla by kneecapping its competitors. Yet much of Tesla’s profit comes from selling regulatory credits created by California and the federal government’s climate policies. If Trump repeals those policies, what will happen to Tesla’s profitability? (Will Musk care?)
The backdrop to these disagreements will be the now forever altered geopolitics for climate policy. Eight years ago, when Trump first took office, climate policy was seen as fundamentally limited to the environment — and clean energy was an important but up-and-coming, almost wholesome niche pursuit that Democrats doted upon. Now the stuff of clean energy — renewables, batteries, and EVs — are central to modern economic development and to geopolitics.
China shows why that is. For every step back that Trump takes on climate policy, China will step forward and take more of a global leadership role. Indeed, partly because of Trump’s own policies, China has taken a commanding lead in zero-carbon technologies over the past decade. In particular it now dominates electric vehicle production, producing cheaper and technologically superior models to anything available elsewhere in the world. If America ends its support for EVs, then China will happily take what global market share remains from U.S. automakers — in fact, it is already doing so. As Trump’s White House steers American climate policy for the rest of the 2020s, they will not just be deciding what direction the U.S. will go in — they will be acting with, or against, the rest of the world.
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Last week’s Energy Department grant cancellations included funding for a backup energy system at Valley Children’s Hospital in Madera, California
When the Department of Energy canceled more than 321 grants in an act of apparent retribution against Democrats over the government shutdown, Russ Vought, President Trump’s budget czar, declared that the money represented “Green New Scam funding to fuel the Left's climate agenda.”
At least one of the grants zeroed out last week, however, was supposed to help keep the lights on at a children’s hospital.
The $29 million grant was intended to build a 3.3-megawatt long-duration energy storage system at Valley Children’s Hospital, a large pediatric hospital in Madera, California. The system would “power critical hospital operations during outage events,” such as when the California grid shuts down to avoid starting wildfires, according to project documents.
“The U.S. Department of Energy’s cancellation of funding for [the] long-duration energy storage demonstration grant is disappointing,” Zara Arboleda, a spokesperson for the hospital, told me.
Valley Children’s Hospital is a 358-bed hospital that says it serves more than 1.3 million children across California’s Central Valley. It has 28 neonatal intensive care unit beds and nationally ranked specialties in pediatric neurology, orthopedics, and lung surgery, among others.
Energy Secretary Chris Wright has characterized the more than $7.5 billion in grants canceled last week as part of an ongoing review of financial awards made by the Biden administration. But the timing of the cancellations — and Vought’s gleeful tweets about them — suggests a more vindictive purpose. Republican lawmakers and President Trump himself threatened to unleash Vought as a kind of rogue budget cutter before the federal government shut down last week.
“We don’t control what he’s going to do,” Senator John Thune told Politico last week. “I have a meeting today with Russ Vought, he of PROJECT 2025 Fame, to determine which of the many Democrat Agencies, most of which are a political SCAM, he recommends to be cut,” Trump posted on the same day.
Up until this year, canceling funding that is already under contract with a private party would have been thought to be straightforwardly illegal under federal law. But the Supreme Court’s conservative majority has allowed the Trump administration to act with previously unimaginable freedom while it considers ruling on similar cases.
Faraday Microgrids, the contractor that was due to receive the funding, is already building a microgrid for the hospital. The proposed backup power system — which the grant stipulated should be “non-lithium-ion” — was supposed to be funded by the Energy Department’s Office of Clean Energy Demonstrations, with the goal of finding new ways of storing electricity without using lithium-ion batteries, and was meant to work in concert with that new microgrid and snap on in times of high stress.
That microgrid project is still moving forward, Arboleda, the hospital’s spokesperson, told me. “Valley Children’s Hospital continues to build and soon will operate its microgrid announced in 2023 to ensure our facilities have access to reliable and sustainable energy every minute of every day for our patients and our care providers,” she added. That grid will contain some storage, but not the long-term storage system discussed in the official plan.
Faraday Microgrids, formerly known as Charge Bliss, didn’t respond to a request for comment, but its website touts its ability to secure grants and other government funding for energy projects.
In a statement, a spokesman for the Energy Department said that the grant was canceled because the project wasn’t feasible. “Following an in-depth review of the financial award, it was determined, among other reasons, that the viability of the project was not adequate to warrant further disbursements,” Ben Dietderich, a spokesman for the Energy Department, told me.
The children’s hospital, at least, is in good company. On Tuesday, a Trump administration document obtained by Heatmap News suggested the Energy Department is moving to kill bipartisan-backed funding for two direct air capture hubs in Texas and Louisiana. And although California has lost the most grants of any state, the Energy Department has also sought to terminate funding for new factories and industrial facilities across Republican-governed states.
Rob and Jesse break down China’s electricity generation with UC San Diego’s Michael Davidson.
China announced a new climate commitment under the Paris Agreement at last month’s United Nations General Assembly meeting, pledging to cut its emissions by 7% to 10% by 2035. Many observers were disappointed by the promise, which may not go far enough to forestall 2 degrees Celsius of warming. But the pledge’s conservatism reveals the delicate and shifting politics of China’s grid — and how the country’s central government and its provinces fight over keeping the lights on.
On this week’s episode of Shift Key, Rob and Jesse talk to Michael Davidson, an expert on Chinese electricity and climate policy. He is a professor at the University of California, San Diego, where he holds a joint faculty appointment at the School of Global Policy and Strategy and the Jacobs School of Engineering. He is also a senior associate at the Center for Strategic and International Studies, and he was previously the U.S.-China policy coordinator for the Natural Resources Defense Council.
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, YouTube, or wherever you get your podcasts.
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Here is an excerpt from our conversation:
Robinson Meyer: Your research and other people’s research has revealed that basically, when China started making capacity payments to coal plants, in some cases, it didn’t have the effect on the bottom line of these plants that was hoped for, and also we didn’t really see coal generation go down or change in the year that it happened. It wasn’t like they were paying these plants to stick around and not run. They were basically paying these plants, it seems like, to do the exact same thing they did the year before, but now they also got paid. And maybe that was needed for their economics, we can talk about it.
Why did coal get those payments and not, say, batteries or other sources of spare capacity, like pumped hydro storage, like nuclear? Why did coal, specifically, get payments for capacity? And does it have to do with spinning reserve? Or does it have to do with the political economy of coal in China?
Michael Davidson: When it came out, we said exactly the same thing. We said, okay, this should be a technology neutral payment scheme, and it should be a market, not a payment, right? But China’s building these things up little by little. Over time we’ve seen, historically, actually, a number of systems internationally started with payments before they move to markets because they realize that you could get a lot more competitive pressure with markets.
The capacity payment scheme for coal is extremely simple, right? It says, okay, for each province, we’re going to say what percentage of our benchmark coal investment costs are we going to subsidize. It’s extremely simple. It does not account for how much you’re using it at a plant by plant level. It does not account for other factors, renewables, etc. It’s a very coarse metric. But I wouldn’t say that it had had some, you know, perverse negative effect on the outcome of what coal generation is. Probably more likely is that these payments were seen, for some, as extra support. But then for some that are really hurting, they’re saying, okay, well then we will maybe put up less obstacles to market reforms.
But then on top of that, you have to put in the hourly energy demand growth story and say, okay, well you have all these renewables, but you don’t have enough storage to shift to evening peaks. You are going to rely on coal to meet that given the current rigid dispatch system. And so you’re dispatching them kind of regardless of whether or not you have the payment schemes.
I will say that I was a skeptic, right? Because when people told me that China should put in place a capacity market, I said, China has overcapacity. So if you have an overcapacity situation, you put in place a market, the prices should be zero. So what’s the point? But actually, when you’re looking out ahead with all of this surplus coal capacity that you’re trying to push down, you’re trying to push those capacity factors of those coal plans from 50%, 60%, down to 20% or even lower, they need to have other revenue schemes if you’re not going to dramatically open up your spot markets, which China is very hesitant to do — very risk averse when it comes to the openness of spot markets, in terms of price gaps. So that’s a necessary part of this transition. But it can be done more efficiently, and it should done technology neutral.
And by the way that is happening in certain places. That’s a national scheme, but we actually see that the implementation — for example, Shaanxi province, we have a technology neutral scheme that would include other resources, not just coal.
Mentioned:
China’s new pledge to cut its emissions by 2035
What an ‘ambitious’ 2035 electricity target looks like for China
China’s Clean Energy Pledge is Clouded by Coal, The Wire China
Jesse’s upshift; Rob’s upshift.
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.
A new list of Department of Energy grants slated for termination will hit clean energy and oil majors alike, including Exxon and Chevron.
A new list of Department of Energy grants slated for termination obtained by Heatmap reveals an additional 338 awards for clean energy projects that the agency intends to cancel. Combined with the 321 grants the agency said it was terminating last week, the total value is nearly $24 billion.
While last week’s announcement mostly targeted companies and institutions located in Democratic states, the new list appears to be indiscriminate. Conrad Schneider, the senior U.S. director at Clean Air Task Force, told me in a statement that the move “will have far-reaching consequences — with virtually no region unscathed.”
“The federal government plays an essential role in addressing gaps that stall the commercialization of energy breakthroughs by providing grants and loans to accelerate innovative projects,” he said. “By abruptly canceling funding for several hundred energy projects, the U.S. risks ceding American energy leadership and signals that U.S. innovation is not a priority.”
Some of the most significant new terminations on the list include:
While two of the seven hydrogen hubs — those in California and the Pacific Northwest — were on last week’s cancellations list, all seven have their status listed as “terminate” on this new list. That includes hubs that planned to make hydrogen from natural gas based in Appalachia, the Gulf Coast, Texas, and the Midwest.
Those awards came out of $8 billion allocated by Congress in the IIJA in 2021 to develop hubs where companies and states would work together to produce and test the use of cleaner hydrogen fuel in new industries. The move would hit oil majors in addition to green energy companies. Exxon and Chevron were partners on the Hyvelocity hydrogen hub on the Gulf Coast.
“If the program is dismantled, it could undermine the development of the domestic hydrogen industry,” Rachel Starr, the senior U.S. policy manager for hydrogen and transportation at Clean Air Task Force told me. “The U.S. will risk its leadership position on the global stage, both in terms of exporting a variety of transportation fuels that rely on hydrogen as a feedstock and in terms of technological development as other countries continue to fund and make progress on a variety of hydrogen production pathways and end uses."
The Inflation Reduction Act’s Domestic Manufacturing Conversion Grants, which were meant to support the conversion of shuttered or at-risk auto plants to be able to manufacture electric vehicles and their supply chains, would be fully obliterated based on the new list. All 13 grants that were awarded under the program are there, including $80 million for Blue Bird’s new electric school bus plant in Fort Valley, Georgia, $500 million for General Motors’ Grant River Assembly Plant in Lansing, Michigan, and $285 million for Mercedes-Benz’s next-generation electric van plant in Ladson, South Carolina.
Some of the other projects slated for termination raise questions about other projects from the same grant program that are not on the list. For example, a $45 million grant for the National Rural Electric Cooperative Association to deploy microgrids in seven communities shows up as terminated, along with several other awards made as part of the IIJA’s Energy Improvements in Rural or Remote Areas program. Grants for indigenous tribes in Alaska, Wisconsin, and throughout the Southwest from that program appear to be preserved, however.
A $9.8 million grant to Sparkz to build a first-of-its-kind battery-grade iron phosphate plant in West Virginia also makes an appearance. The award was made as part of a nearly $430 million funding round from the IIJA to accelerate domestic clean energy manufacturing in 15 former coal communities. Similar awards made to Anthro Energy in Louisville, Kentucky, Infinitum in Rockdale, Texas, Mainspring Energy in Coraopolis, Pennsylvania, and a company called MetOx International developing an advanced superconductor manufacturing facility in the Southeast appear to be safe.
When asked about the new list, DOE spokesperson Ben Dietderich told me by email that he couldn’t attest to its validity. He added that “no further determinations have been made at this time other than those previously announced,” referring to the earlier 321 cancellations.