You’re out of free articles.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Sign In or Create an Account.
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here .
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Subscribe to get unlimited Access
Hey, you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Create Your Account
Please Enter Your Password
Forgot your password?
Please enter the email address you use for your account so we can send you a link to reset your password:
Much may depend on the Senate’s tolerance for fuzzy math.

House Republicans passed a budget blueprint Thursday morning that lays the groundwork for the party to begin drafting legislation to enact President Trump’s agenda. Now the fight over the Inflation Reduction Act’s clean energy tax credits begins in earnest.
The blueprint is merely a set of instructions for writing the eventual budget bill, laying out topline numbers for tax cuts and spending reductions — it doesn’t contain any actual policies. Trump’s biggest priorities are to extend the tax cuts he enacted in 2017, pass new tax cuts on tips and overtime pay, and to boost spending on immigration control and defense.
The resolution that Republicans passed allows for all of the above. In total, it enables Congress to craft a bill that would increase the national debt over the next decade by more than $5 trillion.
The good news for the IRA tax credits is that the framework only requires lawmakers to craft legislation that would produce $4 billion in savings — a relatively small amount that doesn't exert much pressure on cutting the tax credits. The bad news is that Senate Republicans have given their word to budget hawks in the House that they will aim to cut much more than that — at least $1.5 trillion in spending. House Republicans, for their part, are eager to do at least $2 trillion in deficit reductions.
According to a “menu” of budget proposals that made its way around the Hill earlier this year, Republicans estimate they could save anywhere from $3 billion to $800 billion by repealing IRA tax credits, depending on how many and which ones are cut.
Lawmakers could also go after other climate-related policies, like cutting grant programs from the Department of Energy and Environmental Protection Agency. “Most of the funds have been obligated,” meaning they’re legally committed to grantees, “so there’s not much left to rescind,” Alex McDonough, a lobbyist with Pioneer Public Affairs, told me in an email. “We’ll see what they do with a possible rescission package, but even that would be a drop in the bucket compared to the trillions they want for offsetting tax cuts.”
Lobbyists on Capitol Hill and other experts I’ve spoken with over the past two weeks disagree about how much the numbers matter when it comes to whether and how much of the IRA will be repealed. Some felt the budget math would take priority, while others told me that if any of the tax credits were killed or saved, it would be for political reasons over anything else.
Though the biggest political target seems to be the electric vehicle tax credits, “anything with a price tag is at least somewhat vulnerable,” McDonough said. Lawmakers could also opt to make certain credits more difficult to access or phase them out earlier rather than fully repeal them.
McDonough also said the lobbying that companies and trade groups have been doing around the manufacturing and clean electricity tax credits appeared to be working, and will ratchet up even more in May. “Appealing to ‘all of the above’ and ‘energy dominance’ is working because everyone knows how badly we need new generation to meet rapidly rising demand and a lot of the clean energy resources happen to be the quickest to deploy,” he said. “Utilities want it too, which is also very important.”
On Thursday, Republican Senators Lisa Murkowski of Alaska and John Curtis of Utah sent a letter to their party’s leadership asking them to preserve tax credits that spur manufacturing, reduce energy costs for consumers, and give certainty to businesses that have already made investments in the U.S. based on the credits. Thom Tillis of North Carolina and Jerry Moran of Kansas also signed the letter. It was the first major show of support for the tax credits in the Senate, following a similar letter signed by 21 Republicans in the House.
Republicans are trying to enact Trump’s agenda using a special process called budget reconciliation, which will enable them to pass it with a simple 51-vote majority rather than the 60 votes required to overcome a filibuster. The party currently has 53 seats, so four Republicans coming out in favor of preserving IRA tax credits is a good sign for the law. Similarly, the Republicans have a seven-seat majority in the House, and so those 21 who like the IRA could have quite a bit of influence.
But the other big open question for the future of the IRA — and frankly, for the future of the Senate — is whether Republicans will proceed with the fuzzy math they are using to calculate the cost of the bill. When the Congressional Budget Office scores the extension of Trump's 2017 tax cuts, it will use what's called a "current law baseline," and estimate that they will cost the government more than $3 trillion dollars over the next ten years. Senate Republicans, however, have asserted that extending the 2017 tax cuts is free and will have no impact on the deficit, using a different scoring method called a “current policy baseline.”
The reason this matters for the IRA is that the budget reconciliation process has strict rules. If lawmakers were forced to recognize the true cost of the tax cut extensions in drafting the budget bill, they would have to make several trillion dollars’ worth of additional spending cuts in order to align with the blueprint they passed this week. In that scenario, it’s hard to see how any of the IRA could survive.
But if Republicans unify around this fuzzy math and carry it all the way to the final vote on the bill, which would be unprecedented, they could face a showdown with Democrats, who will say the bill doesn’t comply with the reconciliation rules. In that scenario, they’ll be faced with a choice either to go back to the drawing board or take the nuclear option — essentially changing how the Senate operates.
“There will be a majority vote on whether the Senate wants to change its precedents going forward, forever, and basically open up reconciliation to whatever policies the majority wants to enact going forward,” Charlie Ellsworth, another lobbyist for Pioneer Public Affairs, told me.
Expect to hear a lot more about this debate over the cost of the tax cuts once lawmakers return to Washington on April 28 after a two-week recess. Republicans have said they want to get the budget bill to Trump’s desk by Memorial Day. McDonough doesn’t think that’s in the cards, and expects it to happen by the August recess at best. But he expects the House Ways and Means committee to push out a first version of the bill in May, so we’ll see what the first proposal is for the fate of the IRA tax credits then.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Two new reports out this week create a seemingly contradictory portrait of the country’s energy transition progress.
Two clean energy reports out this week offer seemingly contradictory snapshots of domestic solar and battery manufacturing. One, released Wednesday by the Rhodium Group’s Clean Investment Monitor, shows a distinct decline in investment going into U.S. factories to make more of these technologies. The other, released today by the trade group American Clean Power Association, shows staggering recent growth in production capacity.
So which is it? Is U.S. clean energy manufacturing booming or busting?
Maybe both.
The U.S. is suddenly producing more solar and batteries than ever before — enough to meet current domestic demand — so it makes sense that investment in new factories is starting to slow. At the same time, there’s a lot of room for growth in producing the upstream components that go into these technologies, but the U.S. is no longer as attractive a place to set up shop as it was over the past four years.
The U.S. saw 30 new utility-scale solar factories and 30 new battery factories come online last year alone, according to ACP. The country now has the capacity to meet average domestic demand for storage systems through 2030, and can produce enough solar panels to satisfy demand two times over.
In both industries, nearly all of that capacity has been added since 2022, when the Inflation Reduction Act created new subsidies for domestic manufacturing. The advanced manufacturing production tax credit incentivized not just solar and battery factories, but also all the production of components that go into these technologies, including solar and battery cells, polysilicon, wafers, and anodes. On top of these direct subsidies, the IRA generated demand for U.S.-made products by granting bonus tax credits for utility-scale solar and battery projects built with domestically produced parts.
“The policy definitely laid the right foundation for a lot of this investment to take place,” John Hensley, ACP’s senior vice president of markets and policy analysis, told me.
Trump’s One Big Beautiful Bill Act has changed the environment, however. The utility-scale wind and solar tax credits were supposed to apply through at least 2033, but now projects have to start construction by July 4, 2026 — just over a month from now — in order to claim them. Any of those projects that got started this year will also have to adhere to complex new sourcing rules prohibiting Chinese-made materials.
Now, dollars flowing into new U.S. solar factories appears to be on the decline. Investment fell 22% between the fourth quarter of last year and the first of 2026. Battery manufacturing investment dropped by 16%.
The reason investment is declining is not entirely because of OBBBA — it’s partly a function of the fact that a lot of the projects announced immediately after the IRA passed are entering operations, Hannah Hess, director of climate and energy at the Rhodium Group, told me.
Rhodium’s Clean Investment Monitor tracks two metrics, announcements and investment. Announcements are when a company says it’s building a new factory or expanding an existing one, usually with some kind of projected cost. Investments are an estimate of the actual dollars spent during a given quarter on facility construction, calculated based on the total project budget and the expected amount of time it will take to complete after breaking ground.
According to Rhodium’s data, the peak period for new solar manufacturing project announcements was the second half of 2022 through the first quarter of 2025. During that time, announcements averaged more than $2 billion per quarter. New solar factories announced this past quarter, by contrast, fell to about $350 million.
Since it can take a while to get steel in the ground, the peak period for investment was slightly later, with $13.5 billion invested between the second quarter of 2023 and the third quarter of 2025.
“What we were seeing in that post-IRA period was huge, almost unconstrained growth in that sector, and that’s not happening anymore,” Hess said.
Most of this growth occurred all the way downstream, at the final product assembly level — i.e. factories making solar and battery modules that still had to import many of the components that went into them. This was the “lowest hanging fruit” to bring to the U.S., Hensley, of ACP, told me, as the final assembly is the least technologically challenging part of the supply chain.
“These supply chains have momentum as they get going,” he said, “so as you establish those far downstream component manufacturing, you start to recruit all of the upstream manufacturing.” In other words, a solar cell manufacturer is far more likely to build in the U.S. if there’s a robust local market of module factories to buy the cells.
There’s evidence that’s still happening in spite of changes to the tax credit structure. The ACP report says that three solar cell factories came online between 2024 and today — one per year. If all of the additional factories that have been announced are built by 2030, the U.S. will have nearly enough capacity to meet all of its own demand for solar with domestic cells. Battery cell capacity is growing even faster, with three factories as of the end of 2025 and seven more expected to be complete by the end of this year, which will produce more than enough units to meet average annual demand.
It’s the next step up on the supply chain that spells trouble. For solar, that’s ingots and wafers, followed by polysilicon. Today, the only producer of ingots and wafers in the U.S. is a company called Corning. It produces enough to meet about 25% of current domestic solar cell production, but cell production will more than quadruple by the end of this year compared to last year, according to ACP. Similarly, we produce enough polysilicon to meet Corning’s current needs, but not enough to meet anticipated cell demand. The announced projects in the pipeline will not add much on either front.
For batteries, it’s the anodes and cathodes. There’s currently one factory in California producing cathodes and at least one more under construction, but as there is nothing else in the pipeline, the ACP report expects cell manufacturers to rely on imported cathodes for the foreseeable future. Anodes are the one bright spot — there’s one factory producing what’s known as active anode material factory in the U.S., and four more anticipated by the end of this year. Together, they have the potential to meet demand by 2028, according to ACP.
The question now is whether that snowball effect kicked off by the IRA will continue. “A lot has changed about the outlook for future demand after the One Big Beautiful Bill Act passed,” Hess said. “We have seen some more project cancellations and pauses in construction recently.”
Most recently, a company called Maxeon Solar Technologies canceled a $1 billion cell and module factory in New Mexico. The company had been “fighting for its life” since 2024, according to Canary Media. It’s also majority owned by a Chinese state-owned company. The
OBBBA was likely the nail in the coffin, as it penalizes solar developers who source panels from companies with Chinese ownership.
OBBBA also shortened the timeline for the wind and solar tax credits, while the Trump administration’s hostility to wind and solar permitting has made it more difficult for projects to get built before the credits expire. Hensley said the Trump administration’s hostility toward clean energy has added a lot of risk into the system, complicating final investment decisions for manufacturers.
On the flip side, tariffs have the potential to help some domestic producers. Duties on imports from countries such as Cambodia, India, and Vietnam, all major manufacturers of solar panels, “have made their exports to the U.S. almost prohibitive,” Lara Hayim, the head of solar research at BloombergNEF, told me in an email. “This sort of policy framework could continue to provide some protection for domestic manufacturers,” she said, but there are still plenty of countries with low enough tariffs that they will continue to serve the U.S. and compete with domestic manufacturers.
Hensley said that the Trump administration’s tariffs were a double edged sword. They can help domestic manufacturers, but not if they make all of the inputs into the product more expensive.
“That’s a problem with these blanket type of tariffs that aren’t really fine-tuned to target the behavior that you’d like to see,” he told me. “I think we’re seeing a lot of that push and pull and tension in the system at the moment.”
Between Trump’s tariffs and the OBBBA, there’s no doubt that the manufacturing boom sparked by the IRA is slowing. But Hensley is optimistic that the progress will continue. “We haven’t attracted all of the supply chain yet. It’s still a work in progress, but so far the signs are quite good.”
This week’s conversation is with Duncan Campbell of DER Task Force and it’s about a big question: What makes a socially responsible data center? Campbell’s expansive background and recent focus on this issue made me take note when he recently asked that question on X. Instead of popping up in his replies, I asked him to join me here in The Fight. So shall we get started?
Oh, as always, the following conversation was lightly edited for clarity.
Alright let’s start with the big question: What is a socially responsible data center?
So first, there’s water, which I think is pretty solvable.
Part of me thinks water is not even the right thing to be focusing on necessarily, and it’s surprising that it became at least for a while the center of the controversy around data centers.
I think there’s energy, which is mostly a don’t-raise-people’s-bills kind of thing. Or in extreme cases, actually reducing people’s access to energy.”
I think air pollution is another key. This is one of the biggest own-goals our [climate] space is making, because people are installing behind-the-meter power and we can talk about why they’re doing that, the shifting reasons, but the real shame in it is you really shouldn’t have to run those 24/7. If you’re building your own power plant, it should enable you to get a grid connection, because you’re bringing your own capacity and they can provide you firm service, and you should only have to run that gas plant 1% of the year, so air pollution is a non-issue. If only the grid and its institutions could get their act together, this is a no-brainer. But instead people run them 24/7.
There’s noise, which has been very misunderstood and bungled on a handful of well-known projects. That’s just a do-good engineering and site layout type of problem.
And then there’s other. Beyond the very concrete impacts of a data center, what else can it do for the community it's siting itself in? That’s going to be specific for every community.
There’s going to be a perspective that data centers are takers. They get tax incentives. They’re this big new thing. If data centers were to bring something compelling when [they’re] siting in communities, and it is specific to whatever they’re dealing with, maybe they’d be considered socially responsible.
I don’t think I have the master answer here. Everyone’s trying to figure it out.”
What do you hear from other folks in decarb and climate spaces when you ask this question? Do you hear people come up with solutions, or do they knock down the entire premise of the question — that there isn’t such a thing as a socially responsible data center?
You get both. You definitely get both. It depends on who you're talking to.
I can understand both sides of the equation here. There’s definitely solutions, first of all. I do think there’s a group of people whether it is in the energy world or the data center world or tech who would have this incredulous disbelief that anyone could not want what they’re doing. And that then, after being poked and prodded enough, transforms into a very elitist, almost pejorative explanation of everybody’s just NIMBYs.
I think that’s really unproductive. It kind of just throws gas on the fire.
But there’s a lot of people working on solutions, too. The non-firm grid service thing is just a huge opportunity. To be able to connect these sites to the grid in such a manner they either get curtailed some small amount of hours per year or they show up with accredited capacity, absolving them from curtailing. I mean, we can do that. It’s very doable.
The second question becomes, what are the forms of accredited capacity that can be deployed quickly? I think that’s where there’s a lot of cool stuff around VPPs and such. Sure, build a gas power plant, run it once or twice a year. If anything that’s good for a community — back-up power at grid scale.
There’s also other solutions. A really cool effort right now, former Tesla people building a purely solar and battery DC microgrid in New Mexico.
And there’s also a lot of inertia. The folks making decisions about data centers have been doing stuff a certain way for 20 years and it’s hard to change. The inertia within the culture combined with the enormous pressure to deploy just makes it less dynamic than one would hope.
On my end, I’ve been grappling with the issue of tax revenue. We’re seeing a declining amount of money for social services, things that can really help people for both personal and academic reasons. There's quite a bit a lot of people could say on that topic. At the same time, this is another form of industrial development. People are upset at the amount of resources going to this specific thing.
So when it comes to the data center boom in general, where do you stand on social cost-versus-benefit analysis?
That’s a good question. I’m not an expert. I’m mostly just someone who designs energy projects. But I can say where I’m at personally.
Yeah, but isn’t everyone in the energy space talking about data centers? Shouldn’t we all be thinking about this?
Of course. I’m not in a place to proclaim what is right but I’ll tell you where I’m at right now.
With any large-scale industrial build out it is tough relative to other technological changes that were simpler at the infrastructure layer. Like, the smartphone. Massive technological change but pretty straightforward in a lot of ways. But industrial buildout stresses real physical resources, so people have much more of an opinion of whether it’s worth it or not.
I’m pretty optimistic about AI generally. It’s very hand-wave-y. It’s hard to cite data or anything, because we’re talking about something that hasn’t happened yet, but I’m very optimistic about increasing the amount of intelligence we have access to per person on Earth.
A similar thing I think about is when everyone stopped getting lead poisoning all the time, we all jumped five IQ points and killed each other less. Intelligence is good. A lot of our story as a species is about increasing intelligence and learnings-per-person so we can do more. The idea that we would be able to synthesize it, operate it as a machine outside of our own bodies. It feels pretty inevitable.
There’s questions about what that [AI] will do to the economy and jobs, which is what people are really concerned about and is the case with any major technological change.
Are data centers being deployed at a rate and in a way that is responsible? Like, does it need to be this fast? That’s a question people ask and that’s in a way the question being posed by the moratoriums. They’re not saying let’s ban this forever. They’re saying, let’s take a breather. And I do understand that.
There’s a lot of good solutions that could just be pursued and it’s hard for me to separate my feelings about the current path data centers are taking from what I think is objectively right. We could just be doing way better.
On the energy front, what do you make of the way our energy mix — carbon versus renewables, our resilience — is headed? And where do you think we’re heading in five years?
For the energy and climate world, this is the real question. Data centers are a complicated thing but at the end of the day, for us, they’re a source of electricity demand.
From an electricity perspective, there’s been no growth for 20 years. So the theory of addressing climate change was, as the old stuff breaks we’ll replace it with new clean stuff. That was what we were doing, while saying, a lot of the old stuff we’ll keep around. We’ll layer on the new clean stuff.
It was always the case though that we could enter a new phase of electricity growth. Actually, five years ago, when the phrase “electrify everything” was coined, it explicitly became our goal! We were going to massively and rapidly grow the electricity system in order to switch industry, heating, and transport off of fossil fuels. That’s the right prescription, the right way to do it.
My understanding of it is that while this feels really big, because we haven’t grown in so long, compared to the challenge we were all talking about doing is not big at all. It increases the challenge by 15% or 20%. That’s meaningful. But it just seems like we should be able to do this.
From a climate perspective, as someone who’s been trying to do everything I can on it for a while now, I can’t help but feel a little dismayed that today the growth we’re experiencing is some tiny, tiny percentage of what we actually set out to do. And it’s causing chaos. We’re institutionally falling apart from a single percent of what our goals should be.
This is the time for the electrification case. We can all demonstrate this is possible over the next few years. I think confidence in the electricity system as our energy path can remain high. Or this utterly fails, where it’s really hard to imagine governments and businesses making any sincere attempt at a high electrification pathway.
Plus the week’s biggest development fights.
1. LaPorte County, Indiana — If you’re wondering where data centers are still being embraced in the U.S., look no further than the northwest Indiana city of LaPorte.
2. Cumberland County, New Jersey — A broader splashback against AI infrastructure is building in South Jersey.
3. Washington County, Oregon — Hillsboro, a data center hub in Oregon, is turning to a moratorium.
4. Champaign County, Ohio — We’re still watching the slow downfall of solar in Ohio and there’s no sign of it getting any better.
5. Essex County, New York — Man oh man, what’s going on with battery storage in rural pockets of the Empire State?