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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the past two weeks disagree about how much the numbers matter when it comes to whether and how much of the IRA will be repealed.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.
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On House drama, the good and bad of solar, and earnings season
Current conditions: Djibouti, eastern Ethiopia, and southern Eritrea are roasting in higher-than-average triple-digit temperatures • Argentina’s brutal cold snap is back after a brief pause, threatening gas infrastructure and freezing crops • Millions of Americans are facing a new round of heat waves from the upper Midwest down to the Gulf.
The Environmental Protection Agency is days away from proposing a rule to rescind the endangerment finding, the 2009 decision that established the federal government’s legal right to regulate greenhouse gas emissions under the Clean Air Act. That’s according to a scoop late last night in The New York Times, confirmed hours later by The Washington Post. The finding came in response to the 2007 Supreme Court case Massachusetts v. EPA, in which the nation’s highest court ruled that the danger planet-heating emissions posed to human health made them subject to limits under the same law that restricts other forms of air pollution. The endangerment finding was previously considered so untouchable that the first Trump administration tried to work within the parameters of the rule rather than eliminate it outright.
Revoking the endangerment finding would undo all federal greenhouse gas rules on automobiles, factories, and power plants, fundamentally ending any national policy designed to curb emissions. The proposal will almost certainly face political challenges. It’s unclear how the Supreme Court — now overwhelmingly conservative compared to the bench of 18 years ago — would decide the case today. One “highly unusual” wrinkle in the story: E&E News reports that EPA has been absent from recent meetings the White House has held with industry and environmental groups on the endangerment finding, which “raises questions about who within the Trump administration is leading the effort.”
House Speaker Mike Johnson closed up shop early this week, sending Congress’ lower chamber home until September. In so doing, the Republican leader hoped to halt a push to investigate President Donald Trump’s connections to the disgraced financier and accused sex trafficker Jeffrey Epstein.
The move effectively pauses negotiations over energy policy, too. Both chambers of Congress are in the process of setting their budget priorities for the coming year, and President Trump has called for major cuts to programs overseeing clean energy development and deployment. Talks are also set to begin soon over the reauthorization of the Energy Act of 2020, the programs of which largely expire this year, and the Infrastructure Investment and Jobs Act, which is scheduled to expire next year. The House going into recess early will shift attention to the Senate, where eyes will be on Republican moderates such as Senators Susan Collins of Maine and Lisa Murkowski of Alaska, both of whom defended clean energy programs in negotiations over the One Big Beautiful Bill.
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Even before Trump took office, the U.S. electric vehicle revolution appeared to be stalling. Now the elimination of the main tax credit to encourage EV sales threatens to zap any remaining momentum. So far at least, that hasn’t halted GM’s EV sales. In its latest quarterly earnings announced Tuesday, the Detroit auto giant reported its EV sales had doubled over the previous three months, thanks in part to the launch of the battery-powered version of the Chevrolet Equinox, an SUV with a starting price of $35,000. GM now claims 16% of the American EV market, placing the company second behind Tesla, which reports its earnings today.
With earnings season is upon us, and dramatic shifts in federal policy and geopolitics promising some notable results, I went through all the companies reporting financial results to Wall Street this week and rounded up the big ones:
On Wednesday:
On Thursday:
On Friday:
The consultancy McKinsey is out with a new report on the effect of varying degrees of tariffs on the energy transition. The results are mixed. The good news: Solar capacity could more than double in the U.S. and the European Union by 2035 under any tariff scenario. The bad news: Strict tariffs could mean 9% less solar installed in the U.S. by 2035, and 7% less in the European Union.
In reality, the outcomes could be even worse. The report did not take into account how Republicans’ One Big Beautiful Bill pared down tax credits, or how the Trump administration may further limit access to federal incentives through the president’s executive order directing the Internal Revenue Service to restrict eligibility for wind and solar projects.
The Trump administration’s attacks on solar power aren’t changing the favorable economics for photovoltaics just yet. Facebook-owner Meta just inked a deal with energy developer Enbridge to build a 600-megawatt solar farm in Texas to power its data centers. Construction is already underway on the nearly $1 billion facility near San Antonio.
A fire in Oregon. FireSat
A new satellite project resulting from a collaboration between Google, the satellite company Muon Space, and the nonprofit Earth Fire Alliance can detect wildfires as small as 5 meters squared in size, giving firefighters a new tool to identify and potentially contain blazes before they erupt into conflagrations. The companies released the first images from the project this morning.
A fire in Ontario, Canada. FireSat
Jesse teaches Rob all about where solar and wind energy come from.
The two fastest-growing sources of electricity generation in the world represent a radical break with the energy technologies that came before them. That’s not just because their fuels are the wind and the sun.
This is our third episode of Shift Key Summer School, a series of “lecture conversations” about the basics of energy, electricity, and the power grid. This week, we dive into the history and mechanics of wind turbines and solar panels, the two lynchpin technologies of the energy transition. What do solar panels have in common with semiconductors? Why did it take so long for them to achieve scale? And what’s an inverter and why is it so important for the grid of the future?
Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Jesse Jenkins: And so then the other thing, of course, that helps is putting it at a place that’s sunnier, right? In addition to pointing it at the sun, you need to have the sun in the first place. If you go from a cloudy northern latitude to a sunny southern latitude, you’re going to get more production. That variation isn’t as large as you might think, though, from the best site in, say, Arizona and New Mexico to the worst 10th percentile sites in northern Maine or Portland, Oregon, where I grew up, where it’s very cloudy. That difference in solar resource potential is only about a factor of two. So I get about twice as much solar output from an ideally placed panel in Arizona as I do in Portland, Oregon, or Portland, Maine. That’s a lot, but we can find much better resources much closer to Portland, Maine, and Portland, Oregon, right?
And so this is why it doesn’t really make sense to build a giant solar farm in Arizona and then send all that power everywhere else in the country — because the transmission lines are so expensive and the efficiency gain is not that huge, it doesn’t make sense to send power that far away. It might make sense to put my solar panel on the east side of the Cascade Mountains and send them to Portland, Oregon, but not to go all the way to Arizona. Because the variation in solar potential is much more gradual across different locations and doesn’t span quite as much of a range as wind power, which we can talk about.
Robinson Meyer: I was going to say, this idea that solar only varies by, it sounds like, about 100% in its efficiency.
Jenkins: Or capacity factor.
Meyer: Yeah. I suspect, in fact, from previous conversations that this is going to be an important tool that comes back later — this idea that solar only really varies by 100% in its resource potential, that Arizona solar is only twice as good as Maine solar, is going to be really important after we talk about wind.
Mentioned:
How Solar Energy Became Cheap, by Gregory F. Nemet
More on what wind energy has to do with Star Trek
This episode of Shift Key is sponsored by …
Accelerate your clean energy career with Yale’s online certificate programs. Gain real-world skills, build strong networks, and keep working while you learn. Explore the year-long Financing and Deploying Clean Energy program or the 5-month Clean and Equitable Energy Development program. Learn more here.
Music for Shift Key is by Adam Kromelow.
It took a lot of scrutiny and a lot of patience, but the city council is finally making progress against natural gas infrastructure.
Susan Albright, a city councilor in Newton, Massachusetts, was reviewing the latest batch of requests from the local gas utility in early July when one submission caught her off guard. The company, National Grid, regularly asks the city for permission to tear up stretches of road in order to replace aging gas mains and service lines. But this time, the utility wanted to install a new 46-foot pipeline leading to Newton Crossing, a mixed-use housing development that’s currently under construction.
“I thought, Oh my god,” Albright told me. “Here we are trying to get rid of pipe, and here’s some new pipe that they’re asking for.”
Such “grant of location” requests used to be a rubber stamp exercise for the Public Facilities Committee, of which Albright is the chair. But more recently, they’ve become contentious. Activists have started showing up to public meetings to question the necessity of pipeline work. Could the pipes be repaired instead of replaced? Or even better, retired? Could the houses served by them be electrified?
To get ahead of public outcry about a brand new pipe, Albright sprung into action. She pulled up plans the housing developer had filed with the city and learned that the apartments were intended to be all-electric. The developer had requested a gas connection solely to serve commercial businesses on the ground level. Albright found a contact for the project and picked up the phone.
“Is there any possibility that you could go electric for your commercial?” she recalled asking, explaining the connection between natural gas and climate change, and the city’s goal of weaning off gas. “At first he was very reluctant,” she told me. “But then he called me back and said that he’s willing to try it.” His ability to do so will depend on whether the electric utility can supply enough power. Nonetheless, Albright had successfully pushed a vote on the request to a later date. “We will review that grant of location at our meeting on July 28, and hopefully he will withdraw it, but we don’t know,” she said.
The city committed to transitioning away from natural gas by 2050 as part of its Climate Action Plan, enacted in 2019. Although residents have started to electrify their homes, the city hasn’t been able to slow down investment into the gas system. The story of Newton Crossing illustrates a strategy that has finally begun to move the needle. Councilors and activists have begun doggedly scrutinizing each of National Grid’s requests in hopes of finding alternatives that avoid investing more ratepayer money into a gas system that is — or should be — on a path toward obsolescence.
Progress has not been linear, and almost all of these attempts have so far failed. But the city does seem to have gotten the company’s attention. Earlier, in June, National Grid came to Newton with a different kind of request — an invitation to embark on a collaboration together with the local electric utility, Eversource, to proactively plan the city’s transition away from gas, and in doing so, begin to create a model for the company, the state, and possibly the country.
“I’m so excited to be here today because this is the first of its kind,” Bill Foley, National Grid’s director of strategy and transformation told the Public Facilities Committee while presenting the proposal. “We’ve never sat down with Eversource, National Grid, and another community to talk about how we’re going to broadly electrify a community.”
The subterranean network of natural gas pipes that runs under Massachusetts is old and leaky, with some sections dating back to the late 19th century. Utilities in the Commonwealth have always been required to address dangerous leaks, but in 2014, the state passed a law incentivizing more proactive measures to replace or repair leak-prone pipes. It was a matter of public safety as well as environmental protection — the methane that seeps out can kill tree roots in addition to being a powerful greenhouse gas.
The law created the Gas System Enhancement Program, or GSEP. Each fall, companies would file annual plans to the Department of Public Utilities outlining all the pipeline repair and replacement projects they aimed to complete in the coming year. In return, they’d get quicker approvals from regulators and be able to recover the costs more quickly from ratepayers.
In the years since, utilities have spent billions of dollars replacing thousands of miles of pipelines. Simultaneously, the state has fleshed out its plans to tackle climate change, making it clear that electrifying buildings would be a key component. As a result, the tide of public opinion about the pipeline program shifted. Replacing aging pipes may actually be worse for the climate, many activists now believe, since it means putting major investments in new fossil fuel infrastructure, thereby increasing inertia in the energy system and possibly delaying the transition to carbon-free solutions.
Former mechanical engineer Peter Barrer is one of those activists. Barrer lives in Newton, and has become an expert on the local gas network and the state’s pipeline policies. Using public data filed with state regulators, he calculated that out of the $18 million National Grid spent to address aging pipes under the GSEP program in Newton in 2023, only about $200,000 went to repairs, with the rest going to replacements. (National Grid later disputed the number, reporting that it spent $3 million on repairs that year.)
Barrer is concerned that the GSEP gives the company cover to spend excessively on pipeline replacements, which earn them larger profits than repairs. Other analysts have reached similar conclusions. Last year, the energy research consultancy the Brattle Group submitted testimony to state regulators on behalf of the Massachusetts attorney general’s office arguing that utilities are increasingly using GSEP to make everyday capital improvements. The level of spending “goes far beyond remediating immediate risks to safety caused by gas leaks,” the consultants wrote.
Barrer’s research on GSEP led him to a potential point of leverage with National Grid. When the utility wants to dig up a street, it has to submit a Grant of Location request to Newton’s Public Facilities Committee, which is then subject to a public hearing.
Newton is a progressive city that has long been at the forefront of climate action in the state. It’s one of 10 communities granted permission by the state to ban gas hookups in new buildings. (The Newton Crossing development got its permits before the policy went into effect.) The city council has also passed an ordinance requiring the largest existing buildings to reduce their emissions to net-zero by 2050.
While the Public Facilities Committee doesn’t have the power to deny National Grid’s Grant of Location requests, Albright, the city councilor, told me, the meetings do present an opportunity to engage with the utility. Members and the public can ask questions and delay approvals. Barrer and other activists began using the requests as an opportunity to highlight the paradox of the city approving new gas infrastructure.
One particularly contentious fight began last October over a replacement on Garland Road, a street known for hosting a “Sustainable Street Tour,” during which residents spoke about their experiences greening their homes with solar, insulation, EVs, and heat pumps. “Bells kind of rang in my mind,” Barrer told me. “Here’s a great place to fight National Grid.”
The gas company argued that the Garland Road pipeline, 600 feet of cast iron from the 1920s, was simply too high-risk. “National Grid cannot agree to delay replacement long enough to determine if the Garland Rd customers that still use their gas service for one or more uses are willing to have their gas service disconnected,” Amy Smith, the director of the company’s New England Gas Business Unit, wrote in an email to Albright in January. “In addition, even if all customers on Garland Rd agree to have their gas service cut off, we do not currently have a mechanism to fund the costs of full electrification of each home.” The Committee signed off on the project.
But activists continued to challenge it. A resident of Garland Road, Jon Slote, surveyed his neighbors and found that all were either neutral or supportive of electrification. He also put together a cost comparison and found that the capital cost of electrifying the homes was 18% to 41% lower than that of replacing the pipeline.
National Grid didn’t budge. One of the reasons the block couldn’t be electrified, Smith explained to Barrer in emails that I reviewed, was that this segment of pipe “plays a critical role in providing pressure support for approximately 120 homes in the area. Maintaining minimum pressure is vital for both safety and reliability.”
Barrer told me he’s skeptical that replacing the pipe is the only solution, but acknowledged that the issue is real.
Perhaps Barrer’s biggest grievance, though, is that National Grid frequently makes requests that are not in its regulator-approved plans. Nearly 60% of the money the company spent in 2023 and was able to recover through the expedited GSEP process went to such projects, he found. A related issue: GSEP plans often don’t disclose the full extent of each project. “This is important for municipal planning,” Barrer told me. If the public can’t see in advance which areas the company is planning to work on, he said, “there’s no opportunity for the city to investigate. Maybe there’s streets on there that we can get support for electrification.”
He described the fight over gas pipelines in Newton as “a David and Goliath situation.” Activists want the opportunity to get ahead of these projects and figure out alternatives, he said, but aren’t given enough notice or details. “They have all the cards. They have a monopoly on gas, and they also have a monopoly on information.” He wants the state legislature to help them put up a fairer fight by passing two new bills that would require the utilities to disclose more information, sooner.
Albright, meanwhile, told me she thinks National Grid has acted in good faith. “The people that I’ve been working with, I trust that they’re trying to do the best for the company and for us as customers. I mean, they don’t want these pipes to explode.”
For about a year, Albright said, she has been having conversations with Smith of National Grid about what the city could do to start getting off gas. At the end of 2024, Smith came back with an offer — National Grid would work with Newton on an electrification pilot project. The company has since provided the city with a list of streets to consider for the pilot — mostly dead ends on the outskirts of the gas system, areas where taking out a stretch of pipe won’t affect other customers downstream.
Meanwhile, a lot has changed at the state level. Late last year and continuing into this spring, lawmakers and regulators enacted new policies to reform GSEP and better align it with the Commonwealth’s clean energy plans. That meant focusing on the highest risk pipes, prioritizing repairs instead of replacements, lowering the cap on spending for companies, and enabling them to spend some of the money on alternatives to pipelines, including electrification projects.
Perhaps these changes help explain what led National Grid to approach Newton earlier this summer with its proposal to collaborate. At the Public Facilities Committee’s June 18 meeting, representatives from National Grid and Eversource spent nearly three hours explaining their “integrated energy planning” effort, figuring out how to transition from gas to electricity while containing costs and ensuring reliable service. Now they wanted the chance to begin testing it out in a community.
“The technical stuff is easy,” Foley of National Grid told the Committee. “When it comes to knocking on a door and saying, Hey, how do we get you to electrify? That’s the challenging part. That’s what we’re going to learn.”
The Committee, the mayor, and city staff welcomed the idea. Even Barrer is optimistic. “I think it is unprecedented,” he told me, “and it could be very, very useful.” But he’s also skeptical. Will the company actually share the information advocates like him are looking for to analyze alternatives? And will it work quickly?
“From my perspective, every year that the plan doesn’t turn into action is another half a billion dollars of ratepayer money the National Grid gets to invest.” But, he added, “I’m hopeful. Let’s see what actually develops.”