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On Fervo’s megadeal tease, steel’s coal gamble, and Norway’s CO2 milestone
Current conditions: Manila is facing severe flooding amid days of monsoon rains • Of the seven Marshall Islands that the U.S. Drought Monitor tracks, two are currently suffering extreme drought, and another three are under severe drought conditions • Wildfires are blazing in Oregon, where the Cram Fire has already scorched nearly 100,000 acres just 50 miles south of Portland.
OpenAI CEO Sam AltmanKevin Dietsch/Getty Images
Six months after the top executives of OpenAI and Softbank stood shoulder to shoulder at the White House to announce a $500 billion joint venture to build out the infrastructure for artificial intelligence across the United States, the so-called Stargate project has yet to complete a deal for a single data center. The companies promised in January to “immediately” invest $100 billion. But in a sign of the dialed-back ambitions, the project is now targeting the more modest goal of constructing one small data center by the end of this year, likely in Ohio, The Wall Street Journal reported.
That’s bad news for the power companies that have lavished in the projected demand from data centers. Crusoe Energy, a developer of gas- and renewable-powered data centers, boasted earlier this year that it was “pouring concrete at three in the morning” to build out its portions of the Stargate project at “ludicrous speed,” Heatmap’s Katie Brigham reported in March. Over the course of just one month this spring, Morgan Stanley ratcheted up its estimates for capital expenditures in cloud computing this year by a whopping $29 billion, to $392 billion, as Heatmap’s Matthew Zeitlin reported in May. Perhaps that’s another AI hallucination.
Fervo Energy’s breakthrough in harnessing fracking technology to tap into the Earth’s molten heat in far more places than ever before effectively launched the next-generation geothermal industry in the U.S. Now the Houston-headquartered startup is poised to vault “enhanced” geothermal power into a gigawatt-scale electricity source.
In a Monday post on LinkedIn, Fervo CEO Tim Latimer teased a “multi-GW development deal” currently in the works. He promised “more to come on this soon.” He did not respond to my inquiry Monday night. The company already has a deal for a 500-megawatt project called Cape Station in Utah, for which it netted a $206 million investment last month. But a project several times that size would put next-generation geothermal in the big leagues with nuclear power as a potential source of large-scale, baseload power.
Shares of Cleveland-Cliffs soared nearly 13% on Monday afternoon after the steelmaker said President Donald Trump’s tariffs had boosted demand. The company’s second-quarter earnings bested estimates, thanks to cost cutting and record steel shipments. CEO Lourenco Goncalves even suggested the company could sell parts of itself in the wake of Japanese steelmaker Nippon Steel’s megadeal to take over American rival U.S. Steel. He confirmed “active conversations” to sell non-core assets but said “everything else is possible.”
On the call, Goncalves also suggested the administration’s embrace of coal had improved market conditions for the company. As my colleague Matthew Zeitlin reported, the chief executive confirmed that Cleveland-Cliffs would abandon its landmark green steel project because the hydrogen it needed was not available widely enough. Instead, Goncalves said, the company would revamp the project “in a way that we preserve and enhance Middletown using beautiful coal, beautiful coke.”
The chief executive of the largest natural gas company in the U.S. is urging Congress to overhaul energy permitting or risk losing the AI race to China. In an interview with the Financial Times, EQT CEO Toby Rice said, “The threat of not getting infrastructure built has only gotten larger — not only from bad actors getting rich by selling energy that could be replaced with American energy — it’s also the threat of China winning the AI race.” Specifically, he called on lawmakers to end what’s called “judicial review,” a period of six years during which opponents of a project can challenge the federal permits in court.
The U.S. has come to the cusp of easing federal permitting for years. After the passage of the Inflation Reduction Act, Democrats tried to ease permitting rules but faced opposition from progressives and conservationists who deemed any relaxing of regulations that could benefit fossil fuels a nonstarter. Democrats tried to revive the issue last year, but Republicans walked away from the negotiations once the election turned in the GOP’s favor. With the One Big Beautiful Bill revoking many of Democrats’ energy priorities, it’s unclear how much leverage Republicans have to restart talks ahead of next year’s midterm elections.
The world’s first carbon shipping terminal designed to permanently store captured CO2 that would have otherwise gone into the atmosphere just took its first shipment, The Washington Post reported. Located on an island on the edge of the North Sea, Norway’s Northern Lights facility accepted 7,500 metric tons of liquefied CO2 from a Norwegian cement factory. The plant — funded by the government in Oslo and fossil fuel companies — could serve as Europe’s primary carbon dump, and as a model for Asian countries looking to establish their own storage facilities.
China’s exports of clean-energy technologies such as solar panels, batteries and electric vehicles shaved 1% of the global emissions outside China last year, a new Carbon Brief analysis found.
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On PJM’s inflexible giants, another wind attack, and a Sino-Russia mega deal
Current conditions: In the Pacific, Tropical Storm Kiko has strengthened into a hurricane on its way toward Hawaii • Unusually cool air in the Upper Midwest and Appalachians could drop temperatures to as much as 20 degrees Fahrenheit below average • Nearly one million people are displaced in Pakistan’s most populous state as Punjab suffers the biggest flood in its history.
The Trump administration’s plan to kill a $20 billion clean energy financing program got the green light from a federal appeals court on Tuesday. The Greenhouse Gas Reduction Fund, housed under the Environmental Protection Agency, was designed to provide low-cost loans for solar installations, building efficiency upgrades, and other local efforts to reduce planet-heating emissions. The three-judge panel overturned a lower court’s injunction temporarily requiring the EPA to resume payments, ruling that most of the plaintiffs’ claims were contract disputes and belonged in the Court of Federal Claims. If the case now moves to that court, Heatmap’s Emily Pontecorvo wrote, “the plaintiffs would only be able to sue for damages and any possibility of reinstating the grants would be gone.”
Before leaving office, the Biden-era EPA finalized awards to eight nonprofits that would “create a national financing network for clean energy and climate solutions across the country.” The move was meant to insulate the program from cuts, but it stirred the new administration’s ire. The Trump EPA called the move a scam to give taxpayer-funded slush funds to nonprofits stacked with former Biden administration appointees. The recipients could still appeal the decision, which experts told Emily could still have significant ramifications. Watch this space.
The country’s largest electrical grid, the PJM Interconnection, put out a conceptual proposal in August for a plan to ask large electricity users such as data centers to voluntarily reduce their power consumption when there’s a shortage of electrons on the grid — and potentially require them to do so if too few step up. The plan is largely in line with what the Data Center Coalition, a trade association representing server companies, recently backed in a legal filing in North Carolina, as this newsletter previously reported. Yet big tech companies balked at the proposal, according to comments submitted in response. Microsoft warned that imposing curtailment undermines investor confidence. Amazon said targeting large power users to cut back on demand is discriminatory. Talen Energy, an independent power producer, said the 13-state-spanning PJM has no authority to make such a rule, and that individual state law governs load. The Data Center Coalition itself criticized the rule’s assumption that big power users have on-site back-up generation as overly broad and not reflective of reality.
The idea itself derives from an influential paper released by Duke University researchers in February that found the U.S. could add gigawatts’ worth of additional demand from new data centers without building out an equivalent amount of power plants if those facilities could curtail electricity usage when demand was particularly high. Heatmap’s Matthew Zeitlin described the strategy as “one weird trick for getting more data centers on the grid,” boiling down the approach simply as: “Just turn them off sometimes.”
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The Trump administration said it would reconsider the permit for SouthCoast Wind, a Massachusetts offshore wind farm approved last year by the Biden administration, according to legal filings seen by Reuters on Tuesday. In a motion filed to the U.S. District Court for the District of Columbia on Friday, lawyers at the Department of Justice said the Department of the Interior would review the project’s construction and operations plan.
The move came a week after Trump yanked back approvals for the nearly-complete Revolution Wind project off Rhode Island’s coast. It’s just the latest escalation in what Heatmap’s Jael Holzman called “Trump’s total war on wind.” As I reported yesterday in this newsletter, the Department of Transportation was the most recent agency to join the effort this week, axing $679 million in funding for infrastructure to support offshore wind development. But the Interior Department has led the charge with a witch hunt against policies that favor wind power, the de-designation of millions of acres of federal waters for offshore turbine construction, and a new investigation into bird deaths near windmills. The Department of Commerce tapped in last month by teeing up future tariffs with its own probe into whether imported turbine components pose a national security threat. The assault is prompting pushback. On Monday, the Democratic governors of five Northeastern states called on Trump to “uphold all offshore wind permits already granted.”
The BRICS brothers. Suo Takekuma - Pool/Getty Images
In spite of Trump administration pressure aimed at convincing countries around the world to reject Russian oil, the Kremlin netted an energy deal with the world’s second-most populous nation on Tuesday in a sign of what Russian President Vladimir Putin called an “unprecedentedly high level” of good relations between Moscow and Beijing. Under the new agreement, China will buy Russian gas through a new pipeline from Siberia. Once complete, the Power of Siberia 2 pipeline will carry 50 billion cubic meters of gas through Mongolia to northern China every year.
The deal came at the tail end of a summit in China between Putin, Chinese President Xi Jinping, and Indian Prime Minister Narendra Modi. The trio of hardline leaders, who represent the three biggest economies in the world, came together for a photo depicting a friendly three-way handshake widely interpreted as a show of unity and defiance against Washington’s attempts to impose its will through economic sanctions.
The Tennessee Valley Authority is broadening its effort to remake itself as the testing ground for new American small modular reactors. On Tuesday, the federally-owned utility announced plans to buy 6 gigawatts of reactors from NuScale Power, the first and only SMR developer whose design has won approval from the Nuclear Regulatory Commission. Shares of NuScale — which has struggled since the high-profile failure of what was supposed to be the nation’s debut SMR power plant in Utah two years ago — surged nearly 8%.
The TVA had already planned to build the first U.S. units of GE Vernova-Hitachi Nuclear Energy’s 300-megawatt reactors, and last month became the country’s first utility to sign a power purchase agreement with a fourth-generation reactor developer, the Google-backed Kairos Power. The deals come amid what Heatmap’s Katie Brigham called a “nuclear power dealmaking boom.” On Tuesday an industrial standard-setting group that includes Exxon Mobil, Chevron, Shell, Rio Tinto, and IBM launched a new consortium to streamline processes around building advanced nuclear reactors. On Wednesday, Kairos inked a deal with nuclear fuel producer BWXT to work together on producing the rare type of uranium fuel the reactor company needs for its plants.
Wind turbines are notoriously not always recyclable. But they are reusable. Just ask Jos de Krieger, the co-founder of a Dutch company called Blade Made that purchases used turbines and transforms them into sleek, minimalist tiny homes. “Everything in the built environment — everything that you see around you — has an end of life,” Krieger told CNN. “And we need solutions besides waste or landfill, incineration or something without value… Changing that perception is really something that has to happen in the eyes of everyone,” he added, calling for “processes that create stories, instead of waste.”
Rob talks to Peter Brannen, author of the new book The Story of CO2 Is the Story of Everything.
How did life first form on Earth? What does entropy have to do with the origins of mammalian life — or the creation of the modern economy? And what chemical process do people, insects, Volkswagens, and coal power plants all share?
On this week’s episode of Shift Key, Rob chats with Peter Brannen, the author of a new history of the planet, The Story of CO2 Is the Story of Everything. The book weaves together a single narrative from the Big Bang to the Permian explosion to the oil-devouring economy of today by means of a single common thread: CO2, the same molecule now threatening our continued flourishing.
Brannen is a contributing writer at The Atlantic and the author of The Ends of the World, a history of mass extinctions on Earth. He is an affiliate at the Institute of Arctic and Alpine Research at the University of Colorado, Boulder. 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. Jesse is off this week.
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Here is an excerpt from our conversation:
Robinson Meyer: Why do we have a surplus of oxygen in the air in the first place? It was, for me, also something I did not understand at all before I read the book.
Peter Brannen: So there’s this common trope that two out of the next three breaths you have is from phytoplankton the ocean, or a quarter of it is from the Amazon alive today. And there’s a sense in which that’s true because oxygen and CO2 are being exchanged very quickly in the biosphere. But there is something like 800 times more oxygen in the air than can be produced by the entire biosphere. And all of the oxygen that’s produced by the rainforest, say — the rainforest is a living system where everything else is consuming that organic matter and feeding off of it. And it’s kind of a wash — just as much oxygen is created by the trees as is consumed by the bugs and fungi and jaguars and all the things that are living in the rainforest that are feeding off those plants and respiring that plant matter back to things like CO2 and water. So on a net scale it’s a wash.
So that gets you a planet with close to zero oxygen, and instead we have this absurd abundance of this thing that wants to react with everything. And the only way you can do that is if, say, you imagine a tree and when it dies, rather than being decomposed by fungi and beetles and on and on, that tree suddenly gets buried in sediment and falls into the crust and becomes part of the rock record, and the oxygen it made in life is not used in its own destruction. And by shielding that tree in the earth, you leave this surplus of oxygen in the air. And over all of Earth history, as a vanishingly small amount of this organic matter, things like plants and algae, do make it into the rock record, they leave an equivalent gift of oxygen in the air as a surplus.
We are more familiar with plant matter in the crust where it’s economically exploitable — we call those fossil fuels. So in a weird way, the fact that me and you can breathe — I don’t think a lot of people attribute that to the fact that there’s fossil fuels in the ground. Luckily most, you know, quote-unquote fossil fuels are very diffuse in mudstones, and they’re not economically exploitable. And we’re never going to run out of oxygen by burning fossil fuels because, you know, we worry about CO2 going up in parts per million and oxygens in whole percent. So, you know, it is true that for every molecule of CO2 we burn we’re bringing down oxygen by an equivalent amount, it’s just not that concerning.
But yeah, there is this astounding way of reframing, of looking at the world where the plant surface is breathable only because of what’s happened in the rocks beneath it.
Mentioned:
Peter’s book, The Story of CO2 Is the Story of Everything
This episode of Shift Key is sponsored by …
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Music for Shift Key is by Adam Kromelow.
Is the “turbine crisis” coming to an end? Or at least the end of the beginning?
One of the few bright spots for renewables this year has been that their main competitor for energy generation, natural gas, has been in a manufacturing crunch. An inability (or unwillingness) to ramp up production of turbines, the core component of a gas-fired power plant, to meet rising energy demand is cited regularly by industry executives and financiers to explain why renewables are the best solution to quickly getting power. And it’s reflected in the data; planned additions to the grid are overwhelmingly solar and storage.
But now there might be more turbines coming. Mitsubishi Heavy Industry chief executive Eisaku Ito told Bloomberg over the weekend that it aims to double its capacity to build gas turbines over the next two years.
The industry is essentially an oligopoly of three suppliers: Mitsubishi, GE Vernova, and Siemens Energy. Due to the high level of capital investment necessary to build turbines, there’s little chance of the triumvirate expanding. This means it’s a seller’s market. Developers describe having to be vetted by their suppliers for a product that might get delivered in five years, instead of suppliers fiercely competing for new business. That means for the turbine crisis to be truly reversed, executives (and investors) at Mitsubishi’s two competitors will have to be convinced that large-scale capacity expansions are worth it.
Something that might help them reach that conclusion is if capacity expansion plans are met with a higher stock price. In another ominous development for the renewable energy industry, Mitsubishi’s stock price went up in response to the news. Renewable developers have enough problems on their hands without having to worry about a gas turbine industry that could supply more and more megawatts over the medium term.
Gas turbine manufacturers have been trying to navigate the tension of fulfilling orders for new gas turbines and avoiding costly investments in new capacity that might not actually be utilized should the AI boom peter out, let alone if public policy makes it much more difficult to build new fossil-powered generation.
Up until now, manufacturers — and their investors — have seemed content with heavy demand and constrained supply. Going into the weekend, the stock prices of the gas turbine industry powerhouses GE Vernova, Siemens, and Mitsubishi Heavy Industry had risen 86%, 79%, and 69% so far this year.
But Mitsubishi Heavy Industry’s stock bump on Tuesday indicates that investors are not completely averse to capacity expansion. Yet at the same time, executives across the industry are careful to portray themselves as thoughtful and prudent stewards of capital.
Ito emphasized that the planned capacity expansion would not mean reckless investments, telling Bloomberg “the goal is to be as lean as possible” and that there would be work on the efficiency of the production process to address spiraling costs of turbine manufacturing.
“The executives seem keen to stress that this expansion will be lean and efficient,” Advait Arun, a climate and infrastructure analyst at the Center for Public Enterprise and the author of a much-cited Heatmap article on the turbine shortage, told me. “There’s a tension between getting over their skis by expanding overmuch while also killing the goose that’s laying their golden egg by not expanding.”
The pressure to build is immense — but so is the industry’s hard-won reticence about expansion.
Gas turbine orders are likely to hit a new record this year, according to S&P Global Commodities Insights, and the industry might be unwilling to go further.
“Past boom-and-bust cycles have made the industry cautious in its investments, and turbine demand in the early 2030s is uncertain,” S&P analysts wrote.
Siemens Energy chief executive Christian Bruch had told Morgan Stanley analysts in a note released Tuesday that the company had “no intention” of increasing capacity beyond working to expand the facilities it already has. He also said the company’s constraints are its own supply chain issues, namely the blades and vanes used in the turbines
And GE Vernova has been practically bragging about how far back they have reservations for turbines. “Our pipeline of activity for gas demand is only growing, but it is growing at even more healthy levels for 2029 deliveries, 2030, 2031,” the company’s chief executive Scott Strazik said on an earnings call in July.
And Wall Street has been happy to see developers get in line for whatever turbines can be made from the industry’s existing facilities. But what happens when the pressure to build doesn’t come from customers but from competitors?