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As blue states double down on renewables, a backlash is growing in red states.
The Inflation Reduction Act was the star of the show in statehouses across the United States this year. As state leaders wrapped up their legislative sessions, many not only tightened their own climate plans, but delivered an encore to the IRA by passing policies to maximize their share of the new federal clean energy funding.
But the applause hasn’t been universal. In a few key Republican-led legislatures, Biden’s climate maneuvers have produced a backlash. Lawmakers pushed through bills that could make cutting emissions a lot harder, making the map of U.S. climate policy start to look as polarized as that of abortion rights or gun control laws.
“There has been a tendency to think about the energy transition as almost automatic when the cost of clean energy technologies come down,” Matto Mildenberger, a political scientist at the University of California-Santa Barbara, told me. “But politics is a really important dimension that's often missed.”
Let’s look at a few examples. Back in February, Minnesota passed a law requiring the state’s utilities to use 100% carbon-free electricity by 2040. Democrats had just taken over the legislature, and they were just warming up. In April they created a $156 million “competitiveness fund” to help agencies and cities compete for the IRA’s clean energy programs. And last week, Democratic Governor Tim Waltz signed two additional laws, one earmarking funding for heat pumps and electric vehicles, and the other creating a new sales tax to support public transit.
Democrats took a similar approach in Colorado, passing new tax credits for many of the same technologies that the IRA funds to try and attract as much federal money into its economy as possible. Coloradans are now eligible for a $7,500 EV tax credit that can be stacked on the federal credit for a juicy $15,000 incentive.
Meanwhile, New York passed the first state-level ban on natural gas in new buildings in the country. Policymakers there also directed a state-run utility to start building renewable energy projects, taking advantage of a little-known provision in the IRA that enables public entities and nonprofits to cash in on federal tax credits.
But in other states, electeds are enacting what you could call anti-climate policies. Montana’s Republican Governor Greg Gianforte recently signed a law that bars state agencies from even considering greenhouse gas emissions when conducting environmental reviews for major projects. The legislature there also passed measures preempting local governments from requiring new buildings to be solar panel or EV-ready, and from placing any restrictions on the use of natural gas. At least 20 other states have enacted similar natural gas ban preemptions in recent years. A new anti-climate copycat bill also spread to a few states this year — Ohio and Tennessee each passed laws classifying natural gas as a source of clean energy.
In Texas, the Republican-controlled legislature is contemplating bills to publicly fund a fleet of new natural gas plants, while placing new, onerous regulations on wind and solar projects. Texas currently produces more wind and solar power than any other state, thanks to lax permitting requirements and an abundance of wind, sun, and undeveloped land. Now, lawmakers want developers of new wind and solar farms — as well as owners of existing projects — to do additional environmental reviews, get new approvals, and pay higher fees. Wind farms would have to be built at least 3,000 feet from neighboring property lines. The rules would not apply to fossil fuel plants.
Though the bill never made it out of committee, a group of Republican lawmakers in Wyoming even sought to “phase out” electric vehicle sales to protect the state’s oil and gas industry. The bill’s lead sponsor later said he supports electric vehicles, and was just trying to send a message to California, which made plans to eventually ban gas-powered vehicles last August.
And while Georgia is often held up as a leader in building a new clean economy, having attracted more clean energy investments since the IRA passed than any other state, Republican lawmakers there recently enacted a tax on public electric vehicle charging.
None of this is particularly surprising or new. To some extent, climate and clean energy policy has long followed party lines. As political scientist Leah Stokes documents in her book Short Circuiting Policy, states like Texas and Ohio have a history of enacting anti-climate policies that slowed the growth of renewables. Those were in large part driven by special interest groups backed by utilities and the fossil fuel industry.
Mildenberger said these efforts are ramping up now because the IRA has made the threat to these industries much more significant. “Increasingly, as some of these technologies are no longer cost competitive in a pure market competition framework, they need to use policy as a rearguard action to try and maintain their market share.”
There is evidence that at least some of these policies, like defining natural gas as clean energy and preempting any bans on the fuel, trace back to special interest groups like the American Legislative Exchange Council and the American Gas Association. What’s new is a push to turn these issues into culture wars by painting natural gas use as a matter of freedom or identity. Republican lawmakers have described a rash of anti-ESG bills, which also have roots with industry groups, as a crackdown on “woke” investing.
But Hanna Breetz, a political scientist at Arizona State University told me it would be a mistake to attribute the trend purely to industry influence or the usual reactionary politics. That view overlooks two other very real factors that she sees contributing to an increasingly polarized environment. One is that people in rural states are legitimately concerned about what a decarbonized future means for them in terms of land use and extraction. They are going to bear the brunt of landscape impacts from vast new solar and wind farms and lithium mines.
The second is genuine risks to reliability from a grid powered by increasing amounts of renewables and batteries that’s also serving an increasing number of electric appliances. “There are some very serious concerns that have yet to be dealt with, particularly in the face of climate change and weather-related issues,” said Breetz. She pointed to a recent report warning of blackouts in some parts of the country this summer, which highlighted diminished capacity from natural gas and coal plants as one potential cause. “I think there's a lot less ideological opposition within utilities than many people assume, and that they are scared to death about a lot of these reliability concerns.”
It’s hard to untangle the role of each of these components — industry influence, party politics, land use concerns, and technical challenges — when they all feed into one another. The effect could intensify as more and more people experience a bad blackout or are faced with a solar farm being built in a place they hold dear.
But also, it might not. If all goes according to Biden’s plan, the IRA will be a countervailing force that brings new jobs and economic growth to areas where political support for clean energy is in short supply. The majority of clean energy project announcements since the IRA was passed are in states like Georgia, Arizona, and South Carolina. Think of the new battery belt emerging in the South, or how many renewable energy projects are popping in Republican-held congressional districts.
“In three or five years that might make some of the extreme rhetoric and policy positions that we're seeing right now on the Republican side of the aisle a little bit more challenging to hold,” said Mildenberger. “My view is that even in some of the more fossil fuel intensive parts of the United States, the question of the energy transition is not if, but when. And to help manage the global climate crisis, that ‘when’ needs to be really soon.”
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With the federal electric vehicle tax credit now gone, automakers like Ford and Hyundai have to find other ways to make their electric cars affordable.
We finally know what Tesla means by an “affordable” electric vehicle. On Tuesday, the electric automaker revealed the stripped-down, less-fancy “Standard” version of its best-selling Model Y crossover and Model 3 sedan. These EVs will sell for several thousand dollars less than the existing versions, which are now rebranded as “Premium.”
These slightly cheaper Ys and 3s aren’t exactly the $25,000 baby Tesla that many fans and investors have anticipated for years. But the announcement is an indication of where the electric vehicle market in the United States may be headed now that the $7,500 federal tax credit for purchasing an EV is dead and gone. Automakers have spent the past few months rejiggering their lineups and slashing prices as much as they can to make sure sales don’t crater without the federal incentive.
The impending end of the tax credit on September 30 helped propel Tesla to record sales numbers in the third quarter of 2025. It was a stark reversal from months of disappointing sales stemming from factors like increased competition and Elon Musk’s political antics that alienated potential buyers. Money talks, of course; Tesla sent me a blitz of emails to make sure I didn’t forget what a good deal I could get before September’s end. But now, with the deadline passed, Musk’s company needed a new shot in the arm to stop sales from falling off a cliff.
The budget Teslas are, indeed, lesser vehicles. They have simpler headlights, less power, and less range than the now-Premium versions. They even come in fewer colors. But the prices — $40,000 for a Model Y Standard and $37,000 for a Model 3 Standard — effectively mirror what those cars would have cost if the tax credit were still in place. In other words, you can still buy a Tesla in the $35,000 to $40,000 range. It just won’t be as good a Tesla as you used to be able to get for the money.
The tax credit deadline had looked like one that would demarcate two distinct EV eras, with October 1 acting as the beginning of new, less-affordable time. But it turns out things aren’t quite so black and white. Lots of automakers are experimenting with ways to soften the financial blow for those who still want to get into an EV. After all, there’s always a loophole.
For example, as the September tax credit deadline approached, Reuters reported on a scheme orchestrated by Ford and General Motors to allow the American car giants to keep the good times going by buying their own cars. It goes like this: Before the September 30 deadline, the financing arms of these big corporations began the process of purchasing a host of their own vehicles from their dealerships. By making the down payment before the end of September, Ford and GM qualified these vehicles for the federal tax benefit. (They even checked with the IRS to make sure this plot was legitimate, Reuters said.) They plan to pass on the savings by leasing those vehicles back to everyday Americans.
According to Car and Driver, a number of citizens did something similar to what the corporations devised — that is, some buyers made their first payments on EVs that won’t be delivered to them for weeks or months in order to qualify for the tax break. These shenanigans are for the short term, though. Ford and GM could pre-purchase only so many of their own vehicles, and Ford said this deal effectively extends the tax credit only another quarter, through the end of December.
The bigger question is whether the automakers can — or will — simply cut prices on their EVs to make the loss of federal incentives sting a little less.
That’s the plan at Hyundai. The Korean giant has announced an enormous price cut on its successful Ioniq 5, one that more than makes up for the vanishing federal incentive. The most basic version of that car will fall from $42,600 to $35,000, putting it on par with the Chevy Equinox EV that’s been a hit at that price. Fancier versions of the Ioniq 5 will fall by more than $9,000 for the 2026 model year. Hyundai and its partner Kia are offering some of the best October lease deals, too.
Other car companies have begun to follow suit. BMW will simply offer a $7,500 discount on its electric models for those who take delivery by the end of October. Stellantis, the parent company of Jeep, Chrysler, Dodge, Ram, and others, will do the same for electric sales through the end of the year. No word yet on what happens after these deals expire.
Incentives like the federal tax credit for EVs aren’t meant to last forever, of course. In theory, their purpose is to lift up a new technology until it can compete at scale with the tech that has been around forever.
Whether electric cars have reached that point is a contentious question. Ford has only just announced a roadmap to overhaul its entire EV production system in order to stop losing billions on electric vehicles. Hyundai’s EVs are profitable — or, at least they were before the Trump administration began monkeying with tax incentives and tariffs. A batch of more affordable EVs are on the way, though the ever-changing map of tariffs makes it unclear exactly how much they’ll cost when they finally arrive.
The short-term picture may well be that electric cars continue to be a loss leader for some automakers still trying to find their footing in the space. Whether their shareholders will tolerate this long enough for the margins to become sustainable — well, that’s the real question.
Current conditions: In the Atlantic, the tropical storm that could, as it develops, take the name Jerry is making its way westward toward the U.S. • In the Pacific, Hurricane Priscilla strengthened into a Category 2 storm en route to Arizona and the Southwest • China broke an October temperature record with thermometers surging near 104 degrees Fahrenheit in the southeastern province of Fujian.
The Department of Energy appears poised to revoke awards to two major Direct Air Capture Hubs funded by the Infrastructure Investment and Jobs Act in Louisiana and Texas, Heatmap’s Emily Pontecorvo reported Tuesday. She got her hands on an internal agency project list that designated nearly $24 billion worth of grants as “terminated,” including Occidental Petroleum’s South Texas DAC Hub and Louisiana's Project Cypress, a joint venture between the DAC startups Heirloom and Climeworks. An Energy Department spokesperson told Emily that he was “unable to verify” the list of canceled grants and said that “no further determinations have been made at this time other than those previously announced,”referring to the canceled grants the department announced last week. Christoph Gebald, the CEO of Climeworks, acknowledged “market rumors” in an email, but said that the company is “prepared for all scenarios.” Heirloom’s head of policy, Vikrum Aiyer, said the company wasn’t aware of any decision the Energy Department had yet made.
While the list floated last week showed the Trump administration’s plans to cancel the two regional hydrogen hubs on the West Coast, the new list indicated that the Energy Department planned to rescind grants for all seven hubs, Emily reported. “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 her. “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.”
Remember the Tesla announcement I teased in yesterday’s newsletter? The predictions proved half right: The electric automaker did, indeed, release a cheaper version of its midsize SUV, the Model Y, with a starting price just $10 shy of $40,000. Rather than a new Roadster or potential vacuum cleaner, as the cryptic videos the company posted on CEO Elon Musk’s social media site hinted, the second announcement was a cheaper version of the Model 3, already the lower-end sedan offering. Starting at $36,990, InsideEVs called it “one of the most affordable cars Tesla has ever sold, and the cheapest in 2025.” But it’s still a far cry from Musk’s erstwhile promise to roll out a Tesla for less than $30,000.
That may be part of why the company is losing market share. As Heatmap’s Matthew Zeitlin reported, Tesla’s slice of the U.S. electric vehicle sales sank to its lowest-ever level in August despite Americans’ record scramble to use the federal tax credits before the September 30 deadline President Donald Trump’s new tax law set. General Motors, which sold more electric vehicles in the third quarter of this year than in all of 2024, offers the cheapest battery-powered passenger vehicle on the market today, the Chevrolet Equinox, which starts at $35,100.
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Trump’s pledge to revive the United States’ declining coal industry was always a gamble — even though, as Matthew reported in July, global coal demand is rising. Three separate stories published Tuesday show just how stacked the odds are against a major resurgence:
As you may recall from two consecutive newsletters last month, Secretary of Energy Chris Wright said “permitting reform” was “the biggest remaining thing” in the administration’s agenda. Yet Republican leaders in Congress expressed skepticism about tacking energy policy into the next reconciliation bill. This week, however, Utah Senator Mike Lee, the chairman of the Senate Committee on Energy and Natural Resources, called for a legislative overhaul of the National Environmental Policy Act. On Monday, the pro-development social media account Yimbyland — short for Yes In My Back Yard — posted on X: “Reminder that we built the Golden Gate Bridge in 4.5 years. Today, we wouldn’t even be able to finish the environmental review in 4.5 years.” In response, Lee said: “It’s time for NEPA reform. And permitting reform more broadly.”
Last month, a bipartisan permitting reform bill got a hearing in the House of Representatives. But that was before the government shutdown. And sources familiar with Democrats’ thinking have in recent months suggested to me that the administration’s gutting of so many clean energy policies has left Republicans with little to bargain with ahead of next year’s midterm elections.
Soon-to-be Japanese prime minister Sanae Takaichi.Yuichi Yamazaki - Pool/Getty Images
On Saturday, Japan’s long-ruling Liberal Democratic Party elected its former economic minister, Sanae Takaichi, as its new leader, putting her one step away from becoming the country’s first woman prime minister. Under previous administrations, Japan was already on track to restart the reactors idled after the 2011 Fukushima disaster. But Takaichi, a hardline conservative and nationalist who also vowed to re-militarize the nation, has pushed to speed up deployment of new reactors and technologies such as fusion in hopes of making the country 100% self-sufficient on energy.
“She wants energy security over climate ambition, nuclear over renewables, and national industry over global corporations,” Mika Ohbayashi, director at the pro-clean-energy Renewable Energy Institute, told Bloomberg. Shares of nuclear reactor operators surged by nearly 7% on Monday on the Tokyo Stock Exchange, while renewable energy developers’ stock prices dropped by as much as 15%
Researchers at the United Arab Emirates’ University of Sharjah just outlined a new method to transform spent coffee grounds and a commonly used type of plastic used in packaging into a form of activated carbon that can be used for chemical engineering, food processing, and water and air treatments. By repurposing the waste, it avoids carbon emitting from landfills into the atmosphere and reduces the need for new sources of carbon for industrial processes. “What begins with a Starbucks coffee cup and a discarded plastic water bottle can become a powerful tool in the fight against climate change through the production of activated carbon,” Dr. Haif Aljomard, lead inventor of the newly patented technology, said in a press release.
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 116 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.
Editor’s note: This story initially misstated the number of neonatal intensive care unit beds at Valley Children’s Hospital. It has been corrected.