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It’s the Obama playbook, but different.
It was — against all odds — an energy debate.
Just look at the statistics. The word “fracking” was mentioned 10 times. “Oil” came up seven times. Even “climate change,” which Donald Trump was not very eager to talk about, was mentioned four times. And while that may not seem like a lot for such a vast and globe-spanning problem, climate change came up only three times in all of 2016’s debates combined.
Even more than when talking about trade or inflation, Vice President Kamala Harris and former President Donald Trump used energy to make their economic vision concrete and meaningful to Americans. For Harris, that meant recognizing the scale of the country’s fossil fuel resources today while gesturing toward a cleaner and lower-carbon future that will produce (in theory, at least) lots of high-wage manufacturing jobs for America’s middle class. For Trump, the energy industry — and, really, the fossil fuel industry — is central to his fleshy, authoritarian vision of American strength. Seemingly any attempt to replace hydrocarbons with something cleaner or less polluting arises from nothing less than an elite conspiracy to weaken the country and sell out its people.
For such a stark contrast — and for such an outlandish contrast, to be clear — it was a surprisingly substantive debate. Which isn’t to say we learned much, especially about Trump. The Republican nominee was the same man we’ve seen for the past nine years, the same politician who has defined the extreme GOP position on global warming. Over the past near-decade, Trump has called climate change a “hoax” and has seemed to revel in emissions-increasing policies. That isn’t changing. Asked directly what he would do about climate change on Tuesday night, he did not address the question at all. Instead, he talked about how car factories are getting built in Mexico, and he claimed in a difficult-to-follow rant that Joe Biden is getting paid off by China.
About Harris, we learned far more. Harris struck a careful, moderate tone during the debate between the need for climate action and the ongoing importance of fossil fuel extraction. She spoke about the Inflation Reduction Act, the Biden administration’s signature climate policy, but also discussed how it increased federal leasing for oil and gas. She spoke about climate change in terms of its higher everyday costs for Americans, and not — as Biden did — as an existential threat to the country.
“What we know is that [climate change] is very real,” she said. “You ask anyone who lives in a state who has experienced these extreme weather occurrences, who now is either being denied home insurance or [it] is being jacked up.”
She bragged about the Biden administration’s oil and gas record in the same breath as she discussed its enormous investments in clean energy. American oil and gas production is at an all-time high — it is higher, in fact, than Saudi Arabia’s — but I can’t remember hearing a Biden administration official bragging about that.
“I am proud that as vice president over the last four years, we have invested a trillion dollars in a clean energy economy while we have also increased domestic gas production to historic levels,” she said.
In a way, Harris has essentially returned to Obama’s 2012 “all of the above” energy policy. That approach remains unpopular with climate activists, who think it did too much for the oil and gas industry; personally, I think it’s an open question whether Obama actually believed in the “all of the above” approach or was subtly trying to help renewables all along. But more importantly, the underlying policy context is totally different now than it was 12 years ago: With the Inflation Reduction Act in place, the government can more easily bless all forms of energy development because it is, in fact, helping clean energy take root.
What’s most important, though — and what I hope climate advocates do not overlook — is that Harris’s tack here reflects the broad state of American public opinion. While most Americans want to reduce greenhouse gas emissions, they do not seem to want an energy revolution: More than two-thirds of Americans believe the country should use a mix of renewables and fossil fuels, according to the Pew Research Center, and less than a third believe the country should rely “entirely” on renewables. In the same poll, most Americans said they oppose federal rules that would aim to make electric vehicles half of all new cars sold by 2032.
This is not to say that Americans are big oil lovers. Most Americans think the country should prioritize various forms of zero-carbon energy development over fossil fuels. And while Republican support for renewables has dropped over the past few years — and has fallen furtherover the past few months, as my colleague Matthew Zeitlin wrote recently — a generation gap has emerged wherein younger Republicans are much more likely to champion solar and wind than older party members.
Even among seemingly environmental-aligned demographics, greater support exists for fossil fuels than one might expect. Most Democrats say they would not “favor” expanding fracking or offshore drilling — but about a quarterof Democratswould favor more fossil fuel drilling. So would roughly 45% of independents and, of course, a large majority of Republicans, according to Pew.
Of course, these facts of public opinion sit uneasily with what we know about climate change, which is that greenhouse gas emissions — and fossil fuel development with it — should plan to scale down soon. The International Energy Association has said that the most likely pathway for keeping global warming to 1.5 degrees Celsius requires the development of “no new long lead-time upstream oil or gas projects.” This observation provides less guidance for American policy makers than it might initially seem, because it is really focused on the opening of new, massive oil fields like Guyana’s. (The IEA also says, in almost the same breath, that “continued investment is required in some existing oil and gas projects,” which could possibly justify ongoing extraction from Texas’s well-established oil and gas fields.)
But even then, the non-negotiable fact would remain: The world must move away from fossil fuels. And the American people are not generally ready to do that today. The country wants something closer to an “all of the above” strategy than it wants a Green New Deal.
That strategy brings climate policy out of the ideological realm and into the pragmatic. Americans, polling suggests, like renewables in part because they will let the United States reduce its dependence on foreign oil, a popular idea in and of itself and talking point of both parties going back decades.
When Heatmap polled more than 5,000 Americans last month, more than half said that a “strong benefit” of a given clean energy project would be its ability to reduce the country’s dependence on foreign oil and natural gas. Among respondents, those putative energy independence benefits were the No. 2 most popular reason to support clean energy; the only more popular rationale for backing a project was that it would cut utility bills.
Harris directly echoed that appeal on Tuesday. “My position is that we have got to invest in diverse sources of energy so we reduce our reliance on foreign oil,” she said. “We have had the largest increase in domestic oil production in history because of an approach that recognizes that we cannot over rely on foreign oil.”
I can’t remember Biden making an appeal like this. When he talks about clean energy or the IRA, he tends to focus on its potential to grow the economy. Harris did some of that on Tuesday, bragging about the 800,000 new manufacturing jobs created during her vice presidency. But her focus on the national interest — and on the Biden administration’s appreciation of the ongoing fossil boom — was new.
Such an approach is unlikely to help her appeal to climate activists and advocates, who want the government to affirmatively begin to shutter fossil capacity. The Sunrise Movement, a climate activist group, criticized Harris on Tuesday for spending “more time promoting fracking than laying out a bold vision for a clean energy future.”
What I’d advise those advocates to keep in mind is that their views are legitimately not very popular, and Harris is trying to win a very close election in a race that her team believes has potentially existential stakes for American democracy. She also remembers the 2020 primary, when she tacked left on virtually every issue — she promised to ban fracking, for instance — and still lost. (If that’s because many of the groups wound up backing Bernie Sanders in that primary, that only reinforces the view that she can’t win over those voters in the first place.)
Harris isn’t defying the left on every issue — she has resisted neoliberal dogma and pandered to the public’s views on price gouging, for instance, putting her more in line with the Democratic Party’s Elizabeth Warren wing. But unlike Biden, she refuses to pay an electoral price for backing left-wing policies. Indeed, she seems to believe that she cannot pay such a price and still win. If Harris is now bragging about her administration’s support for fossil fuels, if she is casting the Inflation Reduction Act as a law that helped fracking, that means climate activists have much more work to do to persuade the public on what they believe. The Democratic Party’s candidate will not do that persuasion for them. And in any case, activists are not going to convince the public to believe something in the next 54 days that they’ve failed to do in the past five years.
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Jesse teaches Rob the basics of energy, power, and what it all has to do with the grid.
What is the difference between energy and power? How does the power grid work? And what’s the difference between a megawatt and a megawatt-hour?
On this week’s episode, we answer those questions and many, many more. This is the start of a new series: Shift Key Summer School. It’s a series of introductory “lecture conversations” meant to cover the basics of energy and the power grid for listeners of every experience level and background. In less than an hour, we try to get you up to speed on how to think about energy, power, horsepower, volts, amps, and what uses (approximately) 1 watt-hour, 1 kilowatt-hour, 1 megawatt-hour, and 1 gigawatt-hour.
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: Let’s start with the joule. The joule is the SI unit for both work and energy. And the basic definition of energy is the ability to do work — not work in a job, but like work in the physics sense, meaning we are moving or displacing an object around. So a joule is defined as 1 newton-meter, among other things. It has an electrical equivalent, too. A newton is a unit of force, and force is accelerating a mass, from basic physics, over some distance in this case. So 1 meter of distance.
So we can break that down further, right? And we can describe the newton as 1 kilogram accelerated at 1 meter per second, squared. And then the work part is over a distance of one meter. So that kind of gives us a sense of something you feel. A kilogram, right, that’s 2.2 pounds. I don’t know, it’s like … I’m trying to think of something in my life that weighs a kilogram. Rob, can you think of something? A couple pounds of food, I guess. A liter of water weighs a kilogram by definition, as well. So if you’ve got like a liter bottle of soda, there’s your kilogram.
Then I want to move it over a meter. So I have a distance I’m displacing it. And then the question is, how fast do I want to do that? How quickly do I want to accelerate that movement? And that’s the acceleration part. And so from there, you kind of get a physical sense of this. If something requires more energy, if I’m moving more mass around, or if I’m moving that mass over a longer distance — 1 meter versus 100 meters versus a kilometer, right? — or if I want to accelerate that mass faster over that distance, so zero to 60 in three seconds versus zero to 60 in 10 seconds in your car, that’s going to take more energy.
Robinson Meyer: I am looking up what weighs … Oh, here we go: A 13-inch MacBook Air weighs about, a little more than a kilogram.
Jenkins: So your laptop. If you want to throw your laptop over a meter, accelerating at a pace of 1 meter per second, squared …
Meyer: That’s about a joule.
Jenkins: … that’s about a joule.
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If the Senate reconciliation bill gets enacted as written, you’ve got about 92 days left to seal the deal.
If you were thinking about buying or leasing an electric vehicle at some point, you should probably get on it like, right now. Because while it is not guaranteed that the House will approve the budget reconciliation bill that cleared the Senate Tuesday, it is highly likely. Assuming the bill as it’s currently written becomes law, EV tax credits will be gone as of October 1.
The Senate bill guts the subsidies for consumer purchases of electric vehicles, a longstanding goal of the Trump administration. Specifically, it would scrap the 30D tax credit by September 30 of this year, a harsher cut-off than the version of the bill that passed the House, which would have axed the credit by the end of 2025 except for automakers that had sold fewer than 200,000 electric vehicles. The credit as it exists now is worth up to $7,500 for cars with an MSRP below $55,000 (and trucks and sports utility vehicles under $80,000), and, under the Inflation Reduction Act, would have lasted through the end of 2032. The Senate bill also axes the $4,000 used EV tax credit at the end of September.
“Long story short, the credits under the current legislation are only going to be on the books through the end of September,” Corey Cantor, the research director of the Zero Emission Transportation Association, told me. “Now is definitely a good time, if you’re interested in an EV, to look at the market.”
The Senate applied the same strict timeline to credits for clean commercial vehicles, both new and used. For home EV chargers, the tax credit will now expire at the end of June next year.
While EVs were on the road well before the 2022 passage of the Inflation Reduction Act, what the new tax credit did was help build out a truly domestic electric vehicle market, Cantor said. “You have a bunch of refreshed EV models from major automakers,” Cantor told me, including “more affordable models in different segments, and many of them qualify for the credit.”
These include cars produceddomestically by Kia,Hyundai, and Chevrolet. But of course, the biggest winner from the credit is Tesla, whose Model Y was the best-selling car in the world in 2023.
Tesla shares were down over 5.5% in Tuesday afternoon trading, though not just because of Congress. JPMorgan also released an analyst report Monday arguing that the decline in sales seen in the first quarter would accelerate in the second quarter. President Trump, with whom Tesla CEO Elon Musk had an extremely public falling out last month, suggested on social media Monday night that the government efficiency department Musk himself formerly led should “take a good, hard, look” at the subsidies Musk receives across his many businesses. Trump also said that he would “take a look” at Musk’s United States citizenship in response to reporters’ questions about it.
Cantor told me that he expects a surge of consumer attention to the EV market if the bill passes in its current form. “You’ve seen more customers pull their purchase ahead” when subsidies cut-offs are imminent, he said.
But overall, the end of the subsidy is likely to reduce EV sales from their previously expected levels.
Harvard researchers have estimated that the termination of the EV tax credit “would cut the EV share of new vehicle sales in 2030 by 6.0 percentage points,” from 48% of new sales by 2030 to 42%. Combined with other Trump initiatives such as terminating the National Electric Vehicle Infrastructure program for publicly funded chargers (currently being litigated) and eliminating California’s waiver under the Clean Air Act that allowed it to set tighter vehicle emissions standards, the share of new car sales that are electric could fall to 32% in 2030.
But not all government support for electric vehicles will end by October 1, even if the bill gets the president’s signature in its current form.
“It’s important for consumers to know there are many states that offer subsidies, such as New York, and Colorado,” Cantor told me. That also goes for California, New Jersey, Nevada, and New Mexico. You can find the full list here.
Editor’s note: This story has been edited to include a higher cost limit for trucks and SUVs.
Excise tax is out, foreign sourcing rules are in.
After more than three days of stops and starts on the Senate floor, Congress’ upper chamber finally passed its version of Trump’s One Big Beautiful Bill Act Tuesday morning, sending the tax package back to the House in hopes of delivering it to Trump by the July 4 holiday, as promised.
An amendment brought by Senators Joni Ernst and Chuck Grassley of Iowa and Lisa Murkowski of Alaska that would have more gradually phased down the tax credits for wind and solar rather than abruptly cutting them off was never brought to the floor. Instead, Murkowski struck a deal with the Senate leadership designed to secure her vote that accomplished some of her other priorities, including funding for rural hospitals, while also killing an excise tax on renewables that had only just been stuffed into the bill over the weekend.
The new tax on wind and solar would have driven up development costs by as much as 20% — a prospect that industry groups said would “kill” investment altogether. But even without the tax, the Senate’s bill would gum up the works for clean energy projects across the spectrum due to new phase-out schedules for tax credits and fast-approaching deadlines to meet complex foreign sourcing rules. While more projects will likely be built under this version than the previous one, the basic outcomes haven’t changed: higher energy costs, project delays, lost jobs, and ceding leadership in artificial intelligence and manufacturing to China.
"This bill will hit Americans hard, terminating credits that have helped families lower their energy and transportation costs, shrinking demand for American-made advanced energy technologies, and squeezing new domestic energy production at a time of rising demand and prices,” Heather O’Neill, the CEO and president of the trade group Advanced Energy United, said in a statement Tuesday. “The advanced energy industry will endure, but the downstream effects of these rollbacks and punitive policies will be felt by American families and businesses for years to come.”
Here’s what’s in the final Senate bill.
The final Senate bill bifurcates the previously technology-neutral tax credits for clean electricity into two categories with entirely different rules and timelines — wind and solar versus everything else.
Tax credits for wind and solar farms would end abruptly with no phase-out period, but the bill includes a significant safe harbor for projects that are already under construction or close to breaking ground. As long as a project starts construction within 12 months of the bill’s passage, it will be able to claim the tax credits as originally laid out in the Inflation Reduction Act. All other projects must be “placed in service,” i.e. begin operating, by the start of 2028 to qualify.
That means if Trump signs the bill into law on July 4, wind and solar developers will have until July 4 of 2026 to “start construction.” Otherwise, they will have less than a year and a half to bring their projects online and still qualify for the credits.
Meanwhile, all other sources of zero-emissions electricity, including batteries, advanced nuclear, geothermal, and hydropower, will be able to continue claiming the tax credits for nearly a decade. The credits would start phasing down for projects that start construction in 2034 and terminate in 2036.
While there are some potential wins in the bill for clean energy development, many of the safe harbored projects will still be subject to complex foreign sourcing rules that may prove too much of a burden to meet.
The bill requires that any zero-emissions electricity or advanced manufacturing project that starts construction after December of this year abide by strict new “foreign entities of concern,” or FEOC rules in order to be eligible for tax credits. The rules penalize companies for having financial or material connections to people or businesses that are “owned by, controlled by, or subject to the jurisdiction or direction of” any of four countries — Russia, Iran, North Korea, and most importantly for clean energy technology, China.
As with the text that came out of the Senate Finance committee, the text in the final bill would phase in supply chain restrictions, requiring project developers and manufacturers to use fewer and fewer Chinese-sourced inputs over time. For clean electricity projects starting construction next year, 40% of the value of the materials used in the project must be free of ties to a FEOC. By 2030, the threshold would rise to 60%. Energy storage facilities are subject to a more aggressive timeline and would be required to prove that 55% of the project materials are non-FEOC in 2026, rising to 75% by 2030. Each covered advanced manufacturing technology gets its own specific FEOC benchmarks.
Unlike the text from the Finance Committee, however, the final text includes a clear exception for developers who already have procurement contracts in place prior to the bill’s enactment. If a solar developer has already signed a contract to get its cells from a Chinese company, for example, it could exempt that cost from the calculation. That would make it easier for companies further along in the development process to comply with the eligibility rules.
That said, these materials sourcing rules come on top of strict ownership and licensing rules likely to block more than 100 existing and planned solar and battery factories with partial Chinese ownership or licensing deals with Chinese firms from receiving the tax credits, per a BloombergNEF analysis I reported on previously.
Once again, the details of how any of this will work — and whether it will, in fact, be “workable” — will depend heavily on guidance written by the Treasury department. That not only gives the Trump administration significant discretion over the rules, it also assumes that the Treasury department, which is now severely understaffed after Trump’s efficiency department cleaned house earlier this year, will actually have the bandwidth to write them. Without Treasury guidance, developers may not have the cost certainty they need to continue moving forward on projects.
Up until today, the Senate and House looked poised to destroy the business model for companies like Sunrun that lease rooftop solar installations to homeowners and businesses by cutting them off from the investment tax credit, which can bring down the cost of a solar array by as much as 70%. The final Senate bill, however, got rid of this provision and replaced it with a much more narrow version.
Now, the only “leasing” schemes that are barred from claiming tax credits are those for solar water heaters and small wind installations. Companies that lease solar panels, batteries, fuel cells, and geothermal heating equipment are still eligible. SunRun’s stock jumped nearly 10% on Tuesday.
Other than the new FEOC rules, which will have truly existential consequences for a great many projects, there aren’t many changes to the advanced manufacturing tax credit, or 45X, than in previous versions of the bill. The OBBBA would create a new phase-out schedule for critical mineral producers claiming the tax credit that begins in 2031. Previously, critical minerals were set to be eligible indefinitely. It would also terminate the credit for wind energy components early, in 2028.
One significant change from the Senate Finance text is that the bill would allow vertically integrated companies to stack the tax credit for multiple components.
But perhaps the biggest change, which was introduced last weekend, is a twisted new definition of “critical mineral” that allows metallurgical coal — the type of coal used in steelmaking — to qualify for the tax credit. As my colleague Matthew Zeitlin wrote, most of the metallurgical coal the U.S. produces is exported, meaning this subsidy will mostly help other countries produce cheaper steel.
It looks like the hydrogen industry’s intense lobbying efforts finally paid off: The final Senate bill is the first text we’ve seen since this process began in May that would extend the lifespan of the tax credit for clean hydrogen production. Now, projects that begin construction before January 1, 2028 will still qualify for the credit. This is shorter than the Inflation Reduction Act’s 2033 cut-off, but much longer than the end-of-year cliff earlier versions of the bill would have imposed.
The tax credits for electric vehicles and energy efficiency building improvements would end almost immediately. Consumers will have to purchase or lease a new or used EV before September 30, 2025, in order to benefit. There would be a slightly longer lead time to get an EV charger installed, but that credit (30C) would expire on June 30, 2026.
Meanwhile, energy efficiency upgrades such as installing a heat pump or better-insulated windows and doors would have to be completed by the end of this year in order to qualify. Same goes for self-financed rooftop solar. The tax credit for newly built energy efficiency homes would expire on June 30, 2026.
The bill would make similar changes to the carbon sequestration (45Q) and clean fuels (45Z) tax credits as previous versions, boosting the credit amount for carbon capture projects that do enhanced oil recovery, and extending the clean fuels credit to corn ethanol producers.
The House Rules Committee met on Tuesday afternoon shortly after the Senate vote to deliberate on whether to send it to the House floor, and is still debating as of press time. As of this writing, Rules members Ralph Norman and Chip Roy have said they’ll vote against it.