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Talking to legislators from New York, Washington, Massachusetts, and New Jersey about what’s under threat, what’s safe, and the strain of it all.
State lawmakers around the country are negotiating budgets for the coming year amid unprecedented uncertainty. Any decisions they make now about how to spend state money may need to be revisited after Congress finishes its budget reconciliation bill, which could hollow out Medicaid, the largest pot of federal funds that most states receive.
On the climate and clean energy front, the Trump administration has been trying to claw back money allocated to states for electric vehicle charging, home energy retrofits, electric school buses, utility bill assistance, and more. Even longstanding tax credits that states rely on to transition to renewable energy are at risk. On top of all this, the president has threatened to sic his attorney general on states with ambitious climate policies.
I wanted to know how all of this was affecting the way the most forward-thinking state leaders on climate were contemplating their next steps. States passed some of their most ambitious policies to fight climate change during Donald Trump’s first term as president, and they are the best chance the U.S. has to continue making progress over the next four years. But if last time the administration was throwing sand in the gears of climate action, this time it’s trying to tear up the road entirely.
After talking to state senators and representatives in Washington, Massachusetts, New York, and New Jersey, it was clear that every faced its own unique set of considerations and challenges, but there were a few recurring themes.
“We’re in this weird no-man’s land,” New York State Senator Liz Krueger told me. Between losing access to funds the state was relying on and uncertainty around how the Trump administration will reshape environmental protection and clean energy tax credits, “the agenda we might have set out for ourselves a year ago does not necessarily jive with the reality we must now confront.”
Krueger was frustrated because New York has been in the process of developing a new revenue-raiser to help pay for climate programs called Cap-and-Invest, but it’s behind schedule. Eventually it will place a cap on carbon emissions from major polluters and charge them fees when they surpass it — but draft rules for the program are more than a year overdue. Governor Kathy Hochul has not said when her administration will get them out, and environmental groups are now suing the state for putting its climate targets at risk.
The delay has been “quite aggravating,” Krueger told me. But at the same time, she’s worried that if and when the regulations are out, the Trump administration will try to shut down the program. Trump signed an executive order in early April directing his attorney general to identify and “stop the enforcement” of state climate programs that “are or may be unconstitutional.” The order specifically called out California’s carbon cap and trade program, which is similar to the one New York is developing.
“I don’t think we should stop moving forward as planned. But I think hanging over us is the concern that the feds will try to stop us,” Krueger said. She hasn’t sensed much appetite in the legislature to propose new climate programs this session, but she said she’s still hoping to get through a bill that she’s sponsored for the past few years requiring utility regulators to develop a strategy to transition buildings away from using natural gas for heating — although again, she wondered aloud if Trump would quickly try to shut it down.
Washington State, on the other hand, already has a cap-and-invest program in place. Representative Joe Fitzgibbon, of Seattle was the most optimistic of the state legislators I spoke to. “Our legal framework for fighting climate change was not predicated on federal dollars,” he told me. Last year, the state spent nearly half a billion dollars raised through that program on a wide range of projects to enhance wildfire prevention, improve energy efficiency in schools and homes, install electric vehicle chargers, and electrify buildings and vehicles. “We’re not backing off on any of our policies or any of our targets,” he said.
Fitzgibbon was unconcerned about the executive order. Legal experts are skeptical that the courts would side with the White House in any challenges to state climate laws. Trump also went after California’s cap and trade law during his first term and lost. “We think it’s bluster. We think it’s him trying to get headlines, and we’re just not inclined to fan the flames,” he told me.
Instead, Fitzgibbon is pushing forward with a bill this session to strengthen the state’s clean fuel standard. Current law requires a 20% reduction in greenhouse gas emissions from on-road transportation by 2034, and his amendment would increase that to between 45% and 55% by 2038.
New York is also behind on its goal to procure 9 gigawatts of offshore wind by 2035. The state only has power purchase agreements with three offshore wind farms — the small South Fork project, which is already operating, and two larger ones under construction — for a total of 1.8 gigawatts. Then shortly after Krueger and I spoke, the Trump administration issued a stop work order on one of those bigger projects, Empire Wind. Since Trump has also paused federal permitting for new offshore wind projects, Krueger wasn’t sure whether New York officials would even try to solicit for additional contracts. “There’s no good answers,” she said, with a sigh.
Offshore wind is a major element of New Jersey’s plans to cut emissions, as well. But the Trump administration recently pulled the permits for the Atlantic Shores wind farm, the only project serving New Jersey that had said permits.
State Senator Andrew Zwicker told me the sector was already struggling due to rising costs, supply chain issues, and local opposition. Even before Trump came into office, he said, he’s had to fight to keep renewable energy on the agenda. “There is a narrative that we can’t afford renewables, and that the way to go is you need resiliency and redundancy. And the only way to do that is, in our case, with natural gas,” Zwicker told me. He hears that story from Republicans — but also, increasingly, from Democrats. “That’s being driven by the cost of electricity more than it’s being driven by an executive order from Trump,” he added.
There is one source of funding for climate action that all states have access to that may be more impervious to federal interference. This came up during my call with Michael Barrett, a State Senator in Massachusetts, who asserted that “most of our climate policies don’t require budgeting.” That’s because the legislature has designed many of the state’s clean energy programs — including the buildout of electric vehicle infrastructure, rebates for heat pumps and energy efficiency, and compliance with the state’s renewable energy standard — to be funded by fees on monthly electric and gas bills.
Massachusetts is still really early in its legislative calendar — it operates on a two-year schedule and has barely started holding hearings for bills — but Barrett said there are some strategic shifts the state should make in light of Trump’s actions. For example, Trump has stymied offshore wind development, but Barrett said there was less the president could do to hurt solar. “So if you want to preserve the state’s industrial clean energy capacity,” he said, “you pivot to both behind the meter and in front of the meter solar on the ground, on the roofs, on canopies.” He also advocated for more subsidies for EV charging infrastructure rather than for electric vehicles themselves. “You forgo subsidizing individual drivers,” he said. “Many of them will purchase EVs anyhow, because they can afford to, and you focus on getting the charging infrastructure into the ground.”
All of the other state legislators I surveyed for this piece have similar programs financed through utility bills. In general, utility regulation is an area where state leaders have significant sway. In New Jersey, for example, Senator Zwicker is working on a bill that would require utilities to invest in “grid enhancing technologies,” equipment that enables power lines to transmit more electricity without having to totally replace the line or build a new one. That could go a long way to bringing more renewable energy online in the future. In New York, Krueger’s big priority for this year is to pass her New York Heat Act, which would significantly change how gas utilities are regulated, prioritizing transitioning away from gas to electric heating, and cutting the subsidies that customers pay to expand the gas system.
Though Barrett saw the ability for states to tack the cost of clean energy onto utility bills as reassuring, Zwicker found it concerning. “Every year, I personally have gotten more and more uncomfortable with putting everything on the backs of ratepayers,” he told me. “And we don’t have another model in place right now, so there’s no way to do anything else.”
New Jersey is facing many of the same challenges as New York and Massachusetts. The state’s economy has also taken a downturn, Zwicker told me, and budgets are tight. Governor Phil Murphy has proposed cuts to many areas, including climate spending. Zwicker said one of his big focuses right now is finding money to help low-income customers pay their utility bills, as the Trump administration is attempting to zero out federal funding for a longstanding energy assistance program.
New Jersey does have some money coming in for clean energy through utility bill fees, and it also funds climate action with proceeds from the Regional Greenhouse Gas Initiative, a program that charges power plant operators for their emissions. (Massachusetts and New York participate as well.)
But Zwicker was deeply concerned about the loss of federal funding and support. “New Jersey just can’t afford to do this by itself,” he told me. Electricity costs there are already among the highest in the country. “This is a national emergency, and the federal government has got to be a strong partner. Regardless of the fight over how we’re producing energy, if we can’t transmit it, if we don’t have a robust grid, that is as basic an infrastructure as is a highway or a bridge. Under this administration, it’s far from clear that they’ll put a penny towards anything around energy, period.”
Even Washington is not quite sitting pretty. Like New Jersey, the state is in a “pretty severe budget crisis,” Fitzgibbon said, and not in a position to backfill lost federal dollars. Its economy has taken a downturn after a post-pandemic spike. One thing the legislature is doing in response is re-allocating money in the budget that in the past had been set aside for technical assistance to help households, businesses, and Tribes apply for government grants — since federal dollars will likely be scarce, anyway. While the state can still make progress with its cap and invest funds, which can’t be re-allocated to other budget lines, grant funding from the Inflation Reduction Act would help the state cut emissions faster and more cost-effectively, he said. Washington was in line to get $71 million for electric vehicle charging and $21 million for truck charging, for example, but the Trump administration is trying to claw back that funding.
At the end of my interviews, I asked lawmakers what they wanted people to know about what it’s like to do their jobs right now. Zwicker emphasized the sheer scale of the challenge of putting together a budget — especially one that advances climate action — under these circumstances. “Being part of a committee to put a budget together is always a challenge,” he said, “but when you add the threat of over a billion dollars of cuts to our school children, up to $10 billion to $14 billion of cuts for healthcare for seniors and the poor, and then you say, we need to continue to push on New Jersey’s clean energy goals, and get ourselves off of our addiction to fossil fuels, it’s an incredibly challenging task.”
Barrett wanted to make it clear that climate progress would continue under Trump. He said that even if Medicaid was gutted, the state’s efforts to cut emissions would suffer less than local public education — again, because so much of it is financed and implemented through utility regulation. “He can do a great deal of harm, but he cannot kill the resistance to climate change,” Barrett said of Trump. “We would have to play catch up in a big way after he left, but I suspect that we’re going to have to play catch up anyway.”
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The foreign entities of concern rules in the One Big Beautiful Bill would place gigantic new burdens on developers.
Trump campaigned on cutting red tape for energy development. At the start of his second term, he signed an executive order titled, “Unleashing Prosperity Through Deregulation,” promising to kill 10 regulations for each new one he enacted.
The order deems federal regulations an “ever-expanding morass” that “imposes massive costs on the lives of millions of Americans, creates a substantial restraint on our economic growth and ability to build and innovate, and hampers our global competitiveness.” It goes on to say that these regulations “are often difficult for the average person or business to understand,” that they are so complicated that they ultimately increase the cost of compliance, as well as the risks of non-compliance.
Reading this now, the passage echoes the comments I’ve heard from industry groups and tax law experts describing the incredibly complex foreign entities of concern rules that Congress — with the full-throated backing of the Trump administration — is about to impose on clean energy projects and manufacturers. Under the One Big Beautiful Bill Act, wind and solar, as well as utility-scale energy storage, geothermal, nuclear, and all kinds of manufacturing projects will have to abide by restrictions on their Chinese material inputs and contractual or financial ties with Chinese entities in order to qualify for tax credits.
“Foreign entity of concern” is a U.S. government term referring to entities 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.
Trump’s tax bill requires companies to meet increasingly strict limits on the amount of material from China they use in their projects and products. A battery factory starting production next year, for example, would have to ensure that 60% of the value of the materials that make up its products have no connection to China. By 2030, the threshold would rise to 85%. The bill lays out similar benchmarks and timelines for clean electricity projects, as well as other kinds of manufacturing.
But how companies should calculate these percentages is not self-evident. The bill also forbids companies from collecting the tax credits if they have business relationships with “specified foreign entities” or “foreign-influenced entities,” terms with complicated definitions that will likely require guidance from the Treasury for companies to be sure they pass the test.
Regulatory uncertainty could stifle development until further guidance is released, but how long that takes will depend on if and when the Trump administration prioritizes getting it done. The One Big Beautiful Bill Act contains a lot of other new tax-related provisions that were central to the Trump campaign, including a tax exemption for tips, which are likely much higher on the department’s to-do list.
Tax credit implementation was a top priority for the Biden administration, and even with much higher staffing levels than the department currently has, it took the Treasury 18 months to publish initial guidance on foreign entities of concern rules for the Inflation Reduction Act’s electric vehicle tax credit. “These things are so unbelievably complicated,” Rachel McCleery, a former senior advisor at the Treasury under Biden, told me.
McCleery questioned whether larger, publicly-owned companies would be able to proceed with major investments in things like battery manufacturing plants until that guidance is out. She gave the example of a company planning to pump out 100,000 batteries per year and claim the per-kilowatt-hour advanced manufacturing tax credit. “That’s going to look like a pretty big number in claims, so you have to be able to confidently and assuredly tell your shareholder, Yep, we’re good, we qualify, and that requires a certification” by a tax counsel, she said. To McCleery, there’s an open question as to whether any tax counsel “would even provide a tax opinion for publicly-traded companies to claim credits of this size without guidance.”
John Cornwell, the director of policy at the Good Energy Collective, which conducts research and advocacy for nuclear power, echoed McCleery’s concerns. “Without very clear guidelines from the Treasury and IRS, until those guidelines are in place, that is going to restrict financing and investment,” Cornwell told me.
Understanding what the law requires will be the first challenge. But following it will involve tracking down supply chain data that may not exist, finding alternative suppliers that may not be able to fill the demand, and establishing extensive documentation of the origins of components sourced through webs of suppliers, sub-suppliers, and materials processors.
The Good Energy Collective put out an issue brief this week describing the myriad hurdles nuclear developers will face in trying to adhere to the tax credit rules. Nuclear plants contain thousands of components, and documenting the origin of everything from “steam generators to smaller items like specialized fasteners, gaskets, and electronic components will introduce substantial and costly administrative burdens,” it says. Additionally the critical minerals used in nuclear projects “often pass through multiple processing stages across different countries before final assembly,” and there are no established industry standards for supply chain documentation.
Beyond the documentation headache, even just finding the materials could be an issue. China dominates the market for specialized nuclear-grade materials manufacturing and precision component fabrication, the report says, and alternative suppliers are likely to charge premiums. Establishing new supply chains will take years, but Trump’s bill will begin enforcing the sourcing rules in 2026. The rules will prove even more difficult for companies trying to build first-of-a-kind advanced nuclear projects, as those rely on more highly specialized supply chains dominated by China.
These challenges may be surmountable, but that will depend, again, on what the Treasury decides, and when. The Department’s guidance could limit the types of components companies have to account for and simplify the documentation process, or it could not. But while companies wait for certainty, they may also be racking up interest. “The longer there are delays, that can have a substantial risk of project success,” Cornwell said.
And companies don’t have forever. Each of the credits comes with a phase-out schedule. Wind manufacturers can only claim the credits until 2028. Other manufacturers have until 2030. Credits for clean power projects will start to phase down in 2034. “Given the fact that a lot of these credits start lapsing in the next few years, there’s a very good chance that, because guidance has not yet come out, you’re actually looking at a much smaller time frame than than what is listed in the bill,” Skip Estes, the government affairs director for Securing America’s Energy Future, or SAFE, told me.
Another issue SAFE has raised is that the way these rules are set up, the foreign sourcing requirements will get more expensive and difficult to comply with as the value of the tax credits goes down. “Our concern is that that’s going to encourage companies to forego the credit altogether and just continue buying from the lowest common denominator, which is typically a Chinese state-owned or -influenced monopoly,” Estes said.
McCleery had another prediction — the regulations will be so burdensome that companies will simply set up shop elsewhere. “I think every industry will certainly be rethinking their future U.S. investments, right? They’ll go overseas, they’ll go to Canada, which dumped a ton of carrots and sticks into industry after we passed the IRA,” she said.
“The irony is that Republicans have historically been the party of deregulation, creating business friendly environments. This is completely opposite, right?”
On the budget debate, MethaneSAT’s untimely demise, and Nvidia
Current conditions: The northwestern U.S. faces “above average significant wildfire potential” for July • A month’s worth of rain fell over just 12 hours in China’s Hubei province, forcing evacuations • The top floor of the Eiffel Tower is closed today due to extreme heat.
The Senate 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. The excise tax on renewables that had been stuffed into the bill over the weekend was removed after Senator Lisa Murkowski of Alaska struck a deal with the Senate leadership designed to secure her vote. In her piece examining exactly what’s in the bill, Heatmap’s Emily Pontecorvo explains that even without the excise tax, the 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.” Debate on the legislation begins on the House floor today. House Speaker Mike Johnson has said he doesn’t like the legislation, and a handful of other Republicans have already signaled they won’t vote for it.
The Environmental Protection Agency this week sent the White House a proposal that is expected to severely weaken the federal government’s ability to rein in planet-warming pollution. Details of the proposal, titled “Greenhouse Gas Endangerment Finding and Motor Vehicle Reconsideration,” aren’t clear yet, but EPA Administrator Lee Zeldin has reportedly been urging the Trump administration to repeal the 2009 “endangerment finding,” which explicitly identified greenhouse gases as a public health threat and gave the EPA the authority to regulate them. Striking down that finding would “free EPA from the legal obligation to regulate climate pollution from most sources, including power plants, cars and trucks, and virtually any other source,” wrote Alex Guillén at Politico. The title of the proposal suggests it aims to roll back EPA tailpipe emissions standards, as well.
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So long, MethaneSAT, we hardly knew ye. The Environmental Defense Fund said Tuesday that it had lost contact with its $88 million methane-detecting satellite, and that the spacecraft was “likely not recoverable.” The team is still trying to figure out exactly what happened. MethaneSAT launched into orbit last March and was collecting data about methane pollution from global fossil fuel infrastructure. “Thanks to MethaneSAT, we have gained critical insight about the distribution and volume of methane being released from oil and gas production areas,” EDF said. “We have also developed an unprecedented capability to interpret the measurements from space and translate them into volumes of methane released. This capacity will be valuable to other missions.“ The good news is that MethaneSAT was far from the only methane-tracking satellite in orbit.
Nvidia is backing a D.C.-based startup called Emerald AI that “enables AI data centers to flexibly adjust their power consumption from the electricity grid on demand.” Its goal is to make the grid more reliable while still meeting the growing energy demands of AI computing. The startup emerged from stealth this week with a $24.5 million seed round led by Radical Ventures and including funding from Nvidia. Emerald AI’s platform “acts as a smart mediator between the grid and a data center,” Nvidia explains. A field test of the software during a grid stress event in Phoenix, Arizona, demonstrated a 25% reduction in the energy consumption of AI workloads over three hours. “Renewable energy, which is intermittent and variable, is easier to add to a grid if that grid has lots of shock absorbers that can shift with changes in power supply,” said Ayse Coskun, Emerald AI’s chief scientist and a professor at Boston University. “Data centers can become some of those shock absorbers.”
In case you missed it: California Governor Gavin Newsom on Monday rolled back the state’s landmark Environmental Quality Act. The law, which had been in place since 1970, required environmental reviews for construction projects and had become a target for those looking to alleviate the state’s housing crisis. The change “means most urban developers will no longer have to study, predict, and mitigate the ways that new housing might affect local traffic, air pollution, flora and fauna, noise levels, groundwater quality, and objects of historic or archeological significance,” explainedCal Matters. On the other hand, it could also mean that much-needed housing projects get approved more quickly.
Tesla is expected to report its Q2 deliveries today, and analysts are projecting a year-over-year drop somewhere from 11% to 13%.
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.
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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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Music for Shift Key is by Adam Kromelow.