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Newsom signed over a dozen climate-related bills this weekend, but these stood out.
California’s governor, Gavin Newsom, signed more than a dozen climate and clean energy-related bills into law on Saturday. As the Golden State is one of the nation’s most important labs for climate policy, there were three developments in particular that I think will be interesting to keep an eye on as they progress over the next few years.
First, and probably most relevant on a national level, Newsom put his signature on two bills that will require large businesses to disclose their greenhouse gas emissions as well as any risks to their business due to climate change. I wrote about these bills a month ago when they were up for a vote in the state Assembly. They mirror similar policies under consideration by the Securities and Exchange Commission that could soon be adopted at the federal level, but go further because they apply to private companies in addition to publicly-traded firms.
The new laws were sold as a measure to help investors understand how exposed different companies are to future carbon regulations or climate change risks, but they could also go a long way to standardize the reporting of corporate emissions data. That data could help activist groups hold companies accountable for their climate promises and help consumers compare the sustainability efforts of different brands. The next step will be for the California Air Resources Board to develop rules for the new disclosure system by 2025, with reporting to begin in 2026. I’ll be following that rulemaking process closely, as it’s likely to bring up ongoing debates about how companies should account for emissions from indirect sources, like their purchased electricity and supply chains, as well as how to account for carbon offsets.
The second development is a set of laws that are designed to help California overcome major obstacles for its inchoate offshore wind industry. Almost a year ago, the federal government auctioned off the first-ever leases to develop offshore wind in the Pacific, selling five parcels in total. California sees offshore wind as an essential component of its climate goals, as it has the potential to generate power at night when the state’s abundant solar resources disappear. But because the continental shelf drops off abruptly just a few miles from the California shore, plunging thousands of feet, the turbines will have to be built on floating platforms — a much more expensive proposition than the wind projects under development on the East Coast, which are already threatened by cost overruns.
These will be big, risky, projects, and developers need certainty that there will be a buyer for the energy at the end of the road. But it would be hard for a traditional utility to make that kind of commitment at this point, Molly Croll, the director of Pacific offshore wind at the trade group American Clean Power, told Canary Media last month. “It’s new technology,” she said. “It requires some new infrastructure; it requires a contract signed much longer in advance of commercial operation than typical renewable projects require.”
Under the new legislation, California will set up a central procurement program, tasking the Department of Water Resources, which owns and operates hydroelectric power plants in the state, to enter into long-term energy purchase agreements with wind developers. This is similar to programs in place in the northeast, like the New York State Energy and Research Development Agency’s offshore wind solicitation program. Notably, the department will also have the authority to enter into similar contracts with other expensive, risky, but potentially game-changing clean electricity projects like geothermal power plants and energy storage facilities. Meanwhile, a second bill that Newsom signed will get the ball rolling for the state to develop strategies to upgrade its port infrastructure to support the new industry.
The third development is interesting mainly because it’s one of those ideas that sounds so obvious that after you hear it, you can’t believe it’s not already a thing. The new law will enable the state to make use of the tens of thousands of miles of land it owns alongside highways for clean energy development. It instructs the California Department of Transportation to develop a plan to lease the land to utilities or other entities to build solar, storage, and transmission projects.
A recent analysis commissioned by the nonprofit advocacy group Environment California found that just three counties in southern California — Los Angeles, Ventura, and San Diego — together have 4,800 acres of suitable space for roadside solar development, which, if filled with panels, could power more than 270,000 homes. The group Environment California also points out that this could be a way to generate revenue for the state through lease fees and energy sales.
Land use for solar is contentious, especially in California, and putting as much as possible in the rights-of-way alongside highways could avoid battles over the use of undeveloped or agricultural land.
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Add it to the evidence that China’s greenhouse gas emissions may be peaking, if they haven’t already.
Exactly where China is in its energy transition remains somewhat fuzzy. Has the world’s largest emitter of greenhouse gases already hit peak emissions? Will it in 2025? That remains to be seen. But its import data for this year suggests an economy that’s in a rapid transition.
According to government trade data, in the first fourth months of this year, China imported $12.1 billion of coal, $100.4 billion of crude oil, and $18 billion of natural gas. In terms of value, that’s a 27% year over year decline in coal, a 8.5% decline in oil, and a 15.7% decline in natural gas. In terms of volume, it was a 5.3% decline, a slight 0.5% increase, and a 9.2% decline, respectively.
“Fossil fuel demand still trends down,” Lauri Myllyvirta, the co-founder of the Centre for Research on Energy and Clean Air, wrote on X in response to the news.
Morgan Stanley analysts predicted Friday in a note to clients that this “weak downstream demand” for coal in China would “continue to hinder coal import volume.”
Another piece of China’s emissions and coal usage puzzle came from Indonesia, which is a major coal exporter. Citing data from trade data service Kpler, Reuters reported Friday that Indonesia’s thermal coal exports “have dropped to their lowest in three years” thanks to “weak demand in China and India,” the world’s two biggest coal importers. Indonesia’s thermal coal exports dropped 12% annually to 150 million tons in the first third of the year, Reuters reported.
China’s official goal is to hit peak emissions by 2030 and reach “carbon neutrality” by 2060. The country’s electricity grid is largely fueled by coal (with hydropower coming in at number two), as is its prolific production of steel and cement, which is energy and, specifically, coal-intensive. For a few years in the 2010s, more cement was poured in China than in the whole 20th century in the United States. China also accounts for about half of the world’s steel production.
At the same time, China’s electricity demand growth is being largely met by renewables, implying that China can expand its economy without its economy-wide, annual emissions going up. This is in part due to a massive deployment of renewables. In 2023, China installed enough non-carbon-emitting electricity generation to meet the total electricity demand of all of France.
China’s productive capacity has shifted in a way that’s less carbon intensive, experts on the Chinese energy system and economy have told Heatmap. The economy isshifting more toward manufacturing and away from the steel-and-cement intensive breakneck urbanization of the past few decades, thanks to a dramatically slowing homebuilding sector.
Chinese urban residential construction was using almost 300 million tons of steel per year at its peak in 2019, according to research by the Reserve Bank of Australia, about a third of the country’s total steel usage. (Steel consumption for residential construction would fall by about half by 2023.) By contrast, the whole United States economy consumes less than 100 million tons of steel per year.
To the extent the overall Chinese economy slows down due to the trade war with the United States, coal usage — and thus greenhouse gas emissions — would slow as well. Although that hasn’t happened yet — China also released export data on Friday that showed sustained growth, in spite of the tariff barriers thrown up by the Trump administration.
The nonprofit laid off 36 employees, or 28% of its headcount.
The Trump administration’s funding freeze has hit the leading electrification nonprofit Rewiring America, which announced Thursday that it will be cutting its workforce by 28%, or 36 employees. In a letter to the team, the organization’s cofounder and CEO Ari Matusiak placed the blame squarely on the Trump administration’s attempts to claw back billions in funding allocated through the Greenhouse Gas Reduction Fund.
“The volatility we face is not something we created: it is being directed at us,” Matusiak wrote in his public letter to employees. Along with a group of four other housing, climate, and community organizations, collectively known as Power Forward Communities, Rewiring America was the recipient of a $2 billion GGRF grant last April to help decarbonize American homes.
Now, the future of that funding is being held up in court. GGRF funds have been frozen since mid-February as Lee Zeldin’s Environmental Protection Agency has tried to rescind $20 billion of the program’s $27 billion total funding, an effort that a federal judge blocked in March. While that judge, Tanya S. Chutkan, called the EPA’s actions “arbitrary and capricious,” for now the money remains locked up in a Citibank account. This has wreaked havoc on organizations such as Rewiring America, which structured projects and staffing decisions around the grants.
“Since February, we have been unable to access our competitively and lawfully awarded grant dollars,” Matusiak wrote in a LinkedIn post on Thursday. “We have been the subject of baseless and defamatory attacks. We are facing purposeful volatility designed to prevent us from fulfilling our obligations and from delivering lower energy costs and cheaper electricity to millions of American households across the country.”
Matusiak wrote that while “Rewiring America is not going anywhere,” the organization is planning to address said volatility by tightening its focus on working with states to lower electricity costs, building a digital marketplace for households to access electric upgrades, and courting investment from third parties such as hyperscale cloud service providers, utilities, and manufacturers. Matusiak also said Rewiring America will be restructured “into a tighter formation,” such that it can continue to operate even if the GGRF funding never comes through.
Power Forward Communities is also continuing to fight for its money in court. Right there with it are the Climate United Fund and the Coalition for Green Capital, which were awarded nearly $7 billion and $5 billion, respectively, through the GGRF.
What specific teams within Rewiring America are being hit by these layoffs isn’t yet clear, though presumably everyone let go has already been notified. As the announcement went live Thursday afternoon, it stated that employees “will receive an email within the next few minutes informing you of whether your role has been impacted.”
“These are volatile and challenging times,” Matusiak wrote on LinkedIn. “It remains on all of us to create a better world we can all share. More so than ever.”
The company managed to put a positive spin on tariffs.
The residential solar company Sunrun is, like much of the rest of the clean energy business, getting hit by tariffs. The company told investors in its first quarter earnings report Tuesday that about half its supply of solar modules comes from overseas, and thus is subject to import taxes. It’s trying to secure more modules domestically “as availability increases,” Sunrun said, but “costs are higher and availability limited near-term.”
“We do not directly import any solar equipment from China, although producers in China are important for various upstream components used by our suppliers,” Sunrun chief executive Mary Powell said on the call, indicating that having an entirely-China-free supply chain is likely impossible in the renewable energy industry.
Hardware makes up about a third of the company’s costs, according to Powell. “This cost will increase from tariffs,” she said, although some advance purchasing done before the end of last year will help mitigate that. All told, tariffs could lower the company’s cash generation by $100 million to $200 million, chief financial officer Danny Abajian said.
But — and here’s where things get interesting — the company also offered a positive spin on tariffs.
In a slide presentation to investors, the company said that “sustained, severe tariffs may drive the country to a recession.” Sounds bad, right?
But no, not for Sunrun. A recession could mean “lower long term interest rates,” which, since the company relies heavily on securitizing solar leases and benefits from lower interest rates, could round in the company’s favor.
In its annual report released in February, the company mentioned that “higher rates increase our cost of capital and decrease the amount of capital available to us to finance the deployment of new solar energy systems.” On Wednesday, the company estimated that a 10% tariff, which is the baseline rate in the Trump “Liberation Day” tariffs, could be offset with a half percentage point decline in the company’s cost of capital, although it didn’t provide any further details behind the calculation.
Even in the absence of interest rate relief, a recession could still be okay for Sunrun.
“Historically, recessions have driven more demand for our products,” the company said in its presentation, arguing that because their solar systems offer savings compared to utility rates, they become more attractive when households get more money conscious.
Sunrun shares are up almost 10% today, as the company showed more growth than expected.
For what it’s worth, the much-ballyhooed decline in long-term interest rates as a result of Trump’s tariffs hasn’t actually happened, at least not yet. The Federal Reserve on Wednesday decided to keep the federal funds rate at 4.5%, the third time in a row the board of governors have chosen to maintain the status quo. The yield on 10-year treasuries, often used as a benchmark for interest rates, is up slightly since “Liberation Day” on April 2 and sits today at 4.34%, compared to 4.19% before Trump’s tariffs announcements.