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What parliamentary elections in France and the U.K. mean for everyone else.
While America has been distracted by its suddenly-very-real upcoming election, two other important political stories have been unfolding across the pond. The results of last week’s parliamentary votes in France and the United Kingdom have the power to sway global climate policy — and they might even contain lessons for the U.S. about the rise (or fall) of the far-right.
In June, French President Emmanuel Macron called snap elections, and the far-right National Rally party led by Marine Le Pen was widely expected to achieve a majority in the country’s 577-seat National Assembly. Instead, the New Popular Front, a hastily-formed alliance between the hard left, Greens, and Socialists, came out on top in a runoff, followed by the centrist Ensemble (which includes Macron’s Renaissance party) and the National Rally in a distant third. Because no party won the 289 seats needed to gain control of the chamber, the left and center now have to form a coalition government, which means ideological compromise — something that’s distinctly un-French. “We're not the Germans, we're not the Spanish, we're not the Italians — we don't do coalitions,” one French political commentator toldSky News.
Climate change wasn’t a big theme, but the National Rally’s proposals certainly had experts nervous. The party tapped into simmering discontent among some demographics — farmers, in particular — who feel unfairly burdened by new regulations in service of the European Union’s ambitious agenda, known as the Green Deal, including a goal to cut the bloc’s net greenhouse gas emissions by at least 55% by 2030 and reach net zero by 2050. If it had won, the party planned to dismantle France’s energy efficiency rules, roll back a 2035 ban on new gas-powered cars, block new wind farms, do away with low-emission zones, and transform electricity trade. France is already the EU’s third biggest emitter, and the EU as a whole is responsible for about 9% of global CO2 emissions, although emissions have been falling, especially in the energy sector.
As the dust settles in France, the biggest danger to climate policy now is stalemate. The lackluster results for the far right are no doubt a relief to the climate conscious. “We have avoided a catastrophe,” Alain Fischer, president of the French Academy of Sciences in Paris, toldNature. The winning NFP, for its part, backs the Green Deal’s emissions targets and wants France to become “the European leader in renewable energies” through offshore wind power and the development of hydroelectric power. It also calls for the “creation of an international court for climate and environmental justice.” But the next several months are likely to be chaotic as the parties tussle over what the government should look like, and there is no deadline for these decisions to be made. The leadership limbo could bring political paralysis at a time when the EU is just getting its bearings following bloc-wide parliamentary elections — which, by the way, saw the Greens lose seats in lots of places. In response, the non-profit Climate Group put out a statement calling for the French government to “commit to safeguarding the EU Green Deal and ensuring a sustainable future for the continent.” The good news is that a large majority of EU voters want to see more climate action.
The Labour Party won the general election in a landslide, bringing an end to 14 years of Conservative Party rule. During his tenure, former Prime Minister Rishi Sunak watered down key net-zero strategies, delayed a ban on new combustion engine vehicles, scrapped energy efficiency standards, and approved a large new oil field in the North Sea. His party also pulled low-emission zones into the culture wars in a desperate attempt to win over voters. None of this played to his advantage. According to Desmog, two-thirds of the Conservative members of Parliament who were anti-net zero lost their seats, including the former energy secretary. “With a clear mandate for climate action,” wrote climate change think tank E3G, “all eyes are now on Labour to deliver.”
New Prime Minister Keir Starmer has pledged to turn the U.K. into a “clean energy superpower” by doubling onshore wind, tripling solar power, and quadrupling offshore wind by 2030. He also plans to upgrade the grid to speed the rollout of clean energy projects, while at the same time denying new licenses for oil and gas exploration in the North Sea. He wants to establish a publicly owned clean energy firm and decarbonize the power sector by 2030. And he plans to reinstate the 2030 ban on new gas cars. The goals are lofty, and meeting them will “extensive change across every sector of the economy,” wrote Carbon Brief. But Labour seems to be wasting little time. Days after taking power, the new government scrapped a ban on onshore wind farms that had been in place since 2015 and which the new Chancellor of the Exchequer Rachel Reeves called “absurd.”
The U.K. accounts for about 1% of global greenhouse gas emissions. That might be paltry compared to, say, the U.S. (13.5%) or China (32%), but it has a chance now to use its global influence and proximity to Europe to keep the needle moving in the right direction. That goes especially if it is nudged by the Green party, which surprised everyone by quadrupling its number of seats in Parliament (albeit to just four). As The New York Timesnoted, Britain is where the industrial revolution began, so “the speed and scale of Britain’s energy transition is likely to be closely watched by other industrialized countries and emerging economies alike.”
What’s clear from both of these cases is that people really care about climate policy and are willing to vote with that in mind. That can swing either way, though, depending on the particular set of policies and how they affect the electorate. As extreme weather intensifies, however, it may become more difficult for far-right parties to minimize the significance of climate change. “We need to recognize that extreme weather is politicizing people against this climate denial,” said Paul Dickinson, founder of CDP, an emissions disclosure platform, and co-host of the podcast Outrage + Optimism. “It is the Achilles heel of the extreme right that they’re opposed to the realities of extreme weather. That’s how I think if we’re organized and disciplined, we will defeat them.”
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Three companies are joining forces to add at least a gigawatt of new generation by 2029. The question is whether they can actually do it.
Two of the biggest electricity markets in the country — the 13-state PJM Interconnection, which spans the Mid-Atlantic and the Midwest, and ERCOT, which covers nearly all of Texas — want more natural gas. Both are projecting immense increases in electricity demand thanks to data centers and electrification. And both have had bouts of market weirdness and dysfunction, with ERCOT experiencing spiky prices and even blackouts during extreme weather and PJM making enormous payouts largely to gas and coal operators to lock in their “capacity,” i.e. their ability to provide power when most needed.
Now a trio of companies, including the independent power producer NRG, the turbine manufacturer GE Vernova, and a subsidiary of the construction firm Kiewit Corporation, are teaming up with a plan to bring gas-powered plants to PJM and ERCOT, the companies announced today.
The three companies said that the new joint venture “will work to advance four projects totaling over 5 gigawatts” of natural gas combined cycle plants to the two power markets, with over a gigawatt coming by 2029. The companies said that they could eventually build 10 to 15 gigawatts “and expand to other areas across the U.S.”
So far, PJM and Texas’ call for new gas has been more widely heard than answered. The power producer Calpine said last year that it would look into developing more gas in PJM, but actual investment announcements have been scarce, although at least one gas plant scheduled to close has said it would stay open.
So far, across the country, planned new additions to the grid are still overwhelmingly solar and battery storage, according to the Energy Information Administration, whose data shows some 63 gigawatts of planned capacity scheduled to be added this year, with more than half being solar and over 80% being storage.
Texas established a fund in 2023 to provide low-cost loans to new gas plants, but has had trouble finding viable projects. Engie pulled an 885 megawatt project from the program earlier this week, citing “equipment procurement constraints” and delays.
But PJM is working actively with a friendly administration in Washington to bring more natural gas to its grid. The Federal Energy Regulatory Commission recently blessed a PJM plan to accelerate interconnection approvals for large generators — largely natural gas — so that it can bring them online more quickly.
But many developers and large power consumers are less than optimistic about the ability to bring new natural gas onto the grid at a pace that will keep up with demand growth, and are instead looking at “behind-the-meter” approaches to meet rising energy needs, especially from data centers. The asset manager Fortress said earlier this year that it had acquired 850 megawatts of generation capacity from APR Energy and formed a new company, fittingly named New APR Energy, which said this week that it was “deploying four mobile gas turbines providing 100MW+ of dedicated behind-the-meter power to a major U.S.-based AI hyperscaler.”
And all gas developers, whether they’re building on the grid or behind-the-meter, have to get their hands on turbines, which are in short supply. The NRG consortium called this out specifically, noting that it had secured the rights to two 7HA gas turbines by 2029. These kinds of announcements of agreements for specific turbines have become standard for companies showing their seriousness about gas development. When Chevron announced a joint venture with GE Vernova for co-located gas plants for data centers, it also noted that it had a reservation agreement for seven 7HA turbines. But until these turbines are made and installed, these announcements may all just be spin.
Featuring China, fossil fuels, and data centers.
As Republicans in Congress go hunting for ways to slash spending to carry out President Trump’s agenda, more than 100 energy businesses, trade groups, and advocacy organizations sent a letter to key House and Senate leaders on Tuesday requesting that one particular line item be spared: the hydrogen tax credit.
The tax credit “will serve as a catalyst to propel the United States to global energy dominance,” the letter argues, “while advancing American competitiveness in energy technologies that our adversaries are actively pursuing.” The Fuel Cell and Hydrogen Energy Association organized the letter, which features signatures from the American Petroleum Institute, the U.S. Chamber of Commerce, the Clean Energy Buyers Association, and numerous hydrogen, industrial gas, and chemical companies, among many others. Three out of the seven regional clean hydrogen hubs — the Mid-Atlantic, Heartland, and Pacific Northwest hubs — are also listed.
Out of all of the tax credits for low-carbon energy, the hydrogen subsidy, which was created by the 2022 Inflation Reduction Act, is among the most generous. It pays up to $3 per kilogram of hydrogen produced, depending on how emissions-intensive the process is. For context, a 15 ton-per-day plant in Georgia owned by hydrogen producer Plug Power has the potential to earn up to $45,000 per day in tax credits.
But the total price of the tax credit depends on how much clean hydrogen production takes off, and the industry is still in its infancy. When the Penn Wharton Budget Model, a research group at the University of Pennsylvania, estimated the fiscal impact of the Inflation Reduction Act, it placed the total cost for the hydrogen credit at $49 billion over 10 years, compared to more than $260 billion for renewable energy and nearly $400 billion for electric vehicles.
Tactically, Tuesday’s letter draws on all of the Trump administration’s favorite talking points. It warns that nixing the tax credit will mean ceding the hydrogen technology war to China, noting that the country now produces more than 60% of the global supply of electrolyzers — equipment that splits water into hydrogen and oxygen using electricity. It also says that hydrogen fuel cells are already being used by tech companies to power data centers.
And even though the tax credit was designed specifically to subsidize “clean” hydrogen, the letter mostly ignores this distinction, painting hydrogen production as an extension of the U.S. fossil fuel industry. Oil and gas companies have the infrastructure, workforce, and supply chains to lead the global hydrogen economy, it says. It points out that hydrogen can be produced from “natural gas, biogas, biomethane, as well as any electricity source (i.e. nuclear energy),” but does not mention wind, solar, or geothermal.
Investment in the nascent hydrogen industry was essentially on hold for more than two years while companies eager to take advantage of the tax credit waited for the Biden administration to finalize eligibility rules. But even after Biden’s Treasury Department published those rules in early January, how the Trump administration will view the program remained uncertain. “Our industry is now poised to invest billions of dollars in deployments and manufacturing facilities across the country,” the letter says. “However, that private sector investment is at risk due to the uncertainty around this crucial incentive … We need to ensure that we do not miss this hydrogen moment and respectfully request that you maintain the Section 45V tax credit.”
Intense debate and controversy surrounded the development of the rules for claiming the tax credit, and while the Biden administration tried to strike a compromise, some in the industry still found the rules too strict. I asked the Fuel Cell and Hydrogen Energy Association whether it wanted Congress to make any changes to the tax credit or to simply preserve it but hadn’t heard back as of publication time.
But some of the signatories have already expressed their intent to request changes. In December, the American Petroleum Institute sent a memo to the incoming Treasury Department outlining its key priorities and “asks.” It says the Biden administration’s hydrogen tax credit rules were “overly restrictive and raised concerns about qualifying pathways for natural gas.”
Core inflation is up, meaning that interest rates are unlikely to go down anytime soon.
The Fed on Wednesday issued a report showing substantial increases in the price of eggs, used cars, and auto insurance — data that could spell bad news for the renewables economy.
Though some of those factors had already been widely reported on, the overall rise in prices exceeded analysts’ expectations. With overall inflation still elevated — reaching an annual rate of 3%, while “core” inflation, stripping out food and energy, rose to 3.3%, after an unexpectedly sharp 0.4% jump in January alone — any prospect of substantial interest rate cuts from the Federal Reserve has dwindled even further.
Renewable energy development is especially sensitive to higher interest rates. That’s because renewables projects, like wind turbines and solar panels, have to incur the overwhelming majority of their lifetime costs before they start operating and generating revenue. Developers then often fund much of the project through borrowed money that’s secured against an agreement to buy the resulting power. When the cost of borrowing money goes up, projects become less viable, with lower prospective returns sometimes causing investors not to go forward .
High interest rates have plagued the renewables economy for years. “As interest rates rise, all of a sudden, solar assets that are effectively bonds become less valuable,” Quinn Pasloske, a managing director at Greenbacker, a renewable investor and operating company, told me on Tuesday, describing how the stream of payments from a solar project becomes less valuable as rates rise because investors can get more from risk-free government bonds.
The new inflation data is “consistent with our call of an extended Fed pause, with only one rate cut in 2025, happening in June,” Morgan Stanley economists wrote in a note to clients. Bond traders are also projecting just a single cut for the rest of the year — but not until December.
Federal Reserve Chair Jerome Powell told the Senate Banking committee Tuesday, “We think our policy rate is in a good place, and we don’t see any reason to be in a hurry to reduce it further.”
The yield for the 10-year Treasury bond, often used as a benchmark for the cost of credit, is up 0.09% today, to 4.63%. While this is below where yields peaked in mid-January, it’s a level still well above where yields have been for almost all of the last year. When Treasury yields rise, the cost of credit throughout the economy goes up.
Clean energy stocks were down this morning — but so is the overall market. Because while high interest rates are especially bad for renewables, they’re not exactly great for anyone else.