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Instead of rocket fuel, they’re burning biomass.

Arbor Energy might have the flashiest origin story in cleantech.
After the company’s CEO, Brad Hartwig, left SpaceX in 2018, he attempted to craft the ideal resume for a future astronaut, his dream career. He joined the California Air National Guard, worked as a test pilot at the now-defunct electric aviation startup Kitty Hawk, and participated in volunteer search and rescue missions in the Bay Area, which gave him a front row seat to the devastating effects of wildfires in Northern California.
That experience changed everything. “I decided I actually really like planet Earth,” Hartwig told me, “and I wanted to focus my career instead on preserving it, rather than trying to leave it.” So he rallied a bunch of his former rocket engineer colleagues to repurpose technology they pioneered at SpaceX to build a biomass-fueled, carbon negative power source that’s supposedly about ten times smaller, twice as efficient, and eventually, one-third the cost of the industry standard for this type of plant.
Take that, all you founders humble-bragging about starting in a dingy garage.
“It’s not new science, per se,” Hartwig told me. The goal of this type of tech, called bioenergy with carbon capture and storage, is to combine biomass-based energy generation with carbon dioxide removal to achieve net negative emissions. Sounds like a dream, but actually producing power or heat from this process has so far proven too expensive to really make sense. There are only a few so-called BECCS facilities operating in the U.S. today, and they’re all just ethanol fuel refineries with carbon capture and storage technology tacked on.
But the advances in 3D printing and computer modeling that allowed the SpaceX team to build an increasingly simple and cheap rocket engine have allowed Arbor to move quickly into this new market, Hartwig explained. “A lot of the technology that we had really pioneered over the last decade — in reactor design, combustion devices, turbo machinery, all for rocket propulsion — all that technology has really quite immediate application in this space of biomass conversion and power generation.”
Arbor’s method is poised to be a whole lot sleeker and cheaper than the BECCS plants of today, enabling both more carbon sequestration and actual electricity production, all by utilizing what Hartwig fondly refers to as a “vegetarian rocket engine.” Because there’s no air in space, astronauts have to bring pure oxygen onboard, which the rocket engines use to burn fuel and propel themselves into the stratosphere and beyond. Arbor simply subs out the rocket fuel for biomass. When that biomass is combusted with pure oxygen, the resulting exhaust consists of just CO2 and water. As the exhaust cools, the water condenses out, and what’s left is a stream of pure carbon dioxide that’s ready to be injected deep underground for permanent storage. All of the energy required to operate Arbor’s system is generated by the biomass combustion itself.
“Arbor is the first to bring forward a technology that can provide clean baseload energy in a very compact form,” Clea Kolster, a partner and Head of Science at Lowercarbon Capital told me. Lowercarbon is an investor in Arbor, alongside other climate tech-focused venture capital firms including Gigascale Capital and Voyager Ventures, but the company has not yet disclosed how much it’s raised.
Last month, Arbor signed a deal with Microsoft to deliver 25,000 tons of permanent carbon dioxide removal to the tech giant starting in 2027, when the startup’s first commercial project is expected to come online. As a part of the deal, Arbor will also generate 5 megawatts of clean electricity per year, enough to power about 4,000 U.S. homes. And just a few days ago, the Department of Energy announced that Arbor is one of 11 projects to receive a combined total of $58.5 million to help develop the domestic carbon removal industry.
Arbor’s current plan is to source biomass from forestry waste, much of which is generated by forest thinning operations intended to prevent destructive wildfires. Hartwig told me that for every ton of organic waste, Arbor can produce about one megawatt hour of electricity, which is in line with current efficiency standards, plus about 1.8 tons of carbon removal. “We look at being as efficient, if not a little more efficient than a traditional bioenergy power plant that does not have carbon capture on it,” he explained.
The company’s carbon removal price targets are also extremely competitive — in the $50 to $100 per ton range, Hartwig said. Compare that to something like direct air capture, which today exceeds $600 per ton, or enhanced rock weathering, which is usually upwards of $300 per ton. “The power and carbon removal they can offer comes at prices that meet nearly unlimited demand,” Mike Schroepfer, the founder of Gigascale Capital and former CTO of Meta, told me via email. Arbor benefits from the fact that the electricity it produces and sells can help offset the cost of the carbon removal, and vice versa. So if the company succeeds in hitting its cost and efficiency targets, Hartwig said, this “quickly becomes a case for, why wouldn’t you just deploy these everywhere?”
Initial customers will likely be (no surprise here) the Microsofts, Googles and Metas of the world — hyperscalers with growing data center needs and ambitious emissions targets. “What Arbor unlocks is basically the ability for hyperscalers to stop needing to sacrifice their net zero goals for AI,” Kolster told me. And instead of languishing in the interminable grid interconnection queue, Hartwig said that providing power directly to customers could ensure rapid, early deployment. “We see it as being quicker to power behind-the-meter applications, because you don’t have to go through the process of connecting to the grid,” he told me. Long-term though, he said grid connection will be vital, since Arbor can provide baseload power whereas intermittent renewables cannot.
All of this could serve as a much cheaper alternative, to say, re-opening shuttered nuclear facilities, as Microsoft also recently committed to doing at Three Mile Island. “It’s great, we should be doing that,” Kolster said of this nuclear deal, “but there’s actually a limited pool of options to do that, and unfortunately, there is still community pushback.”
Currently, Arbor is working to build out its pilot plant in San Bernardino, California, which Hartwig told me will turn on this December. And by 2030, the company plans to have its first commercial plant operating at scale, generating 100 megawatts of electricity while removing nearly 2 megatons of CO2 every year. “To put it in perspective: In 2023, the U.S. added roughly 9 gigawatts of gas power to the grid, which generates 18 to 23 megatons of CO2 a year,” Schroepfer wrote to me. So having just one Arbor facility removing 2 megatons would make a real dent. The first plant will be located in Louisiana, where Arbor will also be working with an as-yet-unnamed partner to do the carbon storage.
The company’s carbon credits will be verified with the credit certification platform Isometric, which is also backed by Lowercarbon and thought to have the most stringent standards in the industry. Hartwig told me that Arbor worked hand-in-hand with Isometric to develop the protocol for “biogenic carbon capture and storage,” as the company is the first Isometric-approved supplier to use this standard.
But Hartwig also said that government support hasn’t yet caught up to the tech’s potential. While the Inflation Reduction Act provides direct air capture companies with $180 per ton of carbon dioxide removed, technology such as Arbor’s only qualifies for $85 per ton. It’s not nothing — more than the zero dollars enhanced rock weathering companies such as Lithos or bio-oil sequestration companies such as Charm are getting. “But at the same time, we’re treated the same as if we’re sequestering CO2 emissions from a natural gas plant or a coal plant,” Hartwig told me, as opposed to getting paid for actual CO2 removal.
“I think we are definitely going to need government procurement or involvement to actually hit one, five, 10 gigatons per year of carbon removal,” Hartwig said. Globally, scientists estimate that we’ll need up to 10 gigatons of annual CO2 removal by 2050 in order to limit global warming to 1.5 degrees Celsius. “Even at $100 per ton, 10 gigatons of carbon removal is still a pretty hefty price tag,” Hartwig told me. A $1 trillion price tag, to be exact. “We definitely need more players than just Microsoft.”
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Tom Ferguson, founder of Burnt Island Ventures, has bigger concerns.
Water — whether too much or too little — is one of the most visceral ways communities experience the impacts of a warming world. It’s also a $1.6 trillion global market that underpins much of the world’s economy. As climate-related risks such as droughts, floods, and contamination converge with systemic challenges like aging water infrastructure and clunky resource management, the need for innovation is becoming painfully obvious.
As Heatmap’s own polling shows, water is also becoming an increasingly large part of the data center story, with many Americans opposing these facilities in part due to concerns over their water usage. That anxiety may not be entirely rational, Tom Ferguson, founder of the water-focused investment firm Burnt Island Ventures, told me.
He’s spent the better part of his career funding water-related innovation, focusing on where new technologies stand to have the greatest impact. So I believed him when he said that while data centers don’t merit quite so much worry, water as a resource deserves a far greater role in the climate tech conversation.
“Everybody assumes that water is a dog of a market because nobody really speaks water. It’s not within their circle of competence,” Ferguson told me, explaining that many firms simply don’t have employees with industry expertise. “But it’s awfully helpful to work with people who can give you a reasonably sized check — ideally two reasonably sized checks, maybe even more — and then also be helpful on that journey to help you better diagnose reality.”
That’s the goal of Burnt Island, which just closed a $50 million fund — its second overall — dedicated to backing early-stage water innovators. Ferguson’s team may have announced the close today, but the firm has already deployed the majority of the fund’s capital into companies working on everything from advanced water treatment and filtration to infrastructure resilience and climate adaptation. At the same time, Burnt Island is also raising money for a $75 million growth fund, designed to invest in later-stage startups with more proven tech.
Ferguson is a veteran of the industry, having previously run an innovation accelerator at the water nonprofit Imagine H2O, which vets hundreds of water startups every year. He’s also solution-agnostic — Burnt Island has already backed a startup developing an underwater desalination plant, a “defrosting innovation company” pioneering a water-efficient way to thaw frozen food, and an effort to build an algae-based wastewater treatment system.
One area Ferguson is not interested in backing, however, is data center cooling systems. Most large data centers cool servers by circulating water through heat exchangers that absorb heat from the equipment. The hot water is then sent to cooling towers where a portion is evaporated. This releases heat into the air, allowing the cooled water to be recirculated. More novel and efficient — but much less proven — cooling methods include applying coolant directly to the chips themselves or submerging entire servers in a non-conductive liquid.
Those approaches are simply too risky, Ferguson told me — both for him and for the hyperscalers. Cooling, he explained, represents a relatively small fraction of a data center’s project cost, but the cost of failure is enormous. If a novel cooling system goes awry, valuable computer chips will fry and operations will grind to a halt. “Under those circumstances, why would you take that chance?” he asked. “You want to use something that has already been proven, that is totally reliable.”
Ferguson told me he’s happy to let firms with larger pocketbooks bet their money on these solutions, but he’s also assuming that hyperscalers will wind up building a lot of these systems themselves. “They’re going to develop their own stuff in house because they want to have the end-to-end control over the architecture,” he told me. “All of this adds up to a pretty tough market.”
That doesn’t mean he’s bearish on data center water efficiency in general. Many of his portfolio companies see opportunities to, say, use metering and sensing tech to track data center water use, or treat water coming into and out of the facilities. And he’s well aware of the public’s growing scrutiny of the industry’s water intensity, having followed the $3.6 billion data center project in Tucson, Arizona that was cancelled in August amidst community-led drinking water concerns.
But he thinks kerfuffles such as this are often more about perception than reality. “The water impact is slightly overblown,” he told me. Data centers “still use a lot less water than golf courses.” And while the rapid expansion of artificial intelligence infrastructure will inevitably put data centers ahead of golf courses one day, Ferguson trusts that this cash-rich industry will be able to reduce water intensity on its own, as developers have a direct incentive to expand in as many geographies as possible.
Even the canceled Arizona project, he told me, had a reliable plan to replenish the local watershed. Microsoft, Amazon, and Google have all pledged to be “water positive” by 2030, returning more water to data center communities than their facilities use by making their operations more efficient while also restoring local ecosystems and replenishing watersheds. But now that the water use narrative has gained steam, “it actually doesn’t matter what you do physically. It’s what people believe about the resource hungriness of these things,” Ferguson explained.
The more important question, he believes, is whether AI’s overall impact on the world will end up justifying the water it consumes. And as he told me, “the jury is really out” on that for now.
But when it comes to weighing water consumption against the pure economic value of data centers, Christopher Gasson, owner and publisher of the market intelligence firm Global Water Intelligence, has actual numbers.
As Gasson asserted in a presentation that Ferguson attended, in terms of the amount of fresh water used per dollar of revenue generated, data centers perform quite well compared to the world’s other leading industries. Their so-called “revenue intensity” is far lower than that of the semiconductor, power generation, food and beverage, and chemicals sectors, for example.
So for Ferguson, the AI-water intersection that feels most relevant is actually “vertical AI” — models trained specifically on water industry data to address targeted problems in the sector. Training these smaller, specialized models is not only far less resource-intensive, it also allows for much more accurate results than general purpose models, which often hallucinate when trying to address niche queries and concerns.
One of Burnt Island’s portfolio companies, SewerAI, trains its model on reams of sewer inspection data. Using video footage, the software can then perform automated sewer inspections to identify defects in pipes, eliminating the timely, costly, and often inaccurate process of manual video review. Another portfolio company, Daupler, uses its specialized model to automate how water utilities respond to service incidents, categorizing and prioritizing customer reports, dispatching crews, and tracking progress. Burnt Island led Daupler’s Series A round and has already supported it with additional capital through its growth fund.
“You have these really, really high quality, very compelling business models that are being built relatively quietly,” Ferguson said. But he expects these opportunities to gain more attention soon — because while the headlines and community uproar around the water intensity of AI may sometimes be hyperbolic, the necessity of water to human life is anything but.
“You can’t believe in water in the same way that people have chosen to believe in the impact of emissions,” Ferguson told me. “You don’t get to choose when it comes to water issues, because once they get real, they get really real.”
On Japan’s atomic ‘Iron Lady,’ Electra’s supercharge, and a mineral deal Down Under
Current conditions: Tropical Storm Melissa is barreling toward Haiti and Jamaica carrying a payload of as much as 16 inches of rain for certain parts of the Caribbean • A coldfront is set to drop temperatures by as much as 15 degrees Fahrenheit over the Great Lakes states • Temperatures in the French overseas territory of Juan de Nova hit nearly 94 degrees Tuesday, the hottest October day in the history of the French Southern Territories.
US Wind told a federal court that it will go bankrupt if President Donald Trump succeeds in revoking its building permits. The Baltimore-based developer testified on the fate of its 2.2-gigawatt Maryland Offshore Wind project in response to a lawsuit brought by the Department of the Interior and the City Council of Ocean City, Maryland. “If the plan is lost, surrendered, forfeited, revoked or otherwise not maintained in full force and effect, US Wind’s investors have the right to declare US Wind to be in default on the repayment of the company’s debt and/or refuse to extend the additional financing needed to complete construction of the project,” the company told the court, according to an update on the energy consultancy TGS’ 4C Offshore news website. “Either of these consequences could result in US Wind’s bankruptcy.”
The Trump administration’s “total war on wind,” as Heatmap’s Jael Holzman described the multi-agency onslaught against offshore projects, has drawn a backlash in recent months. As I reported last month in this newsletter, a federal judge temporarily stayed Trump’s stop-work order on a 80% complete wind farm off Rhode Island’s coast. Even the oil industry has come out to support the wind sector, as I wrote earlier this month, with Shell’s top U.S. executive warning that the precedent the administration had set would harm fossil fuel producers once Democrats return to power. Yet the effects of the administration’s policies are starting to pinch.
Electra announced a series of major deals on Tuesday as the green iron startup unveiled its debut demonstration facility in Boulder, Colorado. Just a month after Microsoft agreed to buy green steel for its data centers from Sweden’s green steelmaker Stegra, Facebook owner Meta agreed to buy environmental attribute credits linked to emissions cut from Electra’s clean iron. The startup also announced three major offtake agreements — the steelmaker Nucor, the European metal trader Edelstahl Group, and Japanese steel-trading giant Toyota Tsusho all signed deals for Electra’s iron. Meanwhile, Electra brought on new financing. Bill Gates’ Breakthrough Energy invested $50 million in grants into the company, while Colorado Governor Jared Polis provided the five-year-old startups with an $8 million tax credit from the state’s clean industrial financing program. And all that is just what the company announced Tuesday. Earlier this year, as Heatmap’s Katie Brigham reported, Electra closed a $186 million Series B round.
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The top U.S. solar trade group, the Solar Energy Industries Association, is looking for a new leader. After eight years in office, Abigail Ross Hopper, the lobby organization’s chief executive, announced her departure Tuesday amid what she called a “challenging” year for the industry in her public exit letter. When she took office in 2017, the solar industry had a total capacity of 36 gigawatts and just over 1 million residential customers. By today, the industry has grown to more than 255 gigawatts and more than 5.5 million residential customers. Despite struggles competing against China, U.S. solar manufacturing capacity vaulted from 14th globally to the world’s third-largest hub of photovoltaic factories. “The growth we’ve experienced over the years is a result of our collective grit and determination,” she wrote in the letter. “We’ve navigated fierce policy battles and market challenges, from trade cases to tax debates, and yet we’ve always emerged stronger. We fought — and won — historic policy battles, at every level of government.” While the Trump administration’s cuts to solar programs have dulled growth forecasts, she said she was “optimistic” about the future. Her last day will be January 30, 2026.

After months of negotiations, the U.S. and Australia signed onto a two-way trade deal on critical minerals worth $8.5 billion. The move comes as China ratchets up export controls on rare earths and other metals over which Beijing dominates global supplies. Australia and Canada, whose economies heavily depend on mining, are widely considered the most dependable sources of minerals for the U.S., a dynamic highlighted last week by the cancellation of an American metal project by the leaders of a coup in Madagascar, as I reported for Heatmap. For Australia, the agreement “is a really significant deal,” Hayley Channer, the director of the economic security program at the United States Studies Centre at the University of Sydney, told The Guardian. “I’m surprised how good it is. The fact that any U.S. money is coming to Australian companies is huge; we really need this money. I don’t think it could have gone any better.”
Japan just elected its first female prime minister, the arch-conservative former minister of economic security Sanae Takaichi. Like Margaret Thatcher, the first woman to serve as British prime minister, Takaichi has been dubbed the Iron Lady due to her hard-line nationalistic views. But uranium may be a better metal for the nickname. Like Thatcher, Takaichi has vowed to restore Japan’s nuclear industry to its former might. Less than half of Japan’s 33 operable nuclear reactors are currently online and generating electricity, a legacy of the mass shutdown that followed the 2011 Fukushima-Daiichi plant. In lieu of atomic energy, Japan — which lacks the land for vast wind and solar installations — has turned instead to costly liquified natural gas imports. To Takaichi, who wants to remilitarize Japan and take a more aggressive stance toward China, this creates a vulnerability. Without domestic gas fields, Japan relies on imports whose routes the Chinese navy could disrupt in a conflict, weaponizing blackouts in much the same way Russia has in Ukraine. Japan’s offshore wind efforts are badly delayed. And Takaichi has warned that Beijing’s grip over global manufacturing of photovoltaic panels makes solar a threat, as well.
Japan isn’t the only country looking to revive its past atomic ambitions. South Africa’s government approved the state-owned utility Eskom’s integrated resource plan last week, which included starting work again on the company’s abandoned pebble-bed modular reactor program. First proposed in 1999, the technology is billed as safer than light water reactors and more versatile, with the potential for use in more heavy industry settings. But South Africa canceled the program in 2010 after spending $980 million developing the reactor. The country currently depends on coal for nearly 60% of its electricity.
Scientists discovered an ancient climate archive in a remote cave in northern Greenland. In a study published in Nature Geoscience, the researchers found calcite deposits that only form when the ground is unfrozen and water flows. The findings cast new light on past warm periods in the Earth’s climate, particularly the Late Miocene, which began about 11 million years ago. “These deposits are like tiny time capsules,” Gina Moseley, a geologist with the University of Innsbruck in Austria and an author of the study, said in a press release. “They show that northern Greenland was once free of permafrost and much wetter than it is today.”
Rob and Jesse hang with Dig Energy co-founder and CEO Dulcie Madden.
Simply operating America’s buildings uses more than a third of the country’s energy. A major chunk of that is temperature control — keeping the indoors cool in the summer and warm in the winter. Heating eats into families’ budgets and burns a tremendous amount of fuel oil and natural gas. But what if we could heat and cool buildings more efficiently, cleanly, and cheaply?
On this week’s episode of Shift Key, Rob and Jesse talk to Dulcie Madden, the founder and CEO of Dig Energy, a New Hampshire-based startup that is trying to lower the cost of digging geothermal wells scaled to serve a single structure. Dig makes small rigs that can drill boreholes for ground source heat pumps — a technology that uses the bedrock’s ambient temperature to heat and cool homes and businesses while requiring unbelievably low amounts of energy. Once groundsource wells get built, they consume far less energy than gas furnaces, air conditioners, or even air-dependent heat pumps.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University. Jesse is an adviser to Dig Energy.
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Here is an excerpt from our conversation:
Jesse Jenkins: We’ve been throwing a few different terms around here to describe this. We talked about geothermal heating and cooling, ground source heat pumps, geoexchange. There’s a little bit of ambiguity here in the language people used to talk about these things. What’s your favorite way to talk about this product and why?
Dulcie Madden: Ugh.
Jenkins: Or is this just an endless debate that is not resolved?
Madden: It is a great question. It’s a big debate. When I think of geoexchange, just so everyone knows, it’s really about, like, are you able to basically create a larger array, potentially, across buildings, more like exchanging heating and cooling, like both point source and — I think about it more in the context of Princeton, where it’s also across buildings, right? And that starts to move into what some people call a thermal energy network. And so there’s some work there.
There is a lot of back and forth between geothermal heat pump and ground source heat pump, and a lot of people will use them interchangeably. I think that there is technically a differentiation, but I don’t know if there’s a didactic, like, This is what it is. It’s just … you have to be interchangeable.
Jenkins: Yeah, I’m curious, I don’t know what the best marketing term is, what people actually resonate with beyond the technical crowd. I was describing what you guys were doing when you closed your seed series round on X or BlueSky, and somebody jumped into the replies. That’s not geothermal energy, it’s ground source heat pump. And it’s like, okay. And I guess the argument is that, because it’s basically just using it as a source for heat exchange in the heat pump operation as opposed to extracting heating out of the ground — which you can do. I mean, you can just do direct heating from geothermal.
Madden: Right.
Jenkins: Deep geothermal drilling, as well. It’s something that Eavor, which is an Alberta-based deep geothermal company that I advise, as well, is working on their first commercial project in Bavaria. That’s gonna go into a district heating system. So they’re going produce a little bit of power, but a lot of that is just direct heat. But again, they’re drilling, five, six kilometers deep and pulling out heat at high temperatures. And so it’s because it’s kind of back and forth, you’re using this kind of buffer for both heating and cooling. I think that’s why people might push back on the idea that it’s geothermal. But you’re using the heat in the ground.
Mentioned:
TechCrunch: “Geothermal is too expensive, but Dig Energy’s impossibly small drill rig might fix that”
Princeton University’s Geo-Exchange System
Jesse’s downshift; Rob’s downshift.
This episode of Shift Key is sponsored by …
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A warmer world is here. Now what? Listen to Shocked, from the University of Chicago’s Institute for Climate and Sustainable Growth, and hear journalist Amy Harder and economist Michael Greenstone share new ways of thinking about climate change and cutting-edge solutions. Find it here.
Music for Shift Key is by Adam Kromelow.