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The most interesting things I haven’t written about yet.
My inbox and calendar have been filled all year with press releases and requests to chat about new carbon removal technologies, artificial intelligence and its attendant energy demand, novel battery designs, advances in fission and fusion, and investors’ ever-present concerns about how to get all of this to market in time to make a real dent in the climate crisis (and also, you know, a profit).
I wrote about a lot of it — but not all of it, and much of the stuff that got left out is no less worthy of your attention than the stuff that made it. So here I present a roundup of the climate technologies that you might not have read about in Heatmap this year, but that have investors, academics, and the climate world at large buzzing as we look toward 2025.
This fall when I spoke with Amy Duffuor, a co-founder and partner at the venture capital firm Azolla Ventures, she told me that her firm, which is focused on “overlooked and neglected” climate solutions, has been fascinated by the shipping industry. Because while aviation and shipping each account for about 3% of global emissions, decarbonizing flight seems to get the bulk of the attention. “Sometimes it’s hard for people to imagine what they don’t see or what they’re not interacting with on a day to day basis,” Duffuor told me.
This fall, the firm co-led a $4.5 million seed round of investment in clean fuels producer Oxylus Energy, which converts carbon dioxide into green methanol for use in shipping and other transportation fuels. The tech relies on renewable-powered electrolyzers similar to those used to make green hydrogen, but the company’s secret sauce is a special catalyst that can convert carbon dioxide into methanol at low temperature and pressure, makingthe whole process more efficient and more economical than ever before.
Duffuor told me that green methanol has a leg up on other clean fuels such as green hydrogen, which has a low energy density, or green ammonia, which is highly toxic and corrosive. While supply of all of these is still limited and costly, Duffuor said that retrofitting an engine to run on green methanol is much simpler than adapting to other alternative fuels, which is why it’s already being done on a small scale today. Indeed, shipping giant Maersk has a number of green methanol boats in its fleet, one of which completed the world’s first green methanol-powered voyage last fall.
Long considered “one of climate science’s biggest taboos,” according to Heatmap’s own Robinson Meyer, geoengineering had a big 2024, and it looks poised to be taken increasingly seriously. In fact, one investor I spoke with this month, Lee Larson of Piva Capital, which focuses on decarbonizing heavy industry, told me he foresees a splashy but undeniably controversial funding announcement coming in the near future. “I don’t think it’s going to be Piva, but someone is going to take a bet on this, and there’s going to be a big funding round for a startup in this space,” he predicted. “Because there’s enough interested people with deep pockets that have been thinking about this space for someone to raise money off of it.”
But if nothing else, this year proved that the backlash would be swift. In June, the city council in the small town of Alameda, California, shut down testing of a solar geoengineering device that could one day be used for “marine cloud brightening” — that is, spraying aerosols into the sky to enable clouds to reflect more sunlight away from Earth — and Harvard University abandoned another solar geoengineering project, which aimed to study how aerosol plumes behave in the stratosphere. At the same time, though, the nonprofit Environmental Defense Fund announced that it would fund research into solar geoengineering to help inform policymakers should it one day become regulated, and the UK also committed to supporting research into various solar geoengineering pathways, including conducting outdoor experiments.
“There’s a growing understanding that, on a per unit of warming avoidance basis, this is just way cheaper than carbon dioxide removal solutions,” Larson told me. From his perspective, the world needs to support this type of research lest a layperson, a billionaire, or a small nation choose to go rogue. “Just given how cheap it is, given how little we know about it, that’s a poor combination — because the chance of someone doing something with a lot of unintended consequences goes up and up.”
The idea is pretty straightforward — install solar panels that can float on the surface of reservoirs, canals, lakes, and the like — but this year it really began to pick up steam. There are myriad benefits to this solution: eliminating land use controversies, built-in temperature regulation (water keeps the panels cool, thus increasing their efficiency), and reducing evaporation from the water bodies. A paper published in Nature this June found that floating solar could meet, on average, 16% of countries’ total energy needs.
And countries big and small are taking note. While there aren’t a lot of specialized floating solar startups seeking VC funding, governments as well as traditional solar manufacturers and project developers are stepping up. The U.S. Department of the Interior announced in April that it’s investing $19 million to install panels over irrigation canals in California, Oregon, and Utah. Zimbabwe recently secured $250 million from the African Export-Import Bank to install floating solar on the world’s largest man-made lake, while China turned on the largest offshore solar farm in the world in November. Taiwan and India have also already deployed large installations, and have plans for more.
I spoke with the lead author of the Nature paper, Dr. Iestyn Woolway of the UK-based Bangor University, way back in June about floating solar’s decarbonization potential. Even he was “quite surprised with the number of countries that could meet a sizable fraction of the energy demands by [floating photovoltaics],” he told me.His modeling shows that Bolivia, for example, could meet about 80% of its energy demand with floating solar, while Ethiopia could meet 100% of its demand, with extra energy to spare.
The next step, he said, is gaining a deeper understanding of the ecological impacts of this technology. “Even if you do cover a water body by something small, like 10%, we don’t know what knock-on effect that would have,” he said.
Soils are some of the world’s most effective carbon sinks, and sustainable farming techniques can enhance soil’s natural carbon sequestration potential. Thus, soil carbon sequestration plays at the intersection of the fuzzy and buzzy regenerative agriculture space and the increasingly scientifically rigorous carbon dioxide removal sector, with its carbon crediting schemes and verification requirements. One investor I spoke with, Amy Francetic of Buoyant Ventures, is eager to find and back a company that can merge these two worlds. “If you could figure out how to sink carbon in a farm and do that in a way that is easy to measure and validate, we don’t have a good solution for that today,” she told me.
As of now, Francetic said, startups are going about this problem by doing labor intensive and expensive soil sampling and “marrying that with geospatial data to try to measure what climate benefits there are of changing certain agricultural practices, doing different row crops, changing the crop rotation, the amount of inputs you put into the crops.” Many have pitched Buoyant on their methodologies for bridging satellite data with soil sampling data, but thus far she’s passed. “None of them have, I think, met the standard of reliability that the financial industry would back from a carbon credit standpoint,” she explained. “That might be one of these holy grail things. If somebody could really do that, it could be very impactful.”
I’ll be honest, before this year I didn’t know what parametric insurance was. But since it came up time and again in conversations with investors about extreme weather and the necessity of climate resilience and adaptation measures, I decided to dig in. Here’s what parametric insurance is: an insurance product that automatically provides rapid payouts to customers in the case of natural disasters or weather events, assuming these events exceed a predefined limit. For example, a policyholder might be paid if the rainfall, wind speed, or temperature of a particular weather event is above or below a certain threshold, with the amount tied to how much the measurement deviates from the limit, not the damages incurred.
With extreme weather events getting more frequent and more intense due to climate change, this has given rise to a crop of startups that can leverage sensors, satellites, and artificial intelligence to quickly and accurately measure the extent of these events, thus enabling parametric insurance for a host of new customers. To name a few companies that have taken advantage: There’s Floodbase and FloodFlash (both focusing on flood insurance, naturally), which have each raised over $10 million in Series A financing; FloodFlash made a series of rapid payouts this year following storms in the UK, getting policyholders their money in as little as 10 hours after the water level exceeded its threshold. There’s Arbol, which protects against a host of weather events from drought to heat waves and cold snaps, and raised a $40 million Series B round this year. And there’s Pula, which helps provide parametric insurance to small-holder farmers in emerging markets, and raised a $20 million Series B round this year.
“This is affecting everybody,” Clea Kolster of Lowercarbon Capital, which led Floodbase’s Series A round, told me when we met at this year’s San Francisco Climate Week. “So how do you actually make sure that people have coverage for it and can continue to have as close to livable lives as possible, even when they’re subject to more frequent extreme weather events?” Investors know the storms are going to keep coming, so this category of adaptation tech is only set to grow.
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Between the budget reconciliation process and an impending vote to end California’s electric vehicle standards, a lot of the EV maker’s revenue stands to go poof.
It’s shaping up to be a very bad week for Tesla. The House Committee on Energy and Commerce’s draft budget proposal released Sunday night axes two of the primary avenues by which the electric vehicle giant earns regulatory credits. Congress also appears poised to vote to revoke California’s authority to implement its Zero-Emission Vehicle program by the end of the month, another key source of credits for the automaker. The sale of all regulatory credits combined earned the company a total of $595 million in the first quarter on a net income of just $409 million — that is, they represented its entire margin of profitability. On the whole, credits represented 38% of Tesla’s net income last year.
To add insult to injury, the House Ways and Means committee on Monday proposed eliminating the Inflation Reduction Act’s $7,500 consumer EV tax credit, the used EVs tax credit, and the commercial EVs tax credit by year’s end. The move comes as part of the House’s larger budget-making process. And while it will likely be months before a new budget is finalized, with Trump seeking to extend his 2017 tax cuts and Congress limited in its spending ability, much of the IRA is on the chopping block. That is bad news for clean energy companies across the spectrum, from clean hydrogen producers to wind energy companies and battery manufacturers. But as recently as a few months ago, Tesla CEO Elon Musk was sounding cavalier.
After aligning himself with Trump during the election, Musk came out last year in support of ending the $7,500 consumer EV tax credit, along with all subsidies in all industries generally. He wrote on X that taking away the EV tax credit “will only help Tesla,” presumably assuming that while his company could withstand the policy headwinds, it would hurt emergent EV competitors even more, thus paradoxically helping Tesla eliminate its competition.
While it looks like Musk will get his wish, he probably didn’t account for a small but meaningful carveout in the Ways and Means committee proposal that allows the tax credit to stand through the end of 2026 for companies that have yet to sell 200,000 EVs in their lifetime. While Tesla’s sales figures are orders of magnitude beyond this, the extension will give a boost to its smaller competitors, as well as potentially some larger automakers with fewer EV sales to their credit.
A number of other provisions in the Ways and Means committee’s proposal spell bad news for Tesla and EV automakers on the whole. These include the elimination of the $4,000 tax credit for used EVs as well as the $7,500 tax credit for commercial EVs — which leased cars also qualify for. This second credit, often referred to as the “leasing loophole,” allows consumers leasing EVs to redeem the full tax credit even if their vehicle doesn’t meet the domestic content requirements for the buyer’s credit. The committee also wants to phase out the advanced manufacturing tax credit by the end of 2031, one year earlier than previously planned. While not a huge change, this credit incentivizes the domestic production of clean energy components such as battery cells, battery modules, and solar inverters — all products Tesla is heavily invested in.
The domestic regulatory credits that comprise such an outsize portion of Tesla’s profits, meanwhile, come from a mix of state and federal standards, all of which are under attack. These are California’s Zero-Emission Vehicle program, which sets ZEV production and sales mandates, the National Highway Traffic Safety Administration’s Corporate Average Fuel Economy standards, and the Environmental Protection Agency’s greenhouse gas emissions standards.
While the mandates differ in their ambition and implementation mechanisms, all three give automakers credits when they make progress toward EV production targets, fuel economy standards, or emissions standards; exceed these requirements, and automakers earn extra credits. Vehicle manufacturers can then trade those additional credits to carmakers that aren’t meeting state or federal targets. Since Tesla only makes EVs, it always earns more credits than it needs, and many automakers rely on buying these credits to comply with all three regulations.
It’s unclear as of now whether lawmakers have the authority to eliminate the federal fuel efficiency and greenhouse gas emissions standards via budget reconciliation. A Senate stricture known as the Byrd Rule mandates that provisions align with the basic purpose of the reconciliation process: implementing budgetary changes; those with only “incidental” budgetary impacts can thus be deemed “extraneous” and excluded from the final bill. It’s yet to be seen how the standards in question will be categorized. At first blush, fuel efficiency and greenhouse gas emissions standards are a stretch to meet the Byrd Rule, but that determination will take weeks, or even potentially months to play out.
What’s for sure is that California’s ZEV program cannot be eliminated through this process, as the program derives its authority from a Clean Air Act waiver, which was first granted to the state by the Environmental Protection Agency in 1967. This waiver allows California to set stricter emissions standards than those at the federal level because of the “compelling and extraordinary circumstances” the state faces when it comes to air quality in the San Joaquin Valley and Los Angeles basin. California’s latest targets — which require all model year 2035 cars sold in the state to be zero emissions — have been adopted by 11 other states, plus Washington D.C.
These increasingly ambitious goals would presumably cause the tax credits market — and thus Tesla’s profits — to heat up as well, as most automakers would struggle to fully electrify in the next 10 years. But the House voted at the beginning of the month to eliminate California’s latest EPA waiver, granted in December of last year. Now, it’s up to the Senate to decide whether they want to follow suit.
To accomplish this task, Republicans have called upon a legislative process known as the Congressional Review Act, which allows Congress to overturn newly implemented federal rules. Senate Majority Whip John Barrasso, for one, has been vocal about using the process to end California’s so-called “EV mandate,” writing in the Wall Street Journal last week that “it’s time for the Senate to finish the job.” And yet other Senate Republicans are reluctant to attempt to roll back California’s waiver. The Government Accountability Officeand the Senate Parliamentarian have both determined that the regulatory allowance ought not to be subject to the Congressional Review Act as it’s an EPA “order” rather than a “rule.” Going against this guidance could thus set a precedent that gives Congress a broad ability to gut executive-level rules.
During his first term, Tesla CEO Elon Musk stood in firm opposition to efforts to roll back fuel efficiency standards. But lately, as the administration has started turning its longstanding anti-EV rhetoric into actual policy, Trump’s new best friend has been relatively quiet. Tesla’s stock is down about 25% since Trump took office, as investors worry that Musk’s political preoccupations have kept him from focusing on his company’s performance. Not to mention the fact that Musk's enthusiastic support for Trump, major role in mass federal layoffs, and, well, whole personality have alienated his liberal-leaning customer base.
So while Musk may have staged a Tesla showroom on the White House lawn in March, awing the President with the ways in which “everything’s computer,” he’s presumably well aware of exactly how Trump’s policies — and his own involvement in them — stand to deeply hurt his business. Whether Tesla will make it through this regulatory onslaught and self-inflicted brand damage as a profitable company remains to be seen. But with Musk planning to slink away from the White House and back into the boardroom, and with House leaders hoping to complete work on the reconciliation bill by Memorial Day, we should start to get answers soon enough.
On gutting energy grants, the Inflation Reduction Act’s last legs, and dishwashers
Current conditions: Eighty of Minnesota’s 87 counties had red flag warnings on Monday, with conditions expected to remain dry and hot through Tuesday • 15 states in the South and Midwest will experience “extreme” humidity this week • It will be 99 degrees Fahrenheit today in Emerson, Manitoba. The municipality hit 100 last weekend — the earliest in the year Canada has ever recorded triple digits.
Republicans on the House Committee on Energy and Commerce released their draft budget proposal on Sunday night, and my colleague Matthew Zeitlin dove into its widespread cuts to the Inflation Reduction Act and other clean energy and environment programs. Among the rescissions — clawbacks of unspent money in existing programs — and other proposals, Matthew highlights:
Those are just a few of the cuts, which the Sierra Club estimates would add up to $1.6 billion for programs related to decarbonizing heavy industry alone. You can read Matthew’s whole analysis here.
Republicans on the Committee on Energy and Commerce weren’t the only ones who’ve been busy. On Monday, the House Ways and Means Committee, which oversees tax policy, proposed overhauling clean energy tax credits. Heatmap’s Emily Pontecorvo took a look at those proposals, including:
There’s much more, which Emily gets into here.
In response to President Trump’s executive order last week ordering the Energy Department to “eliminate restrictive water pressure and efficiency rules” for appliances, the DOE published a list of 47 regulations on Monday that it has targeted as “burdensome and costly.” Appliances regulated by the DOE’s list include cook tops, dishwashers, compressors, and microwave ovens, with the agency claiming the deregulation effort would cut 125,000 words from the Code of Federal Regulations and “save the American people an estimated $11 billion,”The New York Timesreports. By the government’s own accounting, though, efficiency standards saved the average American household about $576 on energy and gas bills in 2024, and reduced energy spending for households and businesses by $105 billion in total. “If this attack on consumers succeeds, President Trump would be raising costs dramatically for families as manufacturers dump energy- and water-wasting products into the market,” Andrew deLaski, executive director of the Appliance Standards Awareness Project, said in a statement. “Fortunately, it’s patently illegal, so hold your horses.”
Environmental Protection Agency administrator Lee Zeldin said Monday that the Trump administration plans to target stop-start technology in cars. According to the EPA’s website, start-stop technology saves fuel “by turning off the engine when the vehicle comes to a stop and automatically starting it back up when you step on the accelerator,” improving fuel economy by 4% to 5%, especially in conditions like stop-and-go city driving. Zeldin, though, characterized the technology as when “your car dies at every red light so companies get a climate participation trophy. EPA approved it, and everyone hates it, so we’re fixing it.” Neither Zeldin nor the EPA offered further details on what that might entail.
More than 2,100 climate adaptation companies generated a combined $1 trillion in revenue last year by offering products and services mitigating the risks of climate change, a new study by London Stock Exchange Group found. “One question that we are getting a lot at the moment is: ‘With the Trump administration in office, what does that mean for the green economy?,’” Jaakko Kooroshy, LSEG’s global head of sustainable investment research, told Bloomberg in an interview about the report. The answer is “this thing is now so big and so robust, it’s not going to implode just like that,” he added.
The analysis looked at 20,000 companies worldwide and “found that adaptation-related revenues last year accounted for roughly a fifth of the $5 trillion global green economy,” with green buildings and water-related infrastructure being the most significant contributors, Bloomberg adds. LSEG further noted that if all companies related to the “green economy” were considered their own industry group, they’d have had the best performance of any equity sector over the past decade.
Thermasol
Wellness company Thermasol has introduced the first off-grid, solar-powered sauna in the U.S., which can reach 170 degrees Fahrenheit in about half an hour.
Rob and Jesse digest the Ways and Means budget bill live on air, alongside former Treasury advisor Luke Bassett.
The fight over the Inflation Reduction Act has arrived. After months of discussion, the Republican majority in the House is now beginning to write, review, and argue about its plans to transform the climate law’s energy tax provisions.
We wanted to record a show about how to follow that battle. But then — halfway through recording that episode — the Republican-controlled House Ways and Means Committee dropped the first draft of its proposal to gut the IRA, and we had to review it on-air.
We were joined by Luke Bassett, a former senior advisor for domestic climate policy at the U.S. Treasury Department and a former senior staff member at the Senate Committee on Energy and Natural Resources. We chatted about the major steps in the reconciliation process, what to watch next, and what to look for in the new GOP draft. 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, or wherever you get your podcasts.
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Here is an excerpt from our conversation:
Jesse Jenkins: Let’s come back to this as a negotiation. This is the first salvo from the House. What does this tell you about where we go from here? Is this a floor? Could it get worse? Is it likely to get better as the lobbying kicks off in earnest by various industries threatened by these changes, and they try to peel things back? What do you think happens next?
Luke Bassett: If you run with the horror movie analogy here, this is scary. I think a lot of people, especially in any energy startups or folks who have been penciling out deals, to start really lining up new projects — or even folks looking for a new EV to buy are suddenly going to have to totally rethink what the next few years look like.
And, you know, whether or not they want to build a factory, buy a car, or have to switch from an electric heat pump to a whale oil burning stove. Who knows? That said, there are champions for each of these in very different ways in the Senate. There are lobbyists who —
Jenkins: — in the House, too.
Bassett: Exactly. There will be lobbyists weighing in. And I think it matters to really think through … I think we’ve been faced with gigantic uncertainty since January. And there’s a part where companies all across the energy sector are looking at this text as we speak and thinking, whoa, I didn’t sign up for this. And to combine this with tariffs, to combine it with the cuts to other federal programs in the other committees’ jurisdictions, it is just a nearly impossible outlook for building new projects. And I bet a bunch of people, CEOs and otherwise, are thinking, I wish Joe Manchin were back in the Senate. But you know, it is what it is.
Robinson Meyer: I will say that it could get worse from here because they will be negotiating with the House Freedom Caucus and with various other conservative House members. And they’ll also be negotiating against the president’s wishes, which is that this move and get done as soon as possible. And so when I talked to Senator John Curtis, Republican of Utah, who’s a supporter of the IRA, or wants to see it extended in large part, and I asked him questions like, what happens if Republicans really go to work in the House on the IRA and then it gets sent to the Senate? One dynamic we’ve already seen during this Congress is that te House Republican Caucus in this Congress is unusually functional and unusually strategic, and has been unusually good at passing relatively extreme and aggressive policy and then jamming the Senate with it.
And unlike what has happened in the past, which is the House Republican Caucus can’t really do anything, so the Senate passes a far more moderate policy, sends it to the House and dares the House to shut things down. This time the House, if folks remember back in March, the House passed a fairly aggressive budget and kicked it to the Senate and then dared the Senate to shut down the government, and ultimately the Senate decided to keep the government open.
I asked Curtis what happens if they do the same with the IRA. What happens if they really go to task on the IRA? They pass fairly aggressive cuts to it and they send it to the Senate. And his answer was, well, I don’t think the House is going to do that. I don’t think a bill that really savages the IRA could pass the House.
We’ll see, but I just don’t think there’s any floor here. I think there’s no floor for how bad this gets. And I think I just don’t, you know … Before we went into the administration, there was a lot of confidence that the Trump administration and the new Republican majority and the Congress was not going to do anything to substantially make the business environment worse. We’ve discovered there does seem to be a degree of tariffs that will make them squeal and pull back, but we actually haven’t found that in legislature yet.
Music for Shift Key is by Adam Kromelow.