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With continued subsidies a big “if” going into next year, deep-pocketed purchasers will have outsized impact.
As Donald Trump prepares to take office (again), the future of the tax policy that underlies clean energy development in the United States has never been more in doubt. Will the clean energy tax credits survive? What about advanced manufacturing? Or will it just be the electric vehicle credits that get tossed aside?
In any case, one thing seems far closer to certain: Big companies, especially large technology companies, will continue to buy renewable and clean power to fulfill their own sustainability goals and keep up their massively expanding data center operations. For them, speed may be the thing that matters most, and reasonable costs and carbon abatement will have to come along with it.
From 2025 to 2028, Morgan Stanley estimates that there will be 57 gigawatts worth of demand from new data centers, with around 6 gigawatts of that currently under construction, and a substantial shortfall in available power to build everything hyperscale technology companies want. This means that there will be a huge need to buy power, no matter the tax credit situation, which would mean continued upward pressure on prices.
Even before the election, power purchase agreement prices for solar power were creeping up due to tariffs on solar equipment, according to LevelTen Energy. Those will likely be maintained and could be ramped up in the new administration.
“Repeal of the tech neutral tax credits and of the manufacturing production tax credits has the potential to increase PPA prices by almost 40%,” Nidhi Thakar, the senior vice president for policy of the Clean Energy Buyers Association, told me, referring to two of the most powerful provisions of the Inflation Reduction Act. She added that repeal would “essentially have an inflationary effect.”
“We have this opportunity right now to capture that economic development if we do things right,” Thakar said. “That is going to require having critical policies in place that are going to support the deployment of more clean firm resources on the grid.”
At least so far, the prospect of repeal has not slowed energy procurement among the biggest buyers. This month, Alphabet announced a $20 billion investment plan with Intersect Power and TPG to build carbon-free power near datacenters with the hope of bringing power and data centers online more quickly. Meta, meanwhile, announced earlier in December that it would build a $10 billion data center campus in Northeast Louisiana, complete with gas and renewable power provided by Entergy, the local utility. The project will come with “at least” 1.5 gigawatts of new renewable power, Entergy said; it also filed an application with the Louisiana utilities regulator for over 2 gigawatts of new gas-fired power plants, including two plants adjacent to the data center site, according to S&P Global Commodities Insights.
While a “double digit” increase in power purchase agreement sale prices could result from tax credits vanishing, there is still “more demand for renewable energy than supply for a whole bunch of reasons,” Peter Freed, the former director of energy strategy at Meta and the founding director of the consultancy Near Horizon Group, told me.
“Obviously the tax credits are pretty central to the pricing on projects,” he said.
Freed was enthusiastic about grid technologies that could enhance capacity, but he also acknowledged “it is very likely we’re going to have a variety of compromises that have to be made over the course of next seven, eight, nine years, in terms of how we’re going to accommodate load that’s coming in the cleanest possible way.”
“That probably means we’re seeing more gas built,” he added.
A significant portion of that gas could be built on-site. Anything involving the grid — whether fossil or renewable — involves large investments of cash and time for hyperscalers and developers. “Given the increasing time required to connect to power grids, especially in the U.S., we believe there could be more upcoming ‘off grid’ approaches to powering data centers,” Morgan Stanley analyst Stephen Byrd wrote in a note to clients. “Batteries and smaller gas-fired turbines could be combined with large combined cycle natural gas turbines to provide a robust power source.”
Elon Musk’s xAI has done this the quick-and-dirty way by installing mobile natural gas generators to power its facility in Memphis. GE Vernova, the turbine manufacturer, is also “having direct conversations with hyperscalers for gas orders,” according to Jefferies analyst Julien Dumoulin-Smith in a note to clients, with the first order from a hyperscaler possibly coming in the second half of next year.
Gas isn’t the only answer, however — at least not on its own. A group of energy researchers from Stripe, Paces, and Scale Microgrids, wrote in a white paper published mid-December saying that solar microgrids could provide a “fast, scalable, clean, and cheap enough” option for data center power.
These “off-grid solar microgrids” could potentially be put into operation in “around two years” and would combine solar panels, batteries, and some natural gas backup. Installed across the Southwest, they would be able to power some 1,200 gigawatts of data center demand with 90% solar power, according to Scale Microgrids’ Duncan Campbell, at costs below repowering Three Mile Island. A 44% solar system would be “essentially the same cost” as off-grid gas turbines, the whitepaper said.
No matter what solution hyperscalers pursue — bringing their own power behind the grid, locating near power on the grid, or building out more clean, firm power on local grids — the question will ultimately always be how fast they can get online.
“I think people are initially thinking about colocating a large load with a project — renewable, gas, or anything else — as a fact track to getting load online, and there’s some truth to that,” Freed told me.
“My perspective as someone who is adding new load is that you should be indifferent to location for generation,” Freed said. “What you really should be caring about is when you can interconnect and turn lights on at the scale you desire.”
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That said, the U.S. EV maker also reported record fourth-quarter deliveries.
Tesla reported today that it had delivered 495,570 cars in the last three months of the year, and 1,789,226 in 2024 as a whole. That represents a decline in annual sales from 2023 — Tesla’s first annual decline in more than 10 years, back when the company’s deliveries were counted in the hundreds or single-digit thousands — although the fourth quarter figure is a record for quarterly deliveries.
Analysts polled by Bloomberg expected 510,400 deliveries for the fourth quarter, while Tesla had forecast around 515,000 deliveries to meet its “slight growth” goals. The company had cited “sustained macroeconomic headwinds” weighing on the broader electric vehicle market in its most recent investor letter, and again referred to “ongoing macroeconomic conditions” to explain the miss on deliveries. In the fourth quarter of 2023, Tesla deliveries stood at 484,507, with 1,808,581 for the year as a whole.
Going forward, Tesla buyers in the United States are likely to lose out on up to $7,500 in federal subsidies as the incoming Trump administration puts its stamp on energy and environmental policy. Tesla’s chief executive, Elon Musk, has supported ditching EV credits.
The below-expectations deliveries dragged on the stock, which traded down more than 4.5% in early trading Thursday. Tesla shares have otherwise been on a tear, rising around 75% in the last six months before today, with especially torrid performance following the 2024 United States presidential election.
The Chinese car company BYD is in a virtual tie with Tesla for annual battery electric vehicle sales, with 1,764,992 delivered in 2024, the company announced Wednesday. While Tesla’s 2024 sales confirm that the U.S. company maintains a narrow lead over BYD, the Chinese automaker’s sales are growing at a rapid clip — electric sales increased by over 12% for the year, compared to the slight fall in Tesla sales from 2023 to 2024.
While Tesla’s car business appears to have stalled to some extent — though it was buoyed by the release of a new model, the Cybertruck, which is already the third best-selling electric vehicle in the United States — the company’s energy storage business is another story. The company said that in the fourth quarter of last year it had deployed 11 gigawatt-hours of storage, and 31.4 gigawatt-hours in the year as a whole. If Tesla’s deployment rate in 2025 merely matched its fourth quarter rate, it would mean 40% annual growth.
On weather projections, deadly EV attacks, and hydrogen tax credits
Current conditions: A series of Arctic blasts hitting the U.S. could make for the coldest January since 2011 • Power has been restored in Puerto Rico after a massive New Year’s Eve blackout • Temperatures will get down to about 43 degrees Fahrenheit tonight in Barcelona, where gas-powered patio heaters are officially banned due to their carbon emissions.
Authorities are investigating whether yesterday’s deadly truck attacks in New Orleans and Las Vegas may be linked. Both incidents involved electric pickups. In New Orleans, a man drove a Ford F-150 Lightning into a crowd in the French Quarter, killing 15 people and injuring dozens of others. In Vegas, a Tesla Cybertruck packed with explosives detonated outside the Trump International Hotel, killing the driver and injuring seven others. Both vehicles were rented through a budget app called Turo. Electric vehicles tend to be heavier than their internal combustion counterparts, mostly due to their battery packs. This can make them particularly deadly in collisions with smaller vehicles and, of course, pedestrians. Ford’s 2024 F-150 Lightning has a curb weight ranging from 6,000 to nearly 7,000 pounds; the Cybertruck starts at 6,600 pounds, about 2,000 pounds heavier than the average new vehicle weight.
In the Las Vegas explosion, Sheriff Kevin McMahill indicated the Cybertruck actually “limited the damage that occurred.” The vehicle’s exterior appeared to remain intact. In a post on X, Tesla CEO Elon Musk said: “The evil knuckleheads picked the wrong vehicle for a terrorist attack.”
The Biden administration plans to release guidance for hydrogen production tax credits this week, likely on Friday, two sources toldReuters. The guidance will “provide a pathway” for tax credits for hydrogen producers that use nuclear power, the outlet reported. Back in October, Deputy Secretary Wally Adeyemo told Heatmap the rules would be out by the end of 2024. As Heatmap’s Robinson Meyer explained, the Treasury Department’s must decide how hydrogen producers who use electrolysis — sending electricity through water to split its molecules — should deal with the indirect carbon emissions associated with drawing power from the grid. “Finalizing rules that will help scale the clean hydrogen industry while implementing the environmental safeguards established in the law remains a top priority for Treasury,” spokesperson Michael Martinez told Reuters. “In that process, we are carefully considering the numerous comments we have received on the proposed regulations.” In his conversation with Heatmap, Adeyemo acknowledged that the final rules were unlikely to please everyone.
Climate change meant that there were about 41 more “extreme heat” days in 2024, according to the World Weather Attribution’s annual extreme weather report. Climate change contributed to at least 3,700 deaths, but “it’s likely the total number of people killed in extreme weather events intensified by climate change [in 2024] is in the tens, or hundreds of thousands,” the group said. While the El Niño weather pattern contributed to global trends, climate change played a bigger role in fueling extreme weather. “As the planet warms, the influence of climate change increasingly overrides other natural phenomena affecting the weather,” the report added.
World Weather Attribution
China’s weather agency also reported that 2024 was the country’s warmest year on record, and that “the top four warmest years ever were the past four years, with all top 10 warmest years since 1961 occurring in the 21st century.” And a report from the National Institute for Space Research concluded that Brazil’s Amazon rainforest experienced 140,328 fires last year, the highest number in 17 years. In a New Year’s message, UN Secretary-General António Guterres said we are in an era of real-time climate breakdown.
The UK’s Met Office projected that global temperatures will remain high in 2025 despite the shift to La Niña, averaging between 2.3 and 2.7 degrees Fahrenheit above the pre-industrial average. “Years such as 2025, which aren’t dominated by the warming influence of El Niño, should be cooler,” said Professor Adam Scaife, who leads the team behind the Met Office’s global forecast. “2016 was an El Niño year and at the time it was the warmest year on record for global temperature. In comparison to our forecast for 2025 though, 2016 is now looking decidedly cool.”
Met Office
In case you missed it: New York Gov. Kathy Hochul signed a new bill into law that allows the state to fine fossil fuel companies for climate damages. The law could see the companies incur charges of up to $75 billion over the next 25 years – though many are expected to file legal challenges. Firms will be fined based on their emissions between 2000 and 2018. The money will go into a Climate Superfund and be put toward mitigation and adaptation measures. Vermont implemented a similar law last summer. “New York has fired a shot that will be heard round the world: The companies most responsible for the climate crisis will be held accountable,” New York Sen. Liz Krueger said in a statement.
“A generation from now, this solar heater can either be a curiosity, a museum piece, an example of a road not taken, or it can be a small part of one of the greatest and most exciting adventures ever undertaken by the American people.” –The late President Jimmy Carter, upon installing solar panels on the roof of the West Wing of the White House in 1979. Ronald Reagan had the panels removed seven years later. Carter died on Sunday at the age of 100.
His intellectual influences include longtime climate action skeptics — and Bill Gates’ favorite author.
Donald Trump’s nominee for Secretary of Energy, Chris Wright, is a nerd — and he’ll tell you about it. “I’m Chris Wright, and my short bio is, I started out as a science geek, I transitioned to a tech nerd, and then I’ve been an energy entrepreneur my whole life,” he told energy journalist Robert Bryce on the Power Hungry podcast in 2020. “In addition to an energy nerd, I’ve been a climate nerd for quite some time,” he said in a talk hosted by Veriten, the energy consulting firm in 2023.
This is a far cry from Trump’s first Energy Secretary, the former Texas Governor Rick Perry, who famously failed to remember on the Republican primary debate stage the third of the three agencies he sought to eliminate (it was the Department of Energy) and who reportedly didn’t know that the Energy Department’s responsibilities — and budget — then lay heavily with maintaining the country’s nuclear stockpile.
But Wright’s extensive energy experience — studying nuclear fusion at the Massachusetts Institute of Technology and working early in his career on solar and geothermal engineering (his company, Liberty Energy, the fracking powerhouse he founded in 2011, has invested in the next-generation geothermal company Fervo, and Wright sits on the board of the nuclear company Oklo) — has not won him any plaudits from environmental groups or Democrats who focus on climate change. After Trump announced his nomination, the Sierra Club called Wright a “climate denier who has profited off of polluting our communities and endangering our health and future.” Illinois Rep. Sean Casten, one of the House’s most vocal proponents of climate action, also called Wright a “climate denier who prioritizes the wants of energy producers over the needs of American consumers.”
Few Republicans — and certainly few high-level Trump appointees — are as conversant in climate and energy data as Wright. That may make him an even more effective advocate for Trump’s “energy dominance” strategy, built around increased production of fossil fuels and, almost certainly, fewer subsidies for clean energy and electrification.
Typically when a person gains some notoriety by coming out against immediate, large-scale climate action and restrictions on fossil fuel extraction, climate advocates try to link that person to the fossil fuel industry and its long history of deliberate and knowing climate denial. Wright’s associations, however, are perfectly straightforward: Liberty Energy fracks oil and gas in the United States and Canada on behalf of large oil companies. He thinks the company’s contribution to the good of the world consists of its producing more hydrocarbons — full stop.
Wright calls this philosophy “energy sobriety,” fully conceding that climate change is real while also diminishing the urgency of mounting a response. In seemingly countless speeches, interviews, and legislative testimonies, as well as in Liberty Energy’s annual “Bettering Human Lives” report — its version of an environmental, social, and governance review — Wright is perfectly comfortable acknowledging climate change while also patiently assaulting many key pillars of climate policy as it’s practiced in the United States, Europe, and other countries in the developed world seeking to sharply reduce greenhouse gas emissions.
While Wright’s written and spoken record adds up to tens of thousands of words and hours of talks, it can be distilled into a few core ideas: Energy consumption makes people better off; energy access, especially in the developing world, is a greater global challenge than climate change; and existing alternatives to hydrocarbons are not capable of replacing the status quo energy system, which still overwhelmingly relies on fossil fuels, with little prospect of a rapid transition.
He cites a wide range of thinkers, including members of a group of scholars — including the Danish political scientist Bjorn Lomborg (whose book, False Alarm, is “fantastic,” Wright said in a Liberty talk), University of Colorado science policy scholar Roger Pielke, Jr. (“a real intellectual”), and the Canadian energy scholar and historian Vaclav Smil (“the greatest energy scholar of my lifetime by far”) — who share elements of this deflationary view of climate change.
Lomborg and Pielke have long been bêtes noires of the climate movement, mostly as the subjects of years of furious back and forth in every form of media for the past two-plus decades. (Though in Pielke’s case, there was also an investigation in 2015 over alleged conflicts of interest led by House Democrat Raul Grijalva, who is retiring from Congress this year.) Lomborg has for decades argued that climate change ranks relatively low on global challenges compared to, say, global public health, while Pielke contends that many climate change policy advocates overstate what the Intergovernmental Panel on Climate Change actually says about the connection between climate change and extreme weather, a point that has made him the object of intense criticism for going on 15 years.
Smil, meanwhile, is deeply skeptical of any effort to wean the world from fossil fuels considering their role in the production of steel, cement, plastics, and fertilizers — the materials that he describes as essential to the modern world. Smil also counts among his fans Bill Gates (“Vaclav Smil is my favorite author”), who is also one of the biggest funders and promoters of climate action through his research and investment group Breakthrough Energy and funding for companies like TerraPower, which is currently building the country’s first next-generation nuclear facility in Wyoming.
Pielke called both Wright and Doug Burgum, Trump’s nominee for Secretary of the Interior and the designated head of a planned National Energy Council “super competent. They know energy, and that’s a fantastic starting point,” he told me.
“There is polarization of the climate debate, and the idea that fossil fuels are evil and the fossil industry are arch-villains — that’s part of the framing from the progressive left about how climate wars are to be thought,” Pielke said. “I’m not particularly wedded to that sort of Manichean evil vs. good framing of the debate.”
But the differences are real. Wright strongly contests much of what is the mainstream of climate policy. While he acknowledges that increased concentrations of carbon dioxide cause higher temperature, he says it’s “actually sort of slow-moving in our lifetimes” and a “relatively modest phenomenon that’s just been wildly abused for political reasons,” he said in a talk to the conservative policy group American Legislative Exchange Council.
While the Department of Energy has only limited authority over energy policy, per se, especially the permitting and public lands issues that typically concern fossil fuel companies, Wright does have some levers he can pull. He will likely act quickly to approve more export facilities for liquified natural gas, though the Energy Department’s recently released study of LNG’s long-term effects — particularly on domestic energy prices — may complicate that somewhat. Beyond that, he will inherit a massive energy research portfolio through the national labs, putting him in charge of developing the energy technology that he says are currently insufficient to replace oil and gas.
“I’ve worked on alternatives. I’d love it if fusion energy arrives,” Wright said in an interview with the conservative website Power Line. “I love energy technology, and I think there’s good things going on, but it’s now become political.”
He believes that reaching net zero greenhouse gas emissions by 2050 is “neither achievable nor humane,” he wrote in the foreword to the 2024 edition of “Bettering Human Lives.” He also disagrees with the idea of subsidizing the world’s predominant forms of alternative energy, solar and wind.
“Wind and solar are never going to be dominant sources of energy in the world,” Wright told Bryce on the 2020 podcast. The “main impact” of subsidies for wind and solar, Wright said in another 2023 podcast episode with Bryce, “is just to make our electricity grids less reliable and electricity prices more expensive, and to do nothing for the demand for oil and very little for the demand for natural gas.”
“Oil and gas make the world go round,” he added. “[People] want higher quality of lives. That’s what drives the demand for oil and gas.”
Bryce, a persistent critic of green energy policies, told me in an email that he thinks Wright is “the right person for the DOE. He’s not apologetic about being an energy humanist. Regardless of what anyone thinks about climate change, it is obvious that we are going to need a lot more energy in the future, and the majority of that new supply will come from hydrocarbons.”
While Wright’s arguments certainly have wide purchase among his peers in the energy industry executive corps, he nevertheless stands out from the rest for his willingness to express them. In contrast to the stance taken by large, multinational energy companies, which are willing at least to pay lip service to carbon reduction goals and have, at times, embraced branding and marketing strategies to make them seem like something other than oil and gas companies (e.g. ExxonMobil’s algae-based fuel initiative and BP’s notorious “Beyond Petroleum” campaign), Wright and his company see their contribution to a better world as their work extracting oil and gas.
Other executives “don’t want to deal with the criticism that will come with taking a higher-profile stance,” Bryce told me. “They don’t have time or the inclination. It takes a lot of time, courage, and conviction to engage with the media, get on the speaking circuit, and do so in a thoughtful way.”
Wright’s emphasis on the energy poverty faced by poor countries could potentially serve as a diplomatic bridge to the developing world, especially in Africa, where some observers think there’s space for the United States to start funding natural gas development through the International Development Finance Corporation. For Wright, expanding energy production — and specifically fossil fuel development — is crucial to providing cheap energy to the developing world. He mentions in almost every talk the billions of people who use wood, dung, or other biofuels on open fires to cook indoors, causing 3 million premature deaths per year.
“The biggest problem today is a third of humanity doesn’t have hydrocarbons,” Wright told Bryce in 2023. In a 2023 speech to the American Conservation Coalition, a conservative environmental group, he described strictures against financing fossil fuel development as “not just ignorant or bad policy” but “immoral.” His solution: distributing propane stoves as widely as possible, in part through his Bettering Human Lives Foundation.
Here might be the greatest challenge for advocates of climate action: Even if most of the world’s leaders have accepted the reality of anthropogenic climate change, much of the world, especially outside North America and Europe, is still eagerly increasing its use of fossil fuels. In the United States, coal plant shutdowns are being pushed out further and natural gas investment may soon pick up again to power new demand for electricity. Globally, coal use is set to grow over the next few years. That’s thanks in large part to demand from China, the world’s largest emitter and second-largest cumulative emitter behind the United States, defying predictions that demand there was near peaking. The biggest new source of oil demand is India, a country with a per-capita gross domestic product less than 1/30th of the United States.
And so the greatest danger to aggressive action to lower global emissions may not be Chris Wright and his “sober” ideas at the helm of the Department of Energy. It may be that much of the world agrees with him.