Clean Up the Machines

Since the last election, clean energy and climate advocates have been working through what we will do differently with federal power the next time there’s a window of opportunity. Clearly, we need to move faster, getting dollars spent in communities much quicker. When I look back on the successes and failures of the Inflation Reduction Act, it’s clear we needed to do more on electrification—especially industrial electrification, since the machines that make our paper, chemicals, and food still run overwhelmingly on fossil fuels. Although there were some pilot programs, such as the Industrial Demonstrations Program, the limited progress we did make in this area has since been rolled back by the Trump administration: grants clawed back, manufacturing contracts left unsigned, tax credits cut short.

If we are serious about cutting carbon the next time there is an opportunity for federal climate action, cleaning up these machines—from the factory floor to the home garage—must be central to our clean energy and climate agenda. And if we want to get these clean machines deployed, we must stay focused on keeping electricity affordable.

From the Home to the Factory Floor

Across the economy, fossil fuel machines currently provide the backbone for the electricity, transportation, buildings, and industrial sectors. On a factory floor, that usually means burning natural gas in large boilers to create steam—the invisible workhorse that dries pulp into paper, distills chemicals, pasteurizes milk, and cooks much of the food we find on our grocery shelves. Nationally, about 40 percent of all the fossil fuel burned in manufacturing goes into simply making steam.

But it doesn’t have to be this way. Clean, electric machines are here, whether it’s a solar panel, electric vehicle, heat pump, induction stove, or industrial electric dryer. And these machines are increasingly ready for the factory, not just the home. Both industrial heat pumps and electrode boilers can raise the same high-pressure steam that gas boilers do. The industrial heat pumps are so efficient that they can put out more heat than the electricity they draw in, harvesting free warmth from the surrounding air. Next-generation geothermal systems offer a third option, drawing heat from deep underground to supply industrial processes directly.¹ For the low- and medium-temperature heat that makes up a large share of manufacturing, the technology we need in order to electrify is already on the shelf. That was one of the clearest findings from the report we published at the University of California–Santa Barbara’s 2035 Initiative last year—which included a detailed engineering analysis on electrifying low- and medium-temperature industrial heat.²

We found that electrifying heat processes in just three manufacturing sectors—chemicals, pulp and paper, and food and beverage—could cut cumulative greenhouse gas emissions by 930 to 1,320 million metric tons of carbon dioxide equivalent through 2050. That is up to 26 percent of the climate pollution from major facilities in those sectors. And it’s already starting to happen: In Colorado, New Belgium Brewing now makes beer with clean electric heat using a steam heat pump installed by the company AtmosZero. The pump boils the wort in place of a gas boiler, and at full capacity it already meets 30 to 40 percent of the brewery’s steam needs.³

Increasingly, these clean machines in factories are also paired with storage, allowing them to operate more flexibly in the middle of the day, when the sun is shining and electricity is plentiful and cheap. In the industrial sector, large-scale thermal batteries can support manufacturing electrification. These batteries charge up on cheap midday power, hold it as heat hot enough for industrial processes, and release it on demand across a plant’s shifts. American companies are already building these batteries at scale: Antora Energy manufactures them at a California factory.⁴ Scaling up storage is turning out to be essential to the transition.

Storage Is the Key

To get these clean machines deployed everywhere from homes to factories, we need to change how our electricity system works. For well over a century now, it has operated in a top-down way. Large coal and gas plants located on the fringes of cities churn out power every hour of the day—alongside an unhealthy dose of pollution that disproportionately harms lower-income groups and communities of color. But today, our electricity system can operate from the bottom up. Solar panels, wind turbines, and batteries are dotted throughout the landscape. The fact that they cannot operate constantly is usually seen as a problem—but as storage continues to grow exponentially, the abundant, cheap power in the middle of the day becomes a solution.

We haven’t yet reckoned with how completely storage will transform our energy system. It does something the grid can’t on its own: save the midday sun and spend it after dark. Take my own home as a toy example. It’s fully electrified with a heat pump HVAC, heat pump water heater, induction stove, plus an electric car and e-bikes. My rooftop solar charges a battery the moment it starts producing. Meanwhile, I pull from the grid when it’s cleanest and cheapest in the middle of the day—any extra power I draw is almost certainly my neighbors’ solar. If I charge my car or heat my water tank, I’m literally storing that cheap clean energy for later.

When I say “storage,” I’m not just talking about standalone lithium-ion batteries. I’m talking about all these ways we can use extra power during the middle of the day and shave demand later. There are already more than 4 million electric vehicles (EVs) on the road in this country, and every one of them is a place to store power in the middle of the day, when solar electricity is cheap and abundant. Once you start thinking of EVs as storage, it’s easy to see they need to be operated differently than they are today. The trick is getting these cars to charge at the right time—in the middle of the day. Charge them optimally and carbon pollution falls much faster, while the grid can far more easily absorb the extra load.

It’s crucial we pass the policies to make that happen now, before there are 10 million EVs on the road. That means making it easy to plug in EVs during the middle of the day. Ideally, we would incentivize people to drive to work in electric vehicles and charge there, especially since many parking structures now have solar panels on their roofs. And with the rise of remote work, many people could just as easily charge at home: Already one in five Americans works remotely at least some of the time, and can plug in midday with no trouble. We also need many more chargers in multifamily and apartment buildings. State and federal funds should make all of this happen.

Hot water tanks can provide another form of storage. Heat pump water heaters can be set to draw more power in the middle of the day, and then switch off when the sun goes down and power is more expensive and dirty. This works even better with larger tanks. And we can even think of a building as storage: If we preheat or precool a building when clean energy is cheap and abundant, that’s storage. This kind of “thermal energy storage” can apply across the economy, and it works particularly well for manufacturing.

But this storage will not happen if utilities continue with outdated electricity tariffs. They should be offering cheap electricity between 10 am and 2 pm. Instead, most set the same power rates at noon, when electricity is cheap and clean, as after 9 pm, when electricity is the dirtiest. This is an absurd approach that needs updating in every state quickly.

Cheap Power Is the Whole Game

We need to get electricity prices right, because in most states everyone from industrial facilities to homeowners is paying more for electricity than natural gas. This is called the “spark gap”—the difference between what it costs to make the same heat with natural gas versus clean electricity. High electricity prices imperil progress on electrification in the building and industrial sectors. Since 2020, they have risen 31 percent on average across the country. Some states are particularly bad: In California, PG&E has hiked rates nearly 70 percent over that same period.⁵

We need policymakers to focus on bringing electricity costs down. In a recent essay in The Atlantic,⁶ I outlined three ideas to do that.

Make Power Cheap at Midday

First, we should make power genuinely cheap in the middle of the day. Free electricity at noon is not a fantasy; it is already happening in wholesale markets. Abundant solar generation means that wholesale electricity prices sometimes go negative in the middle of the day. The challenge is getting that value through to retail and industrial customers. Well-designed “time-of-use” or “dynamic” rates can pass these low midday prices directly to consumers, incentivizing smart appliances with storage to shift demand.

There are early examples: In Illinois, residential customers have been able to buy electricity at hourly market prices for nearly two decades. ComEd has offered a real-time hourly rate since 2007, and customers who move their use into cheaper hours have saved close to a fifth on the supply portion of their bills.⁷ A counterpart program downstate posts the next day’s hourly prices each evening. The Australian government provides an even bolder example: Starting on July 1, 2025, electricity retailers began offering households at least three hours of free power each day around noon.⁸ We can do this in the US, too.

The same logic is even more powerful for industry. The thermal batteries described earlier are built to draw power exactly when it is cheapest and cleanest. But most industrial customers cannot yet buy electricity at prices that move with the grid. Opening up dynamic rates and rewarding factories that shift their demand into the sunny midday hours would let manufacturers close that price gap, while turning their flexible load into an asset for the grid rather than a strain on it. In California, State Senator Josh Becker has proposed legislation to help make this happen by reducing fixed, “nonbypassable” charges on bills.⁹ Since these parts of a bill are not dynamic, they would erode savings even if factories could access real-time pricing. The legislation would let regulators trim those charges for new industrial process heat load, so a manufacturer that shifts its demand to the right hours actually sees the reward.

End Utility Profiteering

Second, we need to rein in utility profiteering. Regulated utilities earn a guaranteed rate of return on their capital investments. This creates a perverse incentive: The more they spend, the more they earn. Reforming utility regulation to align profits with consumer outcomes—lower bills, greater reliability, faster clean energy deployment—is essential. States have the power to demand this of their public utility commissions, but too few have done so with the urgency the moment requires.

This is why I’m particularly excited about the work of the newly formed Utilize Coalition.¹⁰ State by state, they are working to pass laws that force utilities to actually use the grids they’ve built, rather than endlessly expanding them for the sake of their profits. Today, the US electric grid operates at just 53 percent of its total capacity on average, meaning generation, transmission, and distribution infrastructure sits idle for much of the year. Flexible industrial demand is part of the fix. When electrified factories ramp up during the cheap, sunny middle of the day and ease off when the grid is stressed, they fill that idle capacity instead of forcing utilities to keep building more—using the grid we already have rather than padding rates to expand it.

Don’t Pass the Costs of Climate Change onto Consumers

Third, the costs of climate change itself should not be loaded onto electricity bills. When wildfires destroy utility infrastructure, when storms knock out power for days, when extreme heat forces costly grid upgrades—these costs too often end up as charges on household electricity bills. That is the wrong approach. The social costs of fossil fuels should be borne more broadly, through tax policy and insurance markets, not dumped onto the electricity rate base, where they only make the transition harder.

Potential State and Federal Action

How would lower electricity rates work in practice, especially to incentivize industrial electrification? States could pass laws to direct public utility commissions to create dedicated electricity rates for electrified manufacturing plants, as already exist for homes with EVs. They could also allow these facilities to access real-time pricing, which would change plant behavior and maximize storage. Colorado offers an early model: A 2021 law now requires the state’s largest electric utilities to file “beneficial electrification” plans and lets those utilities recover their costs and even earn performance bonuses for beating their electrification and emissions targets.¹¹ It is a telling reversal of the usual incentives: Rather than profiting by selling more gas, the utility profits by helping its customers get off it.

At the federal level, Congress could pass a clean heat tax credit, as Senator Martin Heinrich’s Industrial HEAT Act proposes. The bill would cover up to 30 percent of the cost of low-carbon heating equipment and make the credit refundable, so that even firms with little tax liability could claim it. A companion approach would reward clean heat by the unit of heat produced rather than the equipment installed, which keeps the most efficient technologies, like heat pumps, from being penalized. The US Department of Energy (DOE) could fund the demonstration projects and low-cost loans that help first movers take the plunge. The DOE’s Industrial Demonstrations Program was doing exactly this before the Trump administration clawed much of it back. Layering these tools with cheap financing through DOE’s loan programs and state green banks would steadily bring down both the cost and the risk of going electric.¹²

Conclusion

None of this is easy. Utility regulation is among the most arcane and politically captured areas of US public policy. In my book Short Circuiting Policy,¹³ I documented how electric utilities have spent decades deploying lobbyists, funding think tanks, and cultivating regulatory commissioners to protect their profits. Breaking that grip requires organized political pressure, state-level advocacy, and a willingness to fight for structural reform over the long haul.

Several years ago, my friends Saul Griffith and Sam Calisch calculated that the US needs to replace roughly 1 billion machines—the furnaces, water heaters, stoves, and dryers in our homes and commercial buildings—with clean electric alternatives.¹⁴ Since then, we’ve started to make progress on electrification in the buildings, transportation, and industrial sectors. But if we want to finish this job, policymakers need to make sure electricity remains affordable.