The Scoop
US President Donald Trump’s administration has the wrong idea about how to solve the country’s looming power shortage, the CEO of the largest US electricity provider told Semafor.
Speaking at the CERAWeek summit in Houston on Monday, US Energy Secretary Chris Wright told a gathered crowd of energy executives that in the Biden administration’s approach to energy policy, “the cure was far more destructive than the disease,” and that “beyond the obvious scale and cost problems, there is simply no physical way wind, solar, and batteries could replace the myriad uses of natural gas.”
That’s wrong, John Ketchum, CEO of NextEra Energy, said at a Semafor event later that evening. And he should know, as the leader of the company with more experience than any other in building both renewable and gas-fired power generation. The cost of gas turbines and the skilled labor to install them are both up threefold from just two years ago, he said, and new gas infrastructure faces years-long delivery backlogs. Renewables plus batteries, he said, are the cheapest, fastest, and easiest way to meet the surging power demand from data centers driven by the acceleration in artificial intelligence.
“We’ve got to be really careful here, from an affordability standpoint, about the choices that we’re making. What we don’t want to do is drive ourselves to only one solution — that being a gas-fired solution — that’s now more expensive than it ever has been in its history,” he said. “It just so happens that the most economic solution comes with clean energy benefits, as well.”
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Tim’s view
Ketchum is an outlier at CERAWeek. For the most part, it seems, Big Oil is relieved to have permission from the White House to stop genuflecting to the climate crisis and get back to its roots. In the conference program, energy “transition” is out, energy “security” is in. Emissions are missing, hydrogen is hiding, and renewables have been removed. It’s not entirely clear that market conditions for a “drill, baby, drill” renaissance are really here — oil prices dipped this week over concerns that Trump’s tariff threats will prompt a recession, which would cut into energy demand — but the industry is tired of apologizing for itself.
“We can all feel the winds of history in our industry’s sails again,” Saudi Aramco CEO Amin Nasser said onstage. “It is time to stop reinforcing failure.”
The chaotic early days of the second Trump administration did make some people here nervous. Trade wars, a new coziness with Russia, and the rapid-fire gutting of environmental regulations and agencies all make it harder for US fossil fuel companies to operate, not easier, even as the administration lifts a freeze on LNG export permits and takes other steps sought by industry leaders. The only thing oil executives dislike more than climate activists is wildly unpredictable federal policy, and Chevron’s Mike Wirth, among others, used his time onstage to beg the administration for more stability.
But no one I’ve spoken to here so far thinks the administration is doing more harm than good, from the perspective of their bottom lines. Multiple people compared the last two months to being inside a shaken snow globe — bewildering at first, but already beginning to settle down. And the fundamental supply and demand conditions that are foremost in the industry’s mind haven’t changed much between administrations. The energy transition is moving more slowly than what some people had hoped for, but that was true before Trump took office; now the rhetoric here is catching up to reality.
The problem, as Ketchum sees it, is that at least when it comes to power demand and the AI boom, clean energy really is the more economical solution, not just some woke nonsense. The administration’s anti-climate crusade risks making it guilty of the same “quasi-religious” energy policymaking that Wright, in his address, accused Biden of.
And for what it’s worth, even if it’s unpopular to talk about, “the urgency of climate change hasn’t gone away,” Jason Bordoff, director of the Center on Global Energy Policy at Columbia University, told me. “But I’ve always said that if we ignore affordability, support for the transition will evaporate, and that’s exactly what happened.”
Room for Disagreement
With a bit of advance planning and vertical integration, gas can in fact compete with renewables as a faster and cheaper power solution for data centers, Austin Knight, vice president of hydrogen at Chevron, said at Semafor’s event. The company announced in January that it is getting into the power market for the first time, and sees its leading position in the US gas market as a way to compete for Big Tech’s business with incumbent power companies like NextEra. “We hear every day that hyperscalers are looking for power that they can count on from counterparties that are credible, and they want to get moving,” he said.
Know More
No matter what, the power crunch isn’t going away anytime soon, Ketchum said. Manufacturing facilities, electric vehicles, and even oil and gas companies themselves need a lot more electricity to operate, so a decade from now the race to build more low-cost power generation won’t have receded, he said. “Data centers get a lot of the attention, and rightfully so, but there are a lot of other parts of the economy that we can’t forget.”
Notable
- The US is considering using emergency powers to keep aging coal-fired power plants from closing, Interior Secretary Doug Burgum said. Biden-era regulations designed to push such plants toward closure put the grid at risk, he said. Instead, “we’ve got to keep every coal plant open.”