This paper describes the first implementation of the Δx = 3.25 km version of the Energy Exascale Earth System Model (E3SM) global atmosphere model and its behavior in a 40‐day prescribed‐sea‐surface‐temperature simulation (January 20 through February 28, 2020). This simulation was performed as part of the DYnamics of the Atmospheric general circulation Modeled On Non‐hydrostatic Domains (DYAMOND) Phase 2 model intercomparison. Effective resolution is found to be the horizontal dynamics grid resolution despite using a coarser grid for physical parameterizations. Despite this new model being in an immature and untuned state, moving to 3.25 km grid spacing solves several long‐standing problems with the E3SM model. In particular, Amazon precipitation is much more realistic, the frequency of light and heavy precipitation is improved, agreement between the simulated and observed diurnal cycle of tropical precipitation is excellent, and the vertical structure of tropical convection and coastal stratocumulus look good. In addition, the new model is able to capture the frequency and structure of important weather events (e.g., tropical cyclones, extratropical cyclones including atmospheric rivers, and cold air outbreaks). Interestingly, this model does not get rid of the erroneous southern branch of the intertropical convergence zone nor the tendency for strongest convection to occur over the Maritime Continent rather than the West Pacific, both of which are classic climate model biases. Several other problems with the simulation are identified, underscoring the fact that this model is a work in progress.

We derive a formulation of the nonhydrostatic equations in spherical geometry with a Lorenz staggered vertical discretization. The combination conserves a discrete energy in exact time integration when coupled with a mimetic horizontal discretization. The formulation is a version of Dubos and Tort (2014, https://doi.org/10.1175/MWR-D-14-00069.1) rewritten in terms of primitive variables. It is valid for terrain following mass or height coordinates and for both Eulerian or vertically Lagrangian discretizations. The discretization relies on an extension to Simmons and Burridge (1981, https://doi.org/10.1175/1520-0493(1981)109%3C0758:AEAAMC%3E2.0.CO;2) vertical differencing, which we show obeys a discrete derivative product rule. This product rule allows us to simplify the treatment of the vertical transport terms. Energy conservation is obtained via a term‐by‐term balance in the kinetic, internal, and potential energy budgets, ensuring an energy‐consistent discretization up to time truncation error with no spurious sources of energy. We demonstrate convergence with respect to time truncation error in a spectral element code with a horizontal explicit vertically implicit implicit‐explicit time stepping algorithm.