I Want to Talk About Solar Geoengineering and You Should Too!

It’s been a little over a month since the Federation of American Scientists’ (FAS) inaugural panel on Climate Interventions at DC Climate Week, hosted alongside the Chesapeake Climate Action Network…and I’m still thinking about it. 

Why? Because with our climate rapidly deteriorating, the idea that there’s an underresearched suite of technologies that could buy us more time to decarbonize and save countless lives is one that sticks with you. 

Sure, shooting particles into the stratosphere to reflect sunlight back into space, or spraying seawater on glaciers to stop them from falling into the ocean, sound like ideas from a science fiction novel. But so does New Orleans falling into the ocean, or extreme heat making parts of the world unlivable, or (more nerdily) Atlantic meridional overturning circulation (AMOC) collapse. These things are all now in the realm of the possible – or already happening. So what do we do about it? 

For one, I think we hear out the experts that take these technologies, collectively known as “climate interventions” or “climate stabilization” approaches, seriously. Some of those experts spoke on the DC Climate Week panel and gave me the brain worm that is this blog.

The panelists made one thing loud and clear: we need better tools to respond to the climate crisis, as well as transparent, equitable research governance frameworks for developing them. 

Climate Interventions 101

If you’re new to the climate intervention space, welcome! The TL;DR: if we can’t stop the most catastrophic impacts of climate change with current tools quickly enough, then we need a bigger toolbox.

To put it another way, think of climate interventions as a life jacket instead of a rescue boat. In this metaphor, the rescue boat is continued clean energy deployment and carbon capture, entrepreneurial re-thinking of our climate laws and policies, and a holistic approach to decarbonization that’s grounded in transparency, equity, and legitimacy. Climate interventions are what keep you afloat long enough for the real help to arrive.

The panelists focused on one specific type of climate intervention: solar geoengineering, also called Solar Radiation Modification (SRM). SRM aims to artificially lower global temperatures by reflecting incoming sunlight back into space, thereby potentially stalling the worst impacts of climate change. There are three main types of SRM approaches: Stratospheric Aerosol Injection (SAI), Marine Cloud Brightening (MCB), and Cirrus Cloud Thinning (CCT). SAI is usually the subject of most conversation given that it has by far the greatest potential to affect temperatures on a global scale.

Research ≠ Deployment 

The panelists were clear that talking about the need for SRM research isn’t the same as calling for deployment (i.e., ultimate large-scale use of SRM techniques). Take hurricanes – Meteorologists study hurricane patterns not because they want a hurricane to make landfall, but to understand what might happen if it does. You can support the research without being pro-hurricane. Same idea here.

Since there’s no world in which we don’t benefit from learning all we can about these technologies and their potential risks and benefits, research should be nonnegotiable. 

The Big Deal About Research Governance 

The next question is: who’s in charge and gets to make the decisions about how we do said research? That’s what “research governance” is about. Research governance sounds like one of those abstract terms that elites use to confuse people but really just refers to the nuts and bolts of how research into SRM (and other climate interventions) gets done – what the regulations are, who’s involved, and what principles inform decision making.

The panelists felt strongly that the “who” of research governance is almost as important as the “what.” A global intervention needs global involvement in the research design. Impacted countries and communities need a seat at the table to shape the work and think collectively about how research moves forward.

Whether impacted communities are involved can be the difference between success and failure. Two attempted outdoor experiments, SCoPOx (at Harvard) and SPICE (in the UK), failed to secure public buy-in from the beginning. Both were shut down and became unnecessarily politicized. Australia offers a counter-example. That country has successfully carried out MCB research without much backlash because it prioritized public engagement and targeted something tangible the public cares about (protecting the Great Barrier Reef) in its outreach. When you hit people in their hearts, they’re more likely to listen. 

Multilateral Action, Please!

SRM is global in nature, so it matters how other countries are approaching (or ignoring) this issue. As of now, there’s no multilateral governance framework for climate interventions, or even an appropriate forum for developing one. Which is a little crazy considering there seems to be a multilateral group for almost everything. Given this, a path forward may be for small groups (or “clubs”) of countries to begin setting norms, standards, and research frameworks together, similar to other international science coordination. For example, the Global Methane Pledge is a coalition of countries that agree to take voluntary action to reduce global methane emissions. A similar research coalition could form around SRM, or climate interventions more broadly. 

Research requires money. Currently, only the United Kingdom (UK) funds climate interventions research at any significant scale. And even the UK’s program, structured under their Advanced Research and Invention Agency (ARIA), has a budget of only about $76 million USD – a minuscule amount compared to other critical research areas. Multiple countries working together could pool resources to increase the amount of funding in climate intervention research, and probably should, given what I’ll call “The Stardust Situation”. That situation is the reality that when the government leaves gaps, the private sector sometimes fills them. And in the SRM space, an American-Israeli private company called Stardust is developing its own particles for SAI to fill the gap. Stardust has raised about $60 million to date – almost the entire budget of ARIA. 

One could argue that private-sector innovation is good, and there’s some truth to that. But as Hannah Safford put it recently, we might also “not like the choices” that the private sector makes without any guardrails or shared goals and norms around SRM research and experimentation. After all, few people these days are loving our unregulated AI overlords. But, and I’ll quote Hannah again, the United States “government has shown more interest in banning climate science than in thoughtfully governing emerging technology.” The panel agreed it’s past time for this to change.

Building Something New

To sum it up: research can’t responsibly proceed without governance, but governance shouldn’t strangle research. Figuring out that balance is the work ahead in the SRM space. The path is filled with tough questions, but the exciting thing is that we have an opportunity to respond right the first time, since we already know what doesn’t work. So many policy areas are either deeply politicized and/or cluttered with outdated laws or old, creaky institutions. This isn’t the case for climate interventions. Here, we can build new frameworks for climate interventions research and governance that have equity, transparency, and legitimacy baked in from the start. We don’t have to fit a square peg into a round hole. That’s something I won’t stop thinking about anytime soon. 

Interested in FAS’ or CCAN’s work on climate interventions? Visit the FAS & CCAN websites.

States Are Plugging into Experimental Electricity Policy to Find Cost-Saving Success

The energy affordability crisis is hitting American communities hard, and nowhere is the pressure more acute than at the state and local level. Leaders are responding to the needs of their constituents while navigating a tangle of barriers—ranging from project development hurdles to political and social constraints. Tackling these challenges requires a holistic approach, as addressing one barrier—whether it’s clean energy permitting, financing, or supply chains—without the others won’t work.

To tune into the action on the ground, FAS convened practitioners, state and local officials, advocates, and policy experts to discuss what it will actually take to deploy clean energy faster, modernize electricity systems, and lower costs for households. 

We heard about lots of efforts underway in city halls and state capitals across the country, many of which are aligned with our recently released Clean Energy for Local and State Governments (CELS) playbook and other recent recommendations for capacity support and innovation at the state and local level. One message came through clearly: while barriers are real, so are the opportunities. Across the conversation, participants identified practical, high-impact levers that states and cities can use right now. 

The ideas were so good we wanted to share them far and wide—read below for more. 

Building capacity for ambition by maximizing what we already have

States and cities have good ideas—and motivation—to bring down electricity prices. But the reality is more complicated. Institutional and political constraints strongly shape the pace and scope of their desired reforms. State and local governments face legal and administrative limitations, including state-level restrictions related to financing, building codes, and utility authority. Many cities (and states!) operate with limited staff and budgetary resources. Lack of capacity makes it difficult to implement ambitious energy policies – even when there’s political will. 

Expanding this capacity is a path to better government and lower prices—and the first step towards rebuilding trust in government as a vehicle to do big things. Resources are a not-insignificant part of being able to do those big things, but of course, it’s not always possible to hire whole new teams of staff or stand up new programs. It’s also not always necessary!

We heard from state and local leaders across the county about how they’re getting creative with existing resources to carry out their promises to constituents. Permitting processes, for example, are an oft-cited barrier to increasing energy supply and driving down electricity prices. With little meaningful change at the federal level, states are looking for ways to improve their own permitting pipelines. 

Pennsylvania has led on this front by clarifying and centralizing permitting authority across agencies, establishing clear timelines and accountability for permit reviews, and digitalizing processes to cut down on administrative burden. Making progress didn’t require building whole new teams or throwing out environmental protections—instead, Pennsylvania made the permitting process clearer, more consistent, and more predictable to increase certainty for solar developers without increasing impact.

Identifying capacity investments with a high return like these are useful—not just for improving delivery, but getting near-term wins that governments can point to to build trust with constituents and provide proof of concept. The think tank and advocacy community can help by identifying creative solutions to increase government capacity at low cost and better leverage existing capacity. 

PUCs, PUCs, PUCs!

We heard a lot of anecdotes about increased attention on Public Utility Commissions (PUCs) given how hard utility bills are hitting constituents. 

Most critical decisions affecting utility bills occur in regulatory proceedings—rate cases and planning dockets in front of PUCs. However, these processes are often technically complex and dominated by utilities, which typically have significantly more resources and information than governments or community members. States and local governments identified help engaging with PUCs—through more capacity and increased data tranparency—as a key opportunity to reduce energy costs and make other clean energy and affordability programs work. 

Capacity at PUCs themselves also came up as a major barrier and opportunity. States can appropriate additional funds to PUCs to help them access adequate staff and technical expertise, or can establish intervenor compensation funds to help level the playing field in rate cases. Ann Arbor, Michigan reported saving ratepayers over $1 billion through interventions in electric and gas cases, in part by investing in legal and technical support for intervenors. Municipalities in Wisconsin, organized under the Wisconsin Local Government Climate Coalition, also banded together to intervene before the Public Service Commission and advocate collectively.

The advocacy community can help as well. By training intervenors, pressuring utilities to increase transparency or provide additional, and supporting local and state governments’ ability to intervene in rate cases, they can help provide key perspectives and evidence to inform PUC decisionmaking. 

Mind the (financing) gap

Unsurprisingly, state leaders identified the cliff in federal financial support for projects as a reason it is harder to implement state and local clean energy programs. 

Getting creative with financing can help state governments stretch existing funds or partner with peers or community organizations. States can use tools like revolving loan funds to support pre-development and construction financing, pooled lending authorities, or loan guarantees to reduce interest rates. Mechanisms that merge public and private financing capacities or improve transparency and certainty around project development can help public dollars go further. 

States and local governments are hungry for help using creative financing mechanisms. For example, how can municipalities play in using public debt to finance projects and reduce costs? This is a major place where the advocacy community can help. 

Don’t be afraid to experiment!

Policymakers were excited about experimenting with new policies that emphasize affordability, resilience, and economic benefits and in turn broaden political support for clean energy initiatives. One example discussed was the Utah Community Clean Energy Program, a first-of-its-kind opt-out clean energy procurement model created through collaboration between 19 Utah communities and Rocky Mountain Power. Approved by the Utah Public Service Commission in March 2026, the program allows participating customers to support new utility-scale clean energy resources through a modest monthly charge, with income-qualified households eligible to participate for free and all customers able to opt out at any time.

This work is already happening and not just in the areas highlighted here. Creating structures for policymakers to share successes and creative ideas can help multiply wins across the country. Collaboration can also support officials working in politically or institutionally constrained environments, where proof of concept and policy examples can help build momentum. The Metropolitan Washington Council of Governments offers one example of how regional institutions can pool resources to accelerate local action. Through its regional environment fund, the COG supports the design and coordination of climate initiatives that signal aggregate demand across members, like fleet electrification or emissions reductions. It then follows up with implementation guides, technical assistance, and best practices that local governments can adapt. 

There is a lot of momentum in utility operation and regulation to reexamine  the way we’ve always done things. Political will from state or local leadership can help question old ideas and advance new ideas to benefit the public. Combined with successful implementation experiments above, further experimentation and research can drive progress and support for state-level  climate leadership. 

Trump’s DPA Play: Turning Energy Infrastructure Into a National Defense Priority

Over the past few months, the Trump administration has been laying the foundation to expand the use of the Defense Production Act (DPA) for energy infrastructure and supply chains. This started back in March when the Trump administration issued an Executive Order extending to the Department of Energy (DOE) the authority to directly engage in contract allocation for energy needs under DPA Title I. 

A month later, on April 20th, the Trump administration released a series of Presidential Memoranda establishing presidential determinations for grid infrastructure, equipment, and supply chain capacity; large-scale energy and energy related infrastructure; natural gas infrastructure; coal supply chains and baseload power generation capacity; and domestic petroleum production, refining, and logistics capacity and delegating DPA Section 303 authorities to DOE. These actions are reminiscent of the series of presidential determinations that the Biden administration issued in June 2022 for energy materials and technologies, which also included transformers and electric power grid components. 

So what does this all mean and why does it matter?

DPA Doing the Heavy Lifting

The DPA grants the President a unique set of authorities designed to direct, expand, and expedite the domestic industrial base for materials, technologies, and energy crucial to national defense when the private sector cannot be expected to meet the nation’s needs on its own. For example, DPA authority was used during the COVID-19 pandemic to expand production of medical supplies and vaccines. 

DPA has a few titles that give different powers when invoked, with Title I and Title III being the most frequently used. Title I gives the President power to require private companies and contractors to prioritize certain contracts and orders over others for national defense purposes, including for materials, equipment, and services needed to “maximize domestic energy supply”. Using Title I, the government can, for example, require that manufacturers prioritize orders for the federal government or domestic customers over foreign exports.   

Title III gives the President powers to expand domestic production and supply of goods, materials, and critical technologies needed for national defense and allows the President to use an array of financial mechanisms to do so. To use Title III authorities, the President must first issue a presidential determination ascertaining that the requirements to use the authority have been met and then delegate the authority to an agency to implement. Hence, the series of presidential determinations issued last week. 

Breaking the Bottlenecks 

Notably, both the Trump and Biden administrations have issued presidential determinations to address vulnerabilities in grid component supply chains. The Trump administration’s determination states that the United States’ deteriorating grid infrastructure, constrained by long lead times and shortages of grid components, is detrimental to national defense; industry cannot alleviate these supply chain bottlenecks without government intervention; and the authorities provided in DPA Section 303 are “the most cost-effective, expedient, and practical alternative methods for meeting this need”. DPA Section 303 authorities invoked by Trump include “purchases, purchase commitments, financial support for the development of production capabilities, or other action” necessary to alleviate supply chain vulnerabilities. 

Through these DPA determinations, the Trump administration is explicitly tying the U.S. energy system to national security and making energy supply chains a national priority. In the context of grid supply chains, this is absolutely crucial given domestic shortages of components like transformers and breakers and an overreliance on imported goods in a time of geopolitical competition and fracturing relations. 

Grid equipment, however, was not the only focus of Trump’s actions. Three of the other determinations support expanding fossil fuel infrastructure for natural gas, coal, and petroleum production. The last determination, focused on “large-scale energy and energy-related infrastructure”, appears to be a catch-all for any other energy projects that the administration wants to support. The memorandum invokes Trump’s prior Executive Order 14156, which declared a “National Energy Emergency” due to the U.S.’ “current inadequate and intermittent energy supply.” This suggests that intermittent renewables like wind and solar will likely be excluded from eligibility. 

Such a large number of determinations raises questions about which ones will take priority. Can the U.S. government simultaneously support the expansion of natural gas, coal, petroleum, grid supply chains, and other large-scale energy infrastructure all at the same time? Trump’s DPA determinations explicitly direct the Secretary of Energy to implement them, adding a level of urgency and accountability. Yet, executing on all of these determinations will require significant coordination, staffing, and funding that has not yet materialized. 

Show Me the Money 

As we have written before on grid supply chains, federal policies like DPA can help correct for market failures, derisk the construction of new manufacturing facilities, and unlock faster grid modernization, but issuing a presidential determination is only the first step. Without a clear funding mechanism to implement the directives, we can only speculate where the money will come from.

Three possible sources currently exist. First, funding could come from whatever remains of the $1 billion that was appropriated in the One Big Beautiful Bill Act (OBBBA) to carry out DPA activities. Some amount of these funds may have already been committed to the DoD and MP Materials deal, and it is unclear how much remains unallocated or what the administration plans to do with the remainder. 

The other alternative options could be FY27 appropriations or an FY27 reconciliation bill. The Department of Defense (DoD) is requesting an eye-watering $30.4 billion in DPA funding for FY27, nearly 100 times the amount appropriated by Congress for FY26. $30 billion of the requested amount is in mandatory funding, which would have to be appropriated through a budget reconciliation bill that the Trump administration is pushing for. Historically, the Pentagon has served as the manager of DPA funds, allocating funding to other agencies as necessary and directed by the White House, so while DoD is the agency requesting this funding, some amount could potentially be transferred later to DOE.

Complementing these funding sources is the $375 million in appropriations from FY26 to DOE to “enhance the domestic supply chain for the manufacture of distribution and power transformers, components, and materials, and electric grid components.” Typically only funds that Congress explicitly appropriates for DPA can be used to implement DPA authorities, but DOE could use the $375 million for supporting activities to help plan for DPA implementation (e.g. analysis and stakeholder engagement), especially since the goals of the appropriated money overlap with the goals of the DPA determination. 

Now what?

These determinations are just the beginning. Now, it will be up to the administration and Congress to either find existing funding or appropriate new funding. DOE will then need to create and follow through on an implementation plan. We at FAS will be keeping an eye on whether these developments actually materialize over the coming year.

Beyond Cap and Trade: What’s Next for Carbon Markets?

It’s a fascinating time to be thinking about carbon markets. In one corner, California just reauthorized its carbon market program, the EU’s Emissions Trading System continues to evolve as the world’s largest compliance market, and a growing number of countries — from Brazil and Indonesia to Singapore and Kenya — are standing up or expanding their own systems, with the architecture for international carbon trading under Article 6 of the Paris Agreement beginning to take shape. In the other, markets are facing headwinds. Pennsylvania just dropped out of a regional carbon market, and while about a quarter of global emissions are now covered by trading systems, steep emissions cuts haven’t followed. 

More broadly, profound legal and political changes in the larger economy and in global climate policy are pushing forward a wide-ranging conversation on next steps in climate policy. In this transitional moment, carbon markets clearly have a role to play in economic and industrial policy, but that role, and the policy environment in which markets function, merits examination.What would it take for carbon markets to actually deliver at the scale and pace the climate problem demands? 

The standard story on the role of pollution markets goes like this: emissions trading worked brilliantly for acid rain in the 1990s, so let’s do it for carbon. Effectively pricing and trading carbon emissions is key to driving a clean-technology transition.

But that story glosses over something important. The acid rain program was operating in specific conditions, with a small universe of highly regulated power plants, shared grids, clear cost information, and a relatively straightforward, easy-to-deploy fix (smokestack scrubbers) for the problematic emissions in question. Carbon emissions trading is orders of magnitude harder – it spans every sector of the economy, involves far more actors, and requires infrastructural changes that don’t come cheap.

That doesn’t mean carbon markets are futile. It means they need to be fit for purpose and embedded in a broader policy strategy. We call this regulatory ingenuity: fitting tools to tasks, rather than hoping one tool does everything.

Three Tools, Three Roles

Climate policy has historically relied on three approaches, each with real strengths and real limits.

These tools work best together. Markets in particular have seen the most success as part of a “portfolio” of programs – including regulation and fiscal policy – where the carbon market functions as a backstop, setting direction and generating funds but not carrying the full weight of an economy-wide transition.

Zooming In On Markets

Positioning markets for continued success requires being clear-eyed about what they can and can’t do. Several structural limits are worth naming.

First, markets optimize for cost per ton, a powerful but incomplete signal. Capital flows to the cheapest reductions first, and that is how markets should work. But cheap reductions are not necessarily the ones critical to fully developed industrial strategies. For example, the marginal cost of generation is not the full cost of reliable, delivered, politically durable clean power. Integration, transmission, siting, and community acceptance all carry real costs that today’s price signals don’t reflect. Until those full system costs are reflected and competitive, markets alone will not scale clean energy at the pace or scale needed. This disjunct between cheap reductions and strategic reductions recurs across the economy. Bridging that gap requires R&D and early deployment to drive costs of needed solutions down to the point where markets take over. 

Second, carbon prices can’t drive decarbonization without affordable alternatives. A carbon price passed along to gas-pump drivers doesn’t transform transportation unless there is something cheaper to switch to. Where affordable alternatives exist, as in markets with cheap electricity and accessible EVs, adoption follows.  Where they don’t, carbon pricing cannot close the gap, and the political backlash against visible consumer costs has been swift.

Finally, market revenues may not cover the real costs of transition. Refinery closures, shifting energy economies, and job losses in fossil-dependent regions have major consequences for workers and communities, as California is now grappling with. Carbon revenues alone won’t fill that gap.

Beyond these structural realities, there’s a second, more fixable problem: carbon markets haven’t yet been built to function like mature markets.

The first problem is an infrastructure problem. Today’s carbon markets lack the infrastructure, breadth, and sophistication of mature financial markets. Registries are fragmented, data fields are inconsistent, chain-of-title is unclear, and there is no unified ledger capable of ensuring finality of settlement. A functional carbon market requires the same institutional foundations that other markets rely upon: transparent interoperable ledgers, consistent data schemas, reliable transfer and custody, and audit trails that regulators and institutions can trust. Only with this plumbing does a market become truly “investable.” Without it, liquidity cannot form and institutional capital remains on the sidelines.

The second problem is a comparability problem. In markets where a “ton” of carbon credit does not represent a consistent underlying asset, credits can vary dramatically in durability, additionality, leakage, and earth-system risk. These differences are economically meaningful because they characterize the credit, duration, and performance risks of this asset class, and current markets do not sufficiently account for them.

Financial markets long ago learned how to handle heterogeneous assets. Commodities are graded, mortgages are underwritten, bonds are rated, structured products are tranched in a standardized form that, when paired with transparency, enables informed decision-making. Carbon markets similarly need a standardized, quantitatively grounded way to express expected atmospheric impact. Infrastructure and comparability are mutually dependent. Without infrastructure, standardized units can’t be recorded, verified, or enforced. Without comparability, infrastructure has nothing meaningful to track.

These problems are solvable; indeed, efforts are underway to solve both the infrastructure and comparability gaps. But even a technically mature carbon market will still bump against the structural limits above. The market needs to be embedded in a broader strategy.

What Well-Designed Markets Can Do 

There is broad agreement that big industrial emitters — power plants, large manufacturers, heavy industry — are natural candidates for direct market participation, and especially so in the context of well-developed economic strategies that can attend to a range of transition equities. In compliance markets, where regulation creates scarcity, well-designed trading systems can accelerate their decarbonization while generating substantial revenues that can be directed toward harder-to-reach parts of the economy.

The harder question is what role markets should play beyond these large point sources — particularly in voluntary and offset markets, where demand is discretionary, the underlying units are heterogeneous, and market infrastructure is less mature.

One view is that most other sectors are poor fits for direct market participation and that the primary value of carbon markets lies in generating revenues and behavioral shifts from the parts of the economy that respond well to price signals, and directing those resources toward the parts that don’t. Natural and working lands, for instance, urgently need funding to manage climate risk —wildfires are erasing climate gains in California, and carbon sinks are deteriorating under pressure from fire, drought, and deforestation. Diffuse emitters — small freight operators, aging refrigeration systems, millions of buildings that need electrification — lack the capital or capacity to participate in complex trading systems. In this framing, carbon markets function less as direct decarbonization tools and more as engines of transition finance: pricing what can be priced, and channeling the proceeds toward what cannot. 

Adherents to this view would also emphasize that there are broad categories of public transition cost, like addressing major regional shifts in public budgets and private incomes as entire industries transition, that at minimum require additional funds and policy to manage. California’s closing refineries (and the attendant political debate over the fundamental structure of its fuels system and the fiscal stability of affected counties) are an example of revenue and policy challenges that a market alone cannot close.

A different view holds that the problem isn’t that many sectors are inherently unsuited to markets, or that markets can’t contribute to larger public finance challenges, but that the markets themselves are unfinished. Today’s markets lack sufficient demand signals that arise when governments impose some form of compliance obligation, whether through a tax, procurement standards, or other policy mechanisms. Carbon credits from forestry projects, land management, methane abatement, and engineered removal all represent real atmospheric interventions — but the current market has no rigorous way to compare what they actually deliver. Without standardized infrastructure and a common unit of impact, a forestry credit and an engineered removal trade as if they are equivalent when they are not, or one is excluded entirely when it could be valued proportionally.

In this framing, the fix is not to route around the market but to build the market properly — with the comparability tools and settlement infrastructure that would let heterogeneous credits be priced accurately and traded with confidence. A market built this way could reach diffuse actors through intermediation, aggregation, and structured products, much as mortgage markets reach individual homeowners without requiring each one to trade directly. A framework for carbon markets, which proposes standardized assessment of atmospheric impact per dollar, offers a concrete path toward this kind of market maturation. It could also more efficiently channel funds to public needs by helping direct scarce capital to whatever delivers the most verified atmospheric benefit per dollar.

Though we (the authors) differ about which view we believe to be most true, we also realize that these two views are not necessarily in conflict. Revenue transfer and market maturation can work in parallel. A strategy oriented around revenue transfer focuses on regulation, fiscal policy, and public investment to do the heavy lifting, with markets in a supporting role. A strategy oriented around market maturation invests in the infrastructure and standards that would allow markets to bear more of the weight directly. The right path almost certainly involves both, and getting the sequencing and emphasis right could be one of the most consequential design choices in climate policy today.

Where Do We Go From Here?

The above analysis lets us take a more sophisticated look back at the acid rain program. The lesson this program teaches isn’t “markets work, full stop.” It’s that markets can accelerate a transition whose economics are favorable, such as the transition to widespread use of smokestack scrubbers: straightforward, cost-effective technology. But markets cannot create that favorability, nor are they always designed to anticipate and manage second-order effects.

A second lesson is that well-designed tools, matched to the right problem and the right timescale, can deliver real results. That applies to carbon markets themselves — which today have design flaws that can be corrected — and to the broader policy architecture in which they sit. A powerful path emerges when well-designed markets are embedded in a broader strategy: enforceable regulatory limits that create real scarcity and price signals; industrial policy that is not only well-designed but well-executed; and a clear theory of how the costs and benefits of transition are distributed.

But it also applies within the market. If carbon markets are going to play a meaningful role — whether as engines of transition finance, as instruments of accurate pricing across heterogeneous climate interventions, or both — they need the infrastructure and standards that any serious market requires. That work is underway, and it deserves at least as much attention as the policy debates that surround it.

So what’s going on with carbon markets? We’ve asked one incomplete tool to do the work of three. And we’ve debated what role markets should play without finishing the market itself. It’s time to do both: modernize market structure, and stop asking markets to work alone.

DOE’s FY27 Budget Request: the Good, the Bad, and the Ugly

Surprise! It’s a double album drop with the release of both the President’s Budget Request (PBR to us, not Pabst Blue Ribbon) and the Department of Energy’s (DOE) Budget Justification for Fiscal Year 2027 (FY27) last Friday. As policy wonks, we here at FAS are here to give you the rundown on all the details for DOE’s energy and nuclear weapons program budgets. 

Jump to…

Big Picture 

Overall, DOE is requesting a 10% increase to its FY27 budget compared to 2026, bringing its total annual budget to $53.9 billion. However, this additional money would go almost entirely to the National Nuclear Security Administration (NNSA), giving them a 12% bump from 2026 levels to reach $32.8 billion. The remaining $21.1 billion left for non-NNSA DOE programs represents an 11% reduction of DOE discretionary funding from 2026 enacted levels. 

It’s important to note, however, that this budget request is just that, a budget request. Congress will likely have its own ideas about how DOE should be funded for FY27, and that too will evolve as staffers take into account appropriations requests from stakeholders and appropriators engage in negotiations and reconciliation over the coming months.

This year’s budget request introduces a number of new accounts, intended to reflect DOE’s reorganization last November. New accounts have been created for the Office of Critical Minerals and Energy Innovations (CMEI) and Hydrocarbons and Geothermal Energy Office (HGEO), with former accounts for Energy Efficiency and Renewable Energy (EERE), Fossil Energy (FE), and others reorganized under them. 

Additionally, two large accounts have been created for Baseload Power and Artificial Intelligence & Quantum. The administration has proposed to fund these accounts at the level of $3.5 billion and $1.2 billion, respectively, by repurposing IIJA funding for the Hydrogen Hubs (likely also requiring the use of funds from cancelled awards). The Baseload Power funding will support activities across HGEO, the Office of Electricity (OE), CMEI, the Office of Nuclear Energy (NE), and the Office of Cybersecurity, Energy Security, and Emergency Response (CESER); the Office of Artificial Intelligence and Quantum’s (AIQ) funding will support seven new supercomputers at the national labs. 

Appropriators in Congress have expressed fatigue with DOE’s reorganizations, so it remains to be seen whether Congress will adopt these changes or keep the old account structure and leave it to DOE to reapportion money internally.

The PBR also indicates a move to rehire staff for DOE, after the agency lost 3,050 federal employees last year. Estimated numbers in the FY27 request reveal plans for a 3.5% increase in the number of staff supported by the accounts for DOE’s energy programs1 and a 7% increase in the number of staff supported by NNSA’s accounts. The FY26 estimate only indicates the number of positions available, though, not the number of current employees, so the actual rehiring effort is likely much larger than the PBR numbers suggest. Rehiring is also likely to be a slow and difficult process, since the most qualified former employees are unlikely to return. Some recent DOE job postings have remained open for months without a hire.

Below, we present a rapid-fire summary of the budget numbers and highlights you need to know. And then keep scrolling for deep dives on the requests for NNSA, CMEI, grid programs, and HGEO.

The Good: New funding for the grid, clean firm energy, and critical minerals supply chains

The Bad: Cancellations and budget cuts across DOE energy programs that Congress will likely temper

The Ugly: Significant increases to funding for nuclear weapons and fossil fuels 

Spotlight: Nuclear Weapons/NNSA 

The NNSA’s budget is broadly divided into four buckets: Weapons Activities (exactly what it sounds like), Defense Nuclear Nonproliferation (which focuses on nonproliferation, counterproliferation, and nuclear-related counterterrorism), Naval Reactors, and Federal Salaries and Expenses. It is very easy to see which of these categories this administration is prioritizing.

The NNSA’s proposed $32.8 billion topline budget is a 29% increase from the FY26 enacted amount, but approximately 84% of that total is slated for Weapons Activities, which surged 35% from $20.4 billion enacted in FY26 to $27.4 billion in FY27. This is in addition to another $3.9 billion provided by the One Big Beautiful Bill Act (OBBBA), most of which will be obligated in FY26.

The categories under weapons activities include warhead production modernization, infrastructure and operations, and stockpile research, among other things. Highlights from the FY27 budget request reflect the surging costs that come with modernizing all three components of the nuclear triad at the same time: 

Interestingly, the Stockpile Sustainment program office has been renamed Stockpile Operations (under the Stockpile Management program), likely reflecting a shifting focus from its maintenance function toward prioritizing production and modernization for new warheads.

Spotlight: CMEI

CMEI is a mega-office within DOE that reports directly to the Secretary of Energy. Its programs and sub-offices are organized under three pillars: the Office of Critical Minerals, Materials, and Manufacturing (CM3), the Office of Energy Technology (E-Tech), and the Office of Innovation, Affordability, and Consumer Choice (IACC).  

The FY27 request would cut CMEI’s budget by 63% from $3.0 billion down to $1.1 billion. A closer look at the budget for each pillar reveals even deeper cuts: E-Tech faces an 88% reduction, while IACC faces a 93% reduction, both achieved through eliminating or nearly eliminating programs formerly under EERE, State and Community Energy Programs, and the Federal Energy Management Program. Notably, the administration is once again proposing to eliminate funding for the Weatherization Assistance Program (WAP), which helps reduce energy costs for low-income households. Ending WAP now, while the U.S. faces a new energy crisis induced by the war in Iran, runs counter to the administration’s stated energy affordability priorities. These cuts would also gut much of DOE’s work on renewable energy, low-carbon transportation technologies, and building and industrial electrification efforts, though the Baseload Power account does offer an additional $500 million in funding for E-Tech to uprate hydropower plants. 

CM3 is the only pillar with a budget increase of 85%, but even that is concentrated within a single office: the Advanced Mining and Mineral Production Technologies Office is slated to receive a 339% budget increase. Meanwhile, other offices under CM3, such as the Manufacturing Deployment Office and the Advanced Materials and Manufacturing Technologies Offices which run both critical minerals and manufacturing programs, are facing cuts of 18% and 19%, respectively.

Spotlight: Grid Funding for OE, CESER, and Baseload Power

Across the board, grid focused offices – the Office of Electricity (OE), the Grid Deployment Office (GDO), and the Office of Cybersecurity, Energy Security, and Emergency Response (CESER) – lost significant levels of funding in the FY27 budget request. OE and CESER would see their budgets shrink by $56 million (22%) and $30 million (16%), respectively, compared to FY26 enacted levels: significant indeed at a moment when electricity demand is surging, extreme weather is straining grid infrastructure with increasing frequency, and the U.S. grid is already widely acknowledged to be aging and vulnerable. Underfunding these offices carries real risk for the administration’s own energy dominance goals, let alone broader reliability, resilience, and affordability of the U.S. energy system.

OE leads R&D activities and programs that strengthen and modernize our nation’s power grid to maintain a reliable, affordable, and secure electricity delivery infrastructure. According to DOE, OE will focus on “electrical energy dominance by combating the capacity crisis, navigating growing complexity, strengthening supply chains, and securing grid infrastructure” in FY27. 

Through the reorganization, OE acquired GDO’s staff and programs, so their funding has been moved into the Electricity account for FY27. These programs face the largest cuts: Distribution & Markets and Hydropower Incentives (which were moved to CMEI) would see their budgets zeroed out, while Transmission Planning & Permitting faces a 61% decrease. Cuts were also made to the budgets for Energy Storage (-39%), Applied Grid Transformation Solutions (-24%), and Resilient Distribution Systems (-18%). 

On the other hand, OE potentially stands to gain $750,000,000 in repurposed IIJA funding through the Baseload Power account for the purpose of reconductoring existing transmission lines with advanced conductors to unlock approximately 3-6 GW of incremental transfer capacity on constrained corridors. This is an important activity as reconductoring can double the capacity on existing transmission lines and is more cost effective than building new transmission lines, allowing more generators and customers to connect to the grid. However, this gain does not offset the loss of funding for ongoing activities designed to address other challenges facing the grid and grid supply chains. 

Complementing OE, CESER plays a critical role in strengthening the security and resilience of the U.S. energy grid and securing U.S. energy infrastructure from cyber threats. CESER’s budget structure has also been reorganized for FY27. The new Threat Analysis and Incident Response (TAIR) program seems to merge the former Policy, Preparedness, and Risk Analysis and Response and Restoration programs, while the Infrastructure Hardening and Technology Development (IHTD) program appears to inherit the former Risk Management Technology and Tools program. Assuming this is the case, TAIR faces a 31% budget reduction from $57 million in FY26 to $39 million in FY27; IHTD faces a 11% budget reduction from $110 million to $97 million. These cuts are concerning given the recent news of cyber attacks to U.S. energy and water infrastructure as a result of the war in Iran – the very kinds of attacks that CESER’s work is designed to prevent and address. 

The proposed Baseload Power account potentially offers a small amount of additional funding for CESER ($10 million) to “expand testing of supply chain components to identify and mitigate cybersecurity vulnerabilities.” However, that amount is only a third of the $30 million CESER stands to lose in FY27 funding if Congress follows the administration’s lead.

Spotlight: HGEO

HGEO was created during DOE’s reorganization by merging the Geothermal Technologies Office (GTO) with the Fossil Energy Office (FE).2 The new Office of Subsurface Energy is the largest office in HGEO, and it is composed of three suboffices: Coal, Oil and Gas, and Geothermal. Overall, the administration is requesting a 14% cut to HGEO’s budget, with the Office of Subsurface Energy facing a 19% cut. The Office of Geothermal maintains its funding at a constant $150 million, same as in FY26, while the Offices of Coal and Oil and Gas see decreases of 35% and 14%, respectively. 

The Office of Geothermal’s budget has been reorganized under new program categories, moving away from technology specific categories to a focus on supporting technologies at different levels of maturity: Pilots and Demonstrations ($92 million), Technology Research & Development ($40 million), and Commercial Scale-Up ($18 million). The Pilots and Demonstrations funding would continue the momentum from the $171.5 million Notice of Funding Opportunity (NOFO) for Enhanced Geothermal Systems (EGS) demonstrations, the largest federal funding commitment for EGS ever, in February. At the same time, however, the administration is also requesting a rescission of $25 million in remaining unobligated IIJA funding for the very same program, a counterintuitive move that seems to be for the sole purpose of expressing opposition to anything funded by IIJA. 

Under the Office of Coal, the Mining and Processing subaccount sees a dramatic 329% increase in funding for R&D aimed at modernizing coal mining and processing. This includes the application of AI tools and robotics to “extend the life of existing mines and coal-based power infrastructure”, reinforcing the administration’s ongoing use of executive power and taxpayer dollars to boost a declining energy source.

Lastly, the proposed Baseload Power account would offer an additional $1.94 billion in funding for coal, oil, and gas infrastructure upgrades to prevent 4 GW of coal power from retiring, preserve 5 GW of power from natural gas plants, and add an additional 3 GW of gas power – the single largest request for new funding in the entire DOE budget.

A People-centered, Power-conscious Regulatory Democracy Balancing Distributive Justice and Delivery Efficacy

Building Blocks to Make Solutions Stick

People-centered, power-conscious rulemaking, using deliberate stakeholder engagement strategies, produces faster and better results. 

Implications for democratic governance:

Capacity needs: 

One of the biggest obstacles confronting meaningful action to address climate action are power disparities. Among our governing institutions, the federal administrative state is unique in its potential for overcoming these power disparities by offering an effective mechanism for redistributing political power from corporate interests committed to maintaining the status quo to the general public who are already bearing the costs of global climate disruption. The key to realizing this potential is “regulatory democracy.” 

At present, though, the means for conducting public engagement in the administrative state generally fail to meaningfully engage the public, but instead have the perverse effect of reinforcing power disparities, as has been ably documented by the burgeoning Abundance movement. What is needed, instead, is a better approach to regulatory democracy – one that is people-centered and power-conscious. 

This paper sketches out what a people-centered and power-conscious approach for improving regulatory democracy in the rulemaking process: a reform called “Public Participation Planning.” This reform consists of two major procedural components. First, it calls upon agencies to develop “public engagement strategy blueprints” as a mechanism for deliberately creating a tailored public engagement strategy for each rulemaking. The key innovation here is a recognition that different kinds of “expertise” (democratic vs. technocratic) are required at different stages of a regulatory development – a concept referred to here as “sequential participation.” Second, it calls upon agencies to document the actual performance of that strategy, by including a group of documents called the Initial and Final Public Participation Plan Statements. These statements would capture the impacts that the public engagement actions have on the development of the rule. They would be included in the rulemaking document along with the notice of proposed rulemaking and final rules, respectively, where they can help inform judicial review of the rule. In theory, a president could implement a rigorous version of Public Participation Planning without new statutory authority. Still, the full potential of this reform could be enhanced with additional actions by Congress and the judiciary. Properly implemented, Public Participation Planning would both improve the quality of agency decision-making and permit for more expeditious policy implementation by reducing the ability of powerful interests to use the rulemaking process to reinforce a bias toward maintaining the status quo.

Addressing the Climate Crisis Through Better Regulatory Democracy

One of the underappreciated features of the federal administrative state – at least within our contemporary context – is its potential capacity to prevent politically and economically destabilizing concentrations of power from taking hold by continually redistributing it to the general public. That the architects of the modern administrative state – turn-of-the-20th century policymakers, thinkers, and movement leaders alike – designed it with this particular goal in mind seems to have been lost to history, however.

The key to their radical vision of the administrative state was “regulatory democracy” – that is, the notion that administrative agencies would work cooperatively (and sometimes competitively) with the public to shape policy priorities, design, and implementation. At its best, regulatory democracy would take the form of a working relationship that was ongoing and durable. The dynamic it was meant to yield would be a much thicker form of engagement in our governing institutions than ordinary Americans would experience through the episodic opportunities of casting a ballot and the often-binary choices they would be presented with during those opportunities.

This vision should be particularly resonant today, though it may sound esoteric and peripheral at first blush. For the reformers of the early progressive era, creating a new venue for translating public power into policy change was essential for effectively meeting the then-emerging challenges that many Americans faced due to such societal changes as industrialization and urbanization. Today, we face cascading challenges – climate change, globalization, and rapidly evolving forms of computational technology such as Artificial Intelligence and quantum computing – which have similarly exposed the limits of our governing institutions. Then, as now, society was characterized by vast disparities of economic and political power that further threatened effective policy implementation. The administrative state’s comparatively decentralized and democratized design – relative to Congress – was meant to mitigate these effects.

More to the point, if we are to avert the worst consequences of the climate crisis, we will need to quickly revive these robust democratic traditions of the administrative state. After all, as the Green New Deal movement correctly taught us, power disparities are a root cause of this crisis; effectively decarbonizing our economy and investing in infrastructure that is hardened to withstand the unavoidable impacts of climate change will require confronting these same power disparities. Among our governing institutions, the administrative state is best equipped to meet this kind of challenge under these kinds of circumstances.

Achieving the full democratic potential of the administrative state will require some important reforms, however. As the primary law governing the operations of the administrative state, the Administrative Procedure Act (APA) establishes many of the mechanisms that agencies use for democratic engagement. For informal rulemaking, which has become a leading vehicle for administrative policymaking, the APA creates the notice-and-comment procedures. The benefit of decades of experience has revealed that these procedures not only fail to meaningfully engage large segments of the population; they also reinforce status quo inaction and the underlying power disparities that benefit from such inaction.

This white paper argues that what is needed instead is an approach to public engagement that distinguishes between the different kinds of stakeholders implicated by a given policy action and accounts for the underlying power disparities that define their relationships to the policy problem that the action is intended to solve. As discussed below, the passive, power-agnostic posture of notice and comment fails to accomplish either of these objectives. Among other things, a people-centered, power-conscious approach would require carefully cataloging the universe of relevant stakeholders, the barriers they face to meaningful engagement, and the kind of input those individuals would likely bring to inform a policy decision.

A people-centered, power-conscious regulatory democracy would also require deliberate attention to how best to obtain public input. It would demand that agencies have a ready toolbox of engagement tactics and solutions tailored to effectively obtain different kinds of input from different kinds of stakeholders. It would also require agencies to plot out in advance the different stages in their rule development process for deploying those tactics and solutions – a concept this white paper refers to as sequential participation.

This approach would depend for its success upon a sincere commitment to transparency and reciprocity with stakeholders. Agencies would need to continually communicate with stakeholders and be completely forthright in those communications – even when the news is not what those stakeholders will want to hear. They will also need to carefully document how public engagement was conducted throughout the rulemaking process and the role it had, if any, on the progression of decision-making at the different stages of that process.

Lastly, and perhaps most controversially, this approach should draw on the agonistic model of democracy. Practically speaking, that means the goal of regulatory democracy should be to surface and channel productive disagreement, rather than embark on a quixotic search for consensus or near-consensus on controversial policy matters. As explained below, powerful interests have used consensus-based approaches to decision-making as a kind of veto-gate to defend their preference for the status quo. Reorienting our expectations for regulatory democracy in this manner will thus permit meaningful engagement without unduly sacrificing timely policy implementation – a concern that has achieved greater prominence due to the Abundance movement.

These lessons could, of course, just as readily apply to reforming state- and local-level administrative procedures as well. Indeed, subnational governments are already playing a pivotal role in addressing the climate crisis, particularly while steadfast Republican obstruction has left Congress incapacitated on this issue. The state rulemaking procedures or public utility commission proceedings that are responsible for implementing these policies could be strengthened through a people-centered, power-conscious regulatory democracy program. For simplicity, however, this white paper will focus on developing a version of this approach that applies to the federal rulemaking process.

While there may be several different methods for institutionalizing a people-centered, power-conscious regulatory democracy, this white paper proposes the use of what it calls Public Participation Planning. Under this reform, agencies would develop tailored plans called public engagement strategy blueprints. The purpose of these blueprints is to ensure meaningful engagement by relevant stakeholder groups – especially those representing communities that are structurally marginalized or that historically have been excluded from democratic processes. Critically, these blueprints would account for the entire rulemaking process with the aim of proactively engaging particular stakeholders at stages where their input is most likely to be relevant and useful. This proposal would also call on agencies to document their outreach and engagement actions and any impacts they had on the proposed and final rule in a special report called a Public Participation Planning Statement, which would be made part of the rulemaking record.

The practical advantage of Public Participation Planning is that it could be instituted by a president with existing legal authority. Still, the proposal also outlines how the other federal governing institutions – including Congress and the judiciary – can help ensure that the benefits of public participation plans achieve their full potential. One important task for the coordinate branches would be to address whether and to what extent existing administrative law doctrines, such as Vermont Yankee, present barriers to achieving the full potential of Public Participation Planning for advancing regulatory democracy. It is also worth emphasizing that parallel efforts to reinvigorate the most important democratic institution in our constitutional framework – Congress – will also be necessary to realize the full potential of regulatory democracy. After all, the administrative state can only implement the laws that Congress passes. It will thus be more effective for the administrative state to leverage regulatory democracy to tackle something like the climate crisis if Congress were to pass legislation explicitly directed at that issue.

If properly implemented, a comprehensive reform program to accomplish regulatory democracy that is people-centered and power-conscious could be essential for addressing complex policy changes such as the climate challenge. As Public Participation Planning demonstrates, this approach would both improve the quality of agency decision-making and permit expeditious policy implementation.

Background: Regulatory Democracy at a Crossroads

Regulatory democracy – represented not just by the APA’s notice-and-comment procedures but also the National Environmental Policy Act’s analytical requirements and their state– and local-level analogs – has come under increasing criticism from several directions in recent decades. Concerns that the regulatory system is undermined by too much public participation stretch back to at least the Obama administration. At the behest of Cass Sunstein, then Office of Information and Regulatory Affairs (OIRA) Administrator, agencies during this era strongly embraced cost-benefit analysis and other technocratic decision-making tools as an apparent antidote to the irrationality and “mistakes” that ordinary lay people make. Under this approach, public participation was to be viewed with extreme skepticism – if not outright hostility – and thus minimized as much as possible.

More recently, the Abundance movement that has emerged in recent years has come to single out for criticism many of the existing public participation requirements in administrative law. According to this criticism, powerful entities often abuse such requirements as a means for delaying policies that they oppose. Conservatives have also begun to reject public participation, with President Trump having directed agencies to evade notice-and-comment procedures whenever possible during this second term. This move seems in keeping with his overall crusade to centralize administrative power in the White House and build something akin to an authoritarian administrative state.

At the same time, we have seen a growing movement among policymakers and advocates focused on expanding public participation opportunities. Notably, as part of his administration’s larger Modernizing Regulatory Review project, President Biden issued a memorandum providing agencies with guidance on how to strengthen public engagement in the rulemaking process – with a particular focus on marginalized communities. Among other things, this memo encouraged agencies to deploy various strategies for engaging members of these communities at the earliest stages of the rulemaking process. Separately, a group of progressive members of Congress have promoted a comprehensive regulatory reform bill called the EXPERTS Act. One of its provisions would create the Office of Public Advocate, which would be charged with supporting individuals and other underrepresented groups in the notice-and-comment process.

What these competing movements reveal is that almost no one is satisfied with the current approaches to regulatory democracy. This dissatisfaction, in turn, arises from both practical flaws and theoretical disagreements associated with these current approaches.

Practical Flaws of Regulatory Democracy

Due to poor design, the prevailing approaches to regulatory democracy generally fail to effectively engage most members of the public in critical administrative state tasks of decisionmaking and implementation. Worse still, in many cases, these design flaws can combine in ways that function to systematically exclude members of many structurally marginalized communities, thereby reinforcing the very power disparities that are often at the root of the policy problems that regulations are often designed to address.

Many of these approaches follow a rigid, one-size-fits-all design that prevents their implementation from being adapted to meet the unique demands that can arise in different policymaking contexts. This can be seen in the APA’s informal rulemaking context. The same basic notice-and-comment process applies for policies as varied as setting Medicaid reimbursement rates and regulating the use of non-compete clauses in employee contracts. Yet, each of these policymaking contexts involve very different kinds of stakeholders whose relationships are characterized by different kinds of power structures. As such, effectively obtaining input from these different kinds of stakeholders is likely to require different, tailored engagement tactics.

To be sure, the procedural requirements setting out the public participation mechanisms set a legal floor; a president generally has the authority under Article II of the Constitution to go above and beyond by adding new public participation strategies aimed at alleviating the flaws that arise from the mandatory approaches. Indeed, as noted above, the Biden administration undertook some steps along these lines. In general, presidents are unlikely to undertake such steps without a clear strategy for doing so due to budget constraints and the growing criticism of public participation in the regulatory system noted above.

One important adjustment a future president could take to help make regulatory democracy opportunities more inclusive for structurally marginalized communities is to introduce them earlier in the policy development process. Presently, most public engagement opportunities tend to occur relatively late in policy development, as the APA notice-and-comment process illustrates. By this point in regulatory development, many of the foundational decisions leading up to the regulatory proposal have been resolved, including problem definition and solution scoping (not to mention the decision to prioritize this particular rulemaking at all). The remaining issues left open for public input are the kind of esoteric or technical details that are typically well beyond the knowledge or expertise of ordinary people.

Put differently, the manner in which regulatory democracy is currently conducted fails to account for the “sequential logic” of the policymaking process – a logic that necessarily draws on different kinds of expertise at different steps. An agency’s authorizing legislation, of course, sets the key parameters for what regulatory actions an agency might undertake and how it might design those actions. From there, though, important decisions remain such as which “public problems” are worthy of priority attention and how best to begin constructing the scope of policy solutions to meet those problems. These earliest stages in the policy development process call for a more democratic form of expertise that finds its source in stakeholder’s lived experience and situated knowledge. This kind of input might, for instance, spur the EPA to prioritize tackling pollution from industrialized agriculture or determine how stringently the Consumer Financial Protection Bureau regulates the use of forced arbitration clauses in consumer contracts.

In contrast, the more conventional understanding of technocratic expertise tends to become more relevant at later stages, such as when decision-makers must refine policies to account for such complex questions as applicable legal constraints, economic factors, the state of technology, or the body’s toxicological mechanisms. These issues might include what control equipment should be required to limit emissions of a toxic air pollutant or the potential energy use impacts of strengthened appliance efficiency standards. Not incidentally, social philosopher and an early intellectual force behind the modern administrative state John Dewey memorably captured the ordinal nature of the policymaking process with his observation that “the man who wears the shoe knows best that it pinches and where it pinches, even if the expert shoemaker is the best judge of how the trouble is to be remedied.”

The upshot of this failure is that the regulatory democracy currently privileges the kind of technocratic input that well-resourced interests committed to maintaining the status quo are uniquely well positioned to provide. Those who lack access to this expertise – including the resources and training to obtain it – are thus effectively prevented from meaningful participation.

Another important adjustment that agencies could make to improve public engagement is to conduct more affirmative outreach to specific stakeholders. Instead, current regulatory democracy approaches adhere to an “open door” model by which agencies invite input on equal terms from all interested stakeholders and then passively wait to receive whatever input is provided. The notice-and-comment procedures, of course, best illustrate this model, and it has been replicated in other regulatory forums as well, such as the “lobbying meetings” during OIRA’s centralized regulatory review process. At best, this model favors stakeholders with the resources to monitor and answer open door invitations for participation. In contrast, individuals and smaller community-based organizations are unlikely to consult the Federal Register on a daily basis or to have the technical capacity to parse a large rulemaking proposal to identify whether and how it implicates their unique interests.

In the worst cases, entrenched interests can abuse the open-door model by leveraging their vast superior resources to excessively voluminous comments containing information of only marginal utility or relevance – a practice known as “packing the record.” As legal scholar Wendy Wagner noted, it is not uncommon for industry interests to submit hundreds of pages worth of highly technical comments, resulting in rulemaking records that are more than 10,000 pages in length. These stakeholders engage in this kind of gamesmanship because they treat the notice-and-comment process more as a prelude to litigation over the final rule rather than as good faith attempt to improve the quality of the rule. Significantly, from a power perspective, this record-packing scheme only works if the party engaged is able to back it up with a credible threat of bringing litigation – something individuals and community-based organizations are unable to do. 

In effect, this gamesmanship has enabled powerful interests to install the courts as the primary locus of regulatory decision-making, on the apparent presumption that they will afford a more sympathetic audience for their policy arguments – usually in favor of maintaining the status quo – than what they may find at the agencies. This tactic has the additional benefit of contributing to regulatory ossification, as agencies seek to “bulletproof” their rules as much as possible to avoid adverse results on subsequent judicial review. The advent of Artificial Intelligence suggests that this problem could grow even worse in the future.

Significantly, various studies on the practice of regulatory democracy have documented the vast quantitative and qualitative disparities in participation that exists between unaffiliated individuals and organized interest groups. Empirical research on the APA’s notice-and-comment process in particular seems to confirm that the design of those procedures has the effect of systematically excluding most members of the public, particularly those from structurally marginalized communities. These results suggest that the notice-and-comment process is failing at its purported task of assembling something approximating comprehensive policy-relevant information for agency decision-makers by systematically depriving them of critical forms of “expertise” that tend to be in the exclusive possession of the individuals and communities who live closest to the problems that the policies are meant to solve. They are left to fix shoes without knowing where exactly they pinch their wearers.

The results of these studies also suggest that these kinds of shortcomings in the notice-and-comment process do not merely limit effective engagement; they also serve to exacerbate underlying power disparities. That is because the skewed perspective that agency decision-makers obtain through these procedures necessarily favors entrenched sites of political or economic power. In terms of substantive results, the public input obtained through the notice-and-comment process often translate into a strong status quo bias toward inaction – or, at best, towards actions that only minimally inconvenience empowered stakeholders. Thus, for example, the public comments for a rulemaking to address the climate crisis are likely to be dominated by fossil fuel interests – as opposed to those who are disproportionately harmed. To the extent that this public input creates a skewed picture for agencies of the harms that significant disruption to our climate systems will create, it risks militating against the kind of aggressive climate policies needed to avert these harms.

Lack of a Coherent Theoretical Basis for Regulatory Democracy

One of the major sticking points is that students of the administrative state have never really achieved something like a real universal agreement on why regulatory democracy is important in the first place. The business community and conservatives have questioned the legitimacy of the modern administrative state within the U.S. tripartite constitutional governing framework at least since the advent of the Great Society programs. In response, scholars have invoked a variety of democratic theories to salvage the constitutional legitimacy of the administrative state. (Though, for the most ardent of conservative critics, such as Philip Hamburger, no theory is likely to suffice.) In turn, the lack of a clear theoretical basis has hampered efforts to design effective public participation mechanisms – contributing to many of the practical flaws described above.

According to the pluralist model, the administrative state’s democratic features provided a forum in which competing interests could shape policy. As long as the forum provides a reasonably fair opportunity for engagement for all interested stakeholders, this theory assumes that the substantive results that emerge roughly approximate the common good.

Another theory is the civic republican model. Unlike the pluralist model, which holds that the administrative state becomes imbued with democratic legitimacy through the balancing of competing interests, civic republicanism starts from the position that some idealized notion of the common good exists externally from the administrative state. Revealing this concept of the common good – which, presumably, all stakeholders would recognize as worthy of their consent – can only be achieved through a process of careful reason-giving and deliberation. The administrative state’s democratic legitimacy thus hinges on its ability to enable such a process to take place.

The influence of these competing schools of thought can be seen in institutional and legal reforms over the last several decades. For instance, the Regulatory Flexibility Act’s procedural requirements aimed at ensuring that regulators account for small business concerns reflects the pluralist model, while the embrace of cost-benefit analysis sounds more in the key of civic republicanism. Regardless of the theoretical grounding, both have tended to promote the addition of new procedural embellishments to the existing notice-and-comment framework that produce suboptimal results. Specifically, they slow down the rulemaking process without improving the quality of regulatory decisionmaking, and they have reinforced power inequality by giving entrenched interests new tools for blocking or weakening new policies they oppose – that is, maintaining a status quo bias towards inaction. In turn, these consequences seem to be artifacts of a characteristic that pluralism and civic republicanism both share: an abiding belief that consensus can be achieved and should be the goal of regulatory decision-making.

Third Theory of Regulatory Democracy: Agonism

Yet, this shared belief has come under increasing criticism in recent years, leading scholars to entertain a third theory of regulatory democracy: agonism. This model begins from the premise that consensus is impossible to achieve in many policy contexts, particularly during times such as now marked by polarized discord and seemingly incommensurable division over values and worldviews. If conflict is inevitable, agonism posits, then the appropriate function for our democratic institutions is to channel that conflict so that it is as productive as possible. Under this view, the legitimacy of policy outcomes comes not from how they are ultimately resolved, since they will not be accepted as such by many stakeholders. Instead, legitimacy flows from affording dissatisfied stakeholders with an ongoing realistic opportunity to contest and displace those outcomes with those that more closely align with their preferences. Administrative law already contains agonistic features. Adherents of this model envision other institutional and legal reforms that would infuse a more agonistic orientation to regulatory democracy. For instance, they would require more frequent use of retrospective review for regulations and greater use of adjudication for policymaking in place of rulemaking where possible.

One of the practical benefits of redesigning regulatory democracy mechanisms consistent with agonism is that it could help prevent some of the abusive gamesmanship practices in the notice-and-comment process described above. By demanding consensus, prevailing theories of pluralism of civic republicanism create perverse incentives for entrenched interests to manipulate public participation mechanisms in order to prevent consensus from ever being achieved. For instance, such interests might seek to delay final action on a rule by packing the rulemaking record with the intent to manufacture uncertainty or continually raise new issues – rather than productively inform a regulatory decision. In this way, public participation becomes a tool for translating power into paralysis. This concern is well worth considering given, as adherents of Abundance liberalism have noted, such paralysis can be exploited by would-be authoritarians to support an agenda of democratic backsliding.

Modernizing Regulatory Democracy Through Public Participation Planning

In light of these challenges, it is time to consider not just incremental changes, but a fundamental rethink of how public engagement is conducted within the administrative state. In contrast to current approaches, effective regulatory democracy must be both people-centered and power-conscious.

This paper will concentrate on applying this reform framework to the rulemaking process, though it could also be applied to other aspects of the federal administrative state that involve public participation, such as NEPA and permitting. Likewise, they could be applied to state-level administrative analogs. While there might be several ways to build a people-centered, power-conscious, rulemaking process, this paper outlines what it refers to as Public Participation Planning. This would involve agencies:

  1. developing and executing a strategy that is
  2. tailored to each of their planned regulatory actions in order to
  3. engage relevant stakeholders throughout each step of the rulemaking process
  4. with the explicit purpose of building a reasonably comprehensive record of the public’s views on the action for the rulemaking record.

The validation of Public Participation Planning as a viable mechanism for achieving truly meaningful engagement comes through its embrace of four cross-cutting principles: proportionality transparency, communication, and pragmatic learning. First, the rigor of a particular plan should be fairly proportional to the significance of the rule under development. Second, strenuous adherence to transparency is essential for achieving the agonistic goal of productive disagreement. In particular, agencies must always be completely forthright with all stakeholders about how decisions were reached and what evidence and arguments proved determinative. Third, and related to transparency, agencies should strive to maintain open lines of communication with stakeholders throughout the entire rulemaking process. This will enable agencies to serve as the effective mediators of productive disagreement through the rule’s development and beyond.

Fourth, it requires agencies to commit to an ethic of pragmatic learning. Implementing Public Participation Planning is not as simple as plugging a few numbers into an equation and expecting an optimal result to emerge; it is impossible to predict ex ante what will work in any given situation. Instead, to make the most of Public Participation Planning, agencies will need to become adept at building and rebuilding the proverbial plane, even as they are flying it. Moreover, what has worked in the past will have to be continually reassessed in light of underlying power inequities. If history is any guide, powerful incumbents will eventually devise ways to use their resource advantage to corrupt even the best public participation mechanisms for engaging structurally marginalized communities.

As discussed in greater detail, one of the obvious objections to Public Participation Planning is that its apparent emphasis on proceduralism will exhaust scarce agency resources and contribute to excessive delays in a rulemaking process that has already become too bogged down to permit for effective and timely policy implementation. These four cross-cutting principles, however, are intended to alleviate those concerns – adherence to them will help to strike the needed balance between public engagement and expeditious policymaking.  

Putting Public Participation Planning into Action

Public Engagement Strategy Blueprints

One of the distinguishing features of Public Participation Planning is the requirement that agencies assemble a public engagement strategy blueprint for engaging stakeholders for each planned regulation at the time that the action is initiated that is tailored to the unique circumstances of the rule. This step provides agencies with a mechanism to anticipate potential challenges and think through and identify effective solutions that are calculated to enable them to build a reasonably comprehensive record of the stakeholders’ views on the rule. 

It is worth emphasizing at the outset that the development of a public engagement strategy blueprints need not be a resource-intensive and time-consuming task. As noted above, these should be tailored to match the significance and controversy level of the rule. In addition, agencies will learn by doing, resulting in increased efficiencies over time. For instance, analyses used for past rules will often be readily usable for future rules addressing similar subjects. Another crucial source of efficiencies will be for agencies to use their existing institutional resources to perform these tasks. Most rulemaking agencies already have various forms of public engagement offices and regional and local offices that can and should be tapped. Public affairs offices can also be brought into the rule development process earlier, rather than announcing decisions – such as proposals and final rules – after the fact. Lastly, agencies may build new institutions that increase efficiencies for implementing public engagement strategy blueprints. For instance, agencies may consider creating a standing process for conducting periodic townhalls or other listening sessions. This relatively modest investment could in turn yield significant value for informing the development of public engagement strategy blueprints for future rulemakings covering a wide variety of issues.

More broadly, as explained in greater detail below, the implementation of all aspects of Public Participation Planning, including the public engagement strategy blueprints, should be thought of in terms as an investment. There is no denying they will involve the dedication of resources and time – mostly at the front end of the rulemaking process. But, by directly addressing power disparities and by more constructively channeling irreconcilable disagreements over the competing values implicated by a given rulemaking, Public Participation Planning will mitigate the sources of delay that crop up later in the regulatory process, including, most notably, litigation and the problem of ossification it creates. And to be perfectly frank, much of this work involves things agencies should be doing anyway. The failure to do so often helps to explain why many agency rules have fallen short of accomplishing their stated goals.  In short, more “process” at the beginning will lead to less process and less delay overall.

Step 1: Public Engagement Strategy Blueprint

The first step in assembling a public engagement strategy blueprint is to conduct a thorough and deliberate stakeholder mapping exercise. By the time an agency has completed this exercise, they should be in a position to identify the relevant range of stakeholders for a given rulemaking and the anticipated role or roles they might be expected to play in the rulemaking process. For each category of stakeholders, agencies should also perform a general capacity assessment. Specifically, they should seek to answer such questions as what kind of input or expertise members of a given stakeholder group are likely to bring, whether and how those individuals have participated in similar rulemaking processes in the past, and what barriers might prevent them from participating effectively in the current rulemaking process.

Step 2: Examine Power Disparities and Structural Injustice

The second step is to assess the role, if any, that underlying power disparities or other forms of structural injustice (e.g., racism or patriarchy) play in contributing to the problem that the regulation is meant to solve. To be sure, agencies should be performing such assessments anyway since a failure to do so could yield policy responses that either fail or have other unintended perverse effects, including making the underlying problem worse. With this background in place, the agency should then give careful consideration to how stakeholders identified through the mapping exercise might help them to better understand these underlying power disparities.

Step 3: Stakeholder Engagement to Inform Rulemaking

The third step is to use any learnings from the stakeholder mapping exercise and power disparities assessment to construct a strategy for conducting stakeholder engagement to inform the development of the rulemaking proposal before it is formally published. Most agencies already have an established “action development process” they follow for drafting proposals and building a supporting evidentiary record. Agencies can build off the procedural framework that process creates when designing this engagement strategy. They can ask which types of stakeholders are likely to have input that would help with the successful completion of each stage of the policy development process and what specific engagement tactics would likely be most successful in obtaining that input at a reasonable cost in terms of time and resources. For example, agencies might use more time-consuming and resource-intensive focus groups for particularly weighty matters such as scoping out alternative regulatory designs. In contrast, they might employ informal remote public hearings to quickly gather ideas for sourcing certain kinds of evidence related to the rulemaking. (A bonus of this process is that it might reveal ways in which an agency policy development process could be strengthened, by adding, removing, or combining steps, or by altering their order.)

In preparation for this step, agencies will likely also want to have created a general library or “menu” of engagement tactics, with a brief assessment of their strengths and weaknesses. This will enable agency staff to quickly pull tactics “off the shelf” and insert them into the individual public engagement strategy blueprint. Indeed, this is an example of how moving along the learning curve will help agencies to implement Public Participation Planning more quickly and at reduced cost.

The capacity assessment performed during the stakeholder mapping exercise will especially be important for successfully implementing this step of plan development. For instance, if that exercise revealed that an important group of stakeholders is unlikely to have reliable access to high-speed internet, then the agency should refrain from relying on something like a remote public hearing to obtain input from those stakeholders. This assessment will also help agencies to identify potential affirmative steps they can take to eliminate barriers to public participation. For example, agencies can take steps to provide translation services if a large number of crucial stakeholders do not speak English as a first language. At the same time, the capacity assessment might reveal that a particular stakeholder group exercises an unusually high degree of dominance over a particular issue. In such cases, the agency may find that imposing certain constraints on their participation during the pre-proposal time period. These might include limiting or barring ex parte contacts or placing reasonable page limits on documentary submissions. (Such actions will also have the advantage of expediting the rulemaking process by preventing well-resourced contacts abuse these contacts as a means for delay.)

Step 4: Identify Mechanisms to Include Marginalized Communities, Including Storytelling

The fourth step in building a public engagement strategy blueprint is to identify mechanisms for ensuring that even stakeholders from structurally marginalized communities are able to participate in the notice-and-comment process as effectively as possible. As noted above, the notice-and-comment procedures often systematically exclude such individuals. While agencies cannot completely obviate this dynamic, they should still strive to sand off its worst effects – especially as these procedures are likely to remain part of the rulemaking process for the foreseeable future. Somewhat regrettably, the general consequence of these auxiliary mechanisms would be to get ordinary individuals to more effectively behave like sophisticated lobbyists instead of their true, authentic selves. This means providing various kinds of educational resources and specialized training to individuals so that their input can fit the “technocratic” mold, much as the Federal Energy Regulatory Commission’s (FERC) Office of Public Participation (OPP) undertakes now. It might also involve creating institutional mechanisms to serve as representatives or ombudsmen on behalf of unaffiliated individuals, though this would likely require significant additional resources and perhaps even legislative change to effectuate.

A more radical option would be to undertake institutional reforms that make notice-and-comment procedures more amenable to obtaining and utilizing non-technocratic forms of input, such as storytelling. This approach has the advantage of permitting individuals to share their more authentic expertise – including their situated knowledge and lived experiences – though such input may be of limited relevance at this later stage in the rulemaking process. The degree of institutional reforms required to fully realize this procedure – ranging from changes in agency hiring practices to modifications of administrative law doctrines to recognize these different kinds of “expertise” – makes it unlikely that this approach will bear fruit any time soon.

Step 5: A Plan for Public Engagement After Rulemaking

The fifth and final step in building a public engagement strategy blueprint is to create a plan for how the public might remain engaged after the rule is finalized – that is, to identify opportunities, if relevant and possible, for the public to participate in the rule’s implementation and ensure those are reflected in the rule’s final design. Examples of such engagement include the public’s role in monitoring compliance, measuring the rule’s impacts through citizen science activities, and holding regulated entities accountable for violations of the rule’s requirements through citizen suits when legally available. The final rule may also seek to explicitly incorporate opportunities for the public to participate in any future retrospective review actions for the rule, though Congress will need to ensure agencies receive sufficient budgetary resources to carry out such reviews. Similarly, many statutes authorize agencies to grant individual businesses different kinds of compliance relief, such as deadline extensions, variances, waivers, and exceptions. The final rule could provide the public with a meaningful role in considering and awarding these grants of relief.

As noted above, the rigor and detail of the blueprint should be roughly proportional to the rules’ economic and social consequences as well as to the level of controversy it is anticipated to engender. As with other aspects of implementing Public Participation Planning, accomplishing this proportionality goal in practice will improve with practical experience.

Resource constraints and political pressure for expeditious policy implementation are likely to provide strong incentives for agencies to fall short of the desirable level of rigor and detail. Consequently, countervailing incentive structures will be necessary to offset that tendency. Perhaps that could be accomplished through well designed judicial review standards, as noted below. Political leadership – including from the White House agency appointees – could also signal the importance of careful implementation of Public Participation Planning. For instance, this could be institutionalized through agency strategic planning exercises or encouraged as part of performance review and promotion decisions for career staff. Of course, Congress can do its part by fully funding agency implementation. And over time, as agencies advance along the learning curve for implementation, they will achieve increased efficiencies that will alleviate some of the incentives to do insufficiently rigorous Public Participation Planning.

Strategy Blueprint Implementation, Tracking, and Public Participation Plan Statements

As indicated above, each public engagement strategy blueprint that an agency develops should focus on creating meaningful participation opportunities for members of structurally marginalized communities early in the pre-proposal process, since that is when their input is likely to be of greatest relevance and utility for agency decision-makers. Rather than be a mere “check the box” exercise, the execution of these early participation mechanisms (informal hearings, focus groups, etc.) should have a discernible impact on the structure and substance of the proposal. Thus, as agencies turn to implementation of these mechanisms, they should carefully track whether and to what extent the public engagement strategy blueprint is accomplishing what they expected it would.

This, of course, is not to say that the agency should use these engagement activities to build evidence for decisions that were already made by other means – much as occurs with cost-benefit analysis now. Rather, it means that agencies should base their monitoring on other more objective benchmarks. One question agencies should ask is whether the quantity of participants matches the predicted expectations. (Again, agencies will likely struggle at first to make these kinds of predictions with much accuracy – there will be a learning curve. But, as noted above, a crucial ethic for Public Participation Planning is a commitment to learning by doing.) Similarly, agencies should find that the input they are receiving through these early engagement mechanisms are providing answers to the questions they need to answer to develop the proposal – whatever those answers happen to be. Another good indicator that the early engagement mechanisms are working well is that they are uncovering important “unknown unknowns” – things that the agency did not realize it did not know when it launched the rulemaking.

If, on the other hand, agencies are not finding that the early engagement mechanisms are working as expected – that they are not helping to build a reasonably complete record of public input on important policy-relevant questions undergirding the proposed rule – then they should make adjustments to the engagement strategy. This goal, of course, does not mean agencies should strive to accomplish something akin to comprehensive accounting for all relevant views from the impacted public. Instead, the goal should be to obtain a reasonably representative level of input from each of the major stakeholders included in the agency’s initial mapping exercise. What constitutes a reasonable level of input will necessarily be a subjective determination, and one that agencies will improve on as they learn through implementation of the Public Participation Planning scheme over time. In making this determination, though, agencies will want to be especially attentive to the concern that they have not adequately engaged members of stakeholder groups they have initially identified as being structurally marginalized or as facing particularly high barriers to participation. When in doubt, an agency may wish to attempt other forms of engagement for these groups. As in other forms of research, if the input they obtain sounds repetitive, that would indicate a good stopping point has been reached. 

Drawing on lessons learned from actual practice, agencies may want to consider employing different forms of affirmative outreach to targeted stakeholder groups, undertaking alternative engagement tactics, or finding other creative ways to minimize barriers that might be preventing effective engagement. For example, if an important stakeholder category is young families, then the agency may consider securing resources to provide childcare during in-person hearings. To be sure, agencies may encounter legal constraints that may prevent them from instituting strategies like this. One suspects that these constraints are not as significant as feared, however, and that agency counsel have been overly cautious in interpreting these constraints. Nevertheless, clarifying legal authority from Congress on these matters would be welcome.

As it carries out the specific components of its public engagement strategy blueprint, the agency should begin assembling a comprehensive Initial Public Participation Plan Statement, which documents its outreach and engagement activities, carefully summarizes the input that was received through each component, and briefly explains what impact, if any, that input had on the agency’s proposal. Consistent with the principles of transparency and communication noted above, it is particularly important that the agency use this document to identify instances when a stakeholders’ input did not influence a particular outcome and explain why that was the case.

Explaining the Democratic Basis for a Rule

The agency should include the completed Initial Public Participation Plan Statement in the rulemaking docket when the rule proposal is formally published so that it is available to the public when they are developing the comments. In this way, the Initial Public Participation Plan Statement will function similarly to an Initial Regulatory Impact Analysis (i.e., the initial cost-benefit analysis), only it explains the “democratic” basis for the rule instead of its “economic” basis. Ideally, as the Initial Public Participation Plan Statement becomes more institutionalized, it can even replace the Initial Regulatory Impact Analysis that agencies now perform as the most prominent supporting document for a proposal. This would conserve agency resources and symbolize that democracy has replaced technocracy as the key driver of regulatory decision-making.

After the proposal is published, agencies should likewise carefully monitor the implementation of any specific components from the public engagement strategy blueprint for supporting public participation while the public comment period is open. Again, they should strive to make appropriate adjustments whenever they discover that these mechanisms are not producing expected or helpful results. During this period, agencies should continue documenting their progress in implementing the public engagement strategy blueprint by updating Initial Public Participation Plan Statement.

In conjunction with releasing the final rule, agencies should then include in the rulemaking docket a Final Public Participation Plan Statement. (Again, this final statement would be democratic analog to the Final Regulatory Impact Analysis.) This document should describe the public engagement strategy blueprint that was originally created, any changes that were made during the rulemaking process, what input was received through the agencies’ engagement mechanisms, and what impact they had on the proposed and final rules, if any. Again, agencies should be forthright in identifying the input that did not impact the rule and briefly explaining why.  

Lastly, after the final rule has been published, agencies should dedicate resources and time to reflecting on lessons learned from the implementation of public engagement strategy blueprint. They should be prepared to incorporate these lessons into the design and implementation of future public engagement strategy blueprints. This will lead to implementation of Public Participation Planning that is more effective, less expensive, and quicker. In addition, agencies will also need to be prepared to track the implementation of any public participation mechanisms related to implementation incorporated into the final rule design. As noted above, these mechanisms might relate to compliance monitoring and enforcement, retrospective review, and grants of compliance relief.

Advantages of Public Participation Planning

Public Participation Planning stands in stark contrast to the largely one-sized-fits-all approach to public engagement – basic notice-and-comment procedures with occasional public hearings – that characterize the current rulemaking process. As noted above, essentially no deliberation goes into the creation of this engagement strategy – it is effectively reflexive – nor does it recognize, much less attempt to address, realistic concerns that important categories of stakeholders may not be accounted for in its strategy or that such incomplete input risks aggravating the very power disparities and social inequities that gave rise to the problem that the rule is meant to address in the first place.

In addition, successful implementation of Public Participation Planning will promote better regulatory democracy in the following ways. First, it will provide agencies with a mechanism for systematically identifying all the relevant stakeholders for a given policy, particularly members of communities who might otherwise be systematically excluded from such decision-making processes by structural or other barriers. Second, it will ensure that input is elicited from these stakeholders consistent with the sequential logic of the rulemaking process, providing agency decision-makers with the information they need when it is most useful.

Third, it will empower agencies to tailor their outreach and engagement strategies to the unique policymaking context implicated by the rule under development. Fourth, it will enable agencies to use public engagement to surface and account for any underlying power disparities that contribute to the policy problems a rule is meant to address, leading to more effective and durable policies. Fifth, it will highlight productive disagreement among stakeholders rather than engage in a quixotic pursuit of consensus – that is, it seeks to move regulatory democracy in a more agonistic direction. This is essential to recalibrate public engagement so that it is more attentive to power disparities and to avoid being a source of excessive delay in the policy development process.

How Other Federal Institutions Can Support the Successful Implementation of Public Participation Planning

The White House

With the advent of presidential administration under Reagan, the White House has played an increasingly active role in coordinating and steering the actions of the administrative state. The White House would thus be well-positioned to support the effective implementation of public participation planning. Indeed, as noted above, the Biden administration took some important initial steps on strengthening public participation in the rulemaking process as part of its broader Modernizing Regulatory Review initiative.

A logical place to start would be for staff at the White House Office of Management and Budget (OMB) to produce a comprehensive list of public outreach and engagement tactics for agencies to use to inform their own public engagement strategy blueprints. They could create this list by surveying the relevant academic literature, reviewing agencies’ past experiments with innovative approaches, and even looking at examples offered by peer democratic states abroad.

To support ongoing agency learning, OMB could also convene a standing working group composed of representatives from the public engagement offices at the various agencies. This working group could provide a forum in which these offices regularly share their best practices and lessons learned. Just as significantly, by signaling that public engagement is a priority of administration leadership, the working group would also by its mere presence help to reinforce a broader ethic and commitment to democratic inclusiveness across the administrative state.

Inviting OMB support in the implementation of Public Participation Planning is not without risk, given its historic role of interfering with and unduly politicizing the rulemaking process. It would certainly be preferable if Congress created a new standalone office outside of the White House that is explicitly charged with these tasks, as suggested below. But short of that, OMB is institutionally best positioned to play this role – provided that it does so in a strictly auxiliary fashion, leaving individual agencies the ultimate discretion on how to implement Public Participation Planning. In addition, carrying out such an auxiliary role would be a far better use of OMB’s resources than its current practice of superintending agency decisionmaking through the centralized regulatory review process.

The implementation of Public Participation Planning would also benefit greatly from having staff with different kinds of skillsets and life experiences. For instance, staff with backgrounds in social work or community organizing and specialized training in sociology might be particularly valuable. The White House Office of Personnel Management (OPM), the main human resources agency for the administrative state, could be instrumental in helping agencies to identify and hire such individuals. OPM could also help make necessary revisions to hiring standards and practices to make it easier and quicker to bring them on board.

Congress

Agencies have adequate legal authority to undertake Public Participation Planning. Still, Congress can ensure that even future administrations that might be hostile to the goals of regulatory democracy will implement this reform, even if reluctantly, by codifying this procedure into law through an amendment to the APA.

Similarly, implementation of Public Participation Planning likely would not require a significant commitment of agency resources – especially, if agencies are able to redirect resources to it from other rulemaking requirements, such as cost-benefit analysis or the myriad energy-related analyses that agencies must conduct pursuant to various executive orders. Ideally, Public Participation Planning will also reduce the incidence of legal challenges against final rules, which would promise to save on direct litigation costs. With these reduced litigation risks, agencies may also find that they are no longer compelled to “bulletproof” their rules through elaborate rulemaking records and gargantuan preambles to their final rules. This resulting streamlining effect of Public Participation Planning could also yield significant cost savings for agencies over the long run.

Nevertheless, Congress should still commit adequate appropriations for agencies to launch this reform, especially while they are still overcoming the incremental additional costs required to move through the early stages of the learning curve. With increased experience and specialization, agencies will likely be able to implement Public Participation Planning in an increasingly cost-effective manner.

Congress can take other steps to affirmatively support Public Participation Planning. For instance, they can authorize and fully fund a new institution that affirmatively supports public participation in the notice-and-comment process. The EXPERTS Act, a comprehensive progressive regulatory reform bill now pending in Congress, offers one potential model. Specifically, it would create something called the Office of the Public Advocate, which would be charged with this responsibility.

In addition, Congress can tap the Administrative Conference of the United States (ACUS) – which is effectively the federal government’s in-house “think tank” on administrative law – to study existing administrative law doctrines that might present a barrier to effective implementation of Public Participation Planning (to the extent that the doctrines arise from statutory, as opposed to constitutional, law). Such doctrines might include Vermont Yankee’s bar on judicially created administrative procedures (the codification of public participation planning, recommended above, would obviously address this), Loper Bright (which gives the judiciary, instead of agencies, the primary responsibility in interpreting agencies’ statutory authority), and the “logical outgrowth” test (which constrains how significantly a final rule’s substance can deviate from what’s contained in the proposal). ACUS could develop recommendations for how agencies and reviewing courts can avoid running afoul of these doctrines or propose legislative fixes for Congress to adopt.

Lastly, it goes without saying that Public Participation Planning would benefit immeasurably from having a functional Congress in place. According to the common conservative myth, an empowered Congress is necessary to restrain the administrative state. Just the opposite is true, however. By recommitting to doing the people’s business and passing public interest legislation again, Congress would provide agencies with fresh opportunities to put Public Participation Planning into action with up-to-date legal authority to tackle the new and emergent problems that pose a great threat of harm to structurally marginalized populations.

The Judiciary

The most obvious way that the judiciary could support the implementation of Public Participation Planning is by devising new judicial review doctrines that reward rulemakings with exceptional democratic pedigrees with enhanced levels of deference. This, of course, would require conservative judges to apply an even hand to all regulations challenged on judicial review before them. That means they would have to deploy enhanced deference consistently and in the service of promoting regulatory democracy, rather than wield it as a weapon to justify striking down rules they oppose on policy grounds. Under present circumstances, one might be forgiven for doubting this will take place. Yet, since we cannot avoid this institution either, we must still do the best we can with our politicized judiciary until such time as we are able to accomplish significant judicial reform – a topic beyond the scope of this paper.

Such enhanced deference might have a role to play in assessing the statutory authority for the agency’s rule, even under the new Loper Bright review framework. For instance, reviewing courts might modify the application of Skidmore to apply a special degree of “respect” for agency interpretations that rest on public input received during the rulemaking process.

More likely, though, the influential weight of public input would be greatest during the review of agency policy decisions under the arbitrary-and-capricious standard. In theory, courts already employ a “super deference” for agencies’ determinations based upon science and other forms of technocratic expertise, though courts rarely follow this approach in practice. Courts could easily create (and actually follow) an analogous super-deference doctrine for agency determinations based on “democratic expertise.” The inclusion of the Final Public Participation Plan Statements in the rulemaking record, as outlined above, would provide the essential informational foundation for the application of such a doctrine. In developing this doctrine, courts would have to account for applicable doctrinal constraints, including, most notably, Vermont Yankee.

Short of that, though, much of the analysis involved in assessing Final Public Participation Plan Statements would fit comfortably within the “hard look review” that courts already perform as part of the arbitrary-and-capricious standard of review. In other words, implementation of Public Participation Planning would not create any insurmountable barriers for courts conducting judicial review pursuant to the APA.

Courts have long recognized that the APA’s arbitrary-and-capricious judicial review standard implies a general duty for agencies to build a sufficiently complete rulemaking record to enable such review. Contained within this broader duty is a more specific responsibility to have procedures or mechanisms in place for ensuring that the information before the agency meets some minimal level of quality. While this responsibility might traditionally be thought of as applying to more technocratic inputs, there is no reason why it should apply equally to the unique on-the-ground expertise of individuals and community-based organizations. Similarly, this general duty also implies a more specific requirement that agencies ensure that the scope of information available to them be sufficiently broad to permit for evidence-based, reasoned decision-making required by arbitrary-and-capricious review. Again, this concern should apply equally to all forms of expertise, not just those regarded as technical or scientific in nature.

Importantly, this same judicial review standard would also guard against attempts by any president who is hostile to regulatory democracy to implement Public Participation Planning with insufficient rigor. Just as the Trump administration is now seeking to bypass the notice-and-comment process altogether, a future administration might reduce this process to a mere check-the-box exercise or conduct woefully inadequate outreach and consideration of input. The Final Public Participation Plan Statements would afford a reviewing court with a basis for applying the arbitrary-and-capricious standard to the agency’s public engagement efforts and, ultimately, to remand an agency rulemaking to correct this aspect of the record where any flaws or gaps are identified.

The notion of courts policing Public Participation Planning raises a separate concern that this aspect of arbitrary-and-capricious review could be abused by conservative activist judges who are opposed to climate policy or other aspects of the progressive policy agenda. The Supreme Court’s recent extreme application of the arbitrary-and-capricious standard in Ohio v. EPA confirms that this is not an idle concern. Still, it seems clear that activist judges will find plenty of opportunities for abusing arbitrary-and-capricious review even in the absence of Public Participation Planning. On balance, then, the benefits of this reform would still seem to outweigh these risks.

Public Participation Planning as Part of a Broader Agenda to Increase Administrative Effectiveness

The past year has seen the Abundance Liberal movement spark a robust debate within the broader liberal community over the appropriate role of legal procedure in our governing institutions. Under the circumstances, then, it may seem like an unusually inopportune time to champion something like Public Participation Planning – an essentially proceduralist reform. As explained below, though, this reform strives to take seriously Abundance’s critiques and is consciously predicated on the recognized imperative to strike an appropriate balance between, on the one hand, public engagement and, on the other, effective, responsive administrative action that delivers concrete results.

The Abundance Liberal movement, as best captured in the recent book by its most prominent advocates Ezra Klein and Derek Thompson, argues that the Left’s reflexive embrace of proceduralism and litigation is an antiquated relic from a bygone era and is already becoming a political liability. That is because many of the progressive movement’s policy priorities – from addressing the climate crisis to promoting affordable housing – requires quick policy implementation, a goal that is ultimately defeated by excessive proceduralism. Instead, the book argues, the Left should dispense with most procedures as a mechanism for legitimizing government action and instead let the popular results of those actions (e.g., affordable housing, cheap clean energy, etc.) serve that legitimizing function after the fact.

Significantly, Klein and Thompson’s book singles out public participation in the policymaking process as emblematic of the broader problem they are trying to solve. Indeed, their specific critiques of notice-and-comment procedures largely tracks with those that have motivated the proposal Public Participation Planning, as detailed above. In particular, they correctly identify these procedures as excluding structurally marginalized communities and reinforcing broader power disparities in our society.

Where the Public Participation Planning proposal departs from Abundance adherents such as Klein and Thompson is its core claim that the problem is not procedure per se, but power disparities. More specifically, it posits that the dysfunctional procedures that cause excessive and unnecessary delays in policy implementation are better understood as a symptom of the deeper problem of power disparities in our society. After all, even if we were to remove all existing procedural requirements – that is, to take Abundance to its logical extreme – it is by no means clear that we would see more expeditious policy implementation, particularly where those policies go against the preferences of entrenched elites. Such interests would simply find other, non-procedural mechanisms for blocking policies they opposed.

Given that we are unlikely to eliminate the structural sources of power disparities in our society any time soon, it is worth exploring more practicable near-term mechanisms for alleviating the worst consequences of those power disparities. What Abundance potentially misses with its black-and-white diagnosis of the procedure problem is that procedure actually holds a lot of promise for accomplishing this goal. After all, if procedures can aggravate power disparities, as Abundance Liberals would freely stipulate, then it also follows that well-designed procedures can do the opposite as well. Legal scholar Nicholas Bagley, who has provided part of the intellectual foundation for Abundance, highlighted this intrinsic feature of procedure when he wrote: “government action — whether it involves dispensing public benefits or regulating private conduct — allocates resources, risk, and power within the United States.”

To put Bagley’s point differently, procedure can never be neutral in its effects on underlying power dynamics; it will tend to cut in the favor of one set of stakeholders or another. Taking this reality seriously means that policymakers have a lot of tools at their disposal to shape and reshape those power dynamics in more productive ways through carefully designed procedures. More to the point, Abundance overlooks the tantalizing possibility that, by effectively redistributing power within the administrative state, well-designed procedures can actually expedite policy implementation – or at least add value, such as improving the quality of decision-making, without causing new or undue delay. This is precisely the project that Public Participation Planning sets out.

As described above, Public Participation Planning illustrates how procedures might be designed with the goal of affirmatively redistributing power from entrenched interests committed to maintaining a suboptimal, unjust status quo to members of structurally marginalized communities that are both underrepresented in our political processes and disproportionately burdened by the harms that arise from status quo economic, social, and political arrangements. Specifically, it seeks to carve out new spaces in the rulemaking process for bringing in the unique expertise of historically underrepresented populations at precisely the points in that process when their expertise is most germane. At the same time, it contemplates placing reasonable constraints on the participation opportunities available to entrenched powers such that their input is channeled to maximize its utility for agency decision-making. This would also have the additional benefit of preventing these interests from abusing their resource advantages to overwhelm agency decision-makers with extraneous information for the purpose of causing unnecessary delay.

Public Participation Planning’s commitment to transparency and ongoing communication with stakeholders plays an important contributing role in this power shifting dynamic. For structurally marginalized stakeholders, it will be essential for them to know concretely how their input is materially shaping the policy and factual determinations that undergird agency decision-makers. Otherwise, it will be entirely rational for members of these communities to assume that their participation is little more than a check-the-box exercise, rather than a genuine effort at promoting regulatory democracy. Understandably, members of such communities will still harbor some degree of skepticism even despite agencies’ good faith commitment to transparency and communication. Trust will take time to build, but it can be built. Somewhat counterintuitively, one way that agencies can do this is by always honestly explaining to these stakeholders when their input did not substantively influence a particular decision – that is, by delivering the bad news as well as the good.

Equally as important, Public Participation Planning demonstrates how these kinds of investments in well-designed procedures can actually pay off in terms of more expeditious policy implementation. In other words, it helps to refute the commonly held belief – one clearly embraced by the Abundance Liberal movement – that public engagement and expeditious policy action are fundamentally at odds. Instead, these tradeoffs can effectively be mitigated when such public engagement procedures are designed to correct power disparities that are implicated by a given rulemaking.

The key to accomplishing this seeming procedural alchemy is by addressing the primary driver of rulemaking delay: litigation over final rules. (To be sure, Public Participation Planning would also endorse Abundance’s more general call to clear out unnecessary procedural requirements that have accreted over the years, such as cost-benefit analysis, the Regulatory Flexibility Act, and the Unfunded Mandates Reform Act, to name a few. Doing so would be entirely consistent with its analytical framework. These procedures tend to aggravate power disparities – often by design – and thus contribute to delays in the rulemaking process.) Litigation is time-consuming in its own right, often taking several years to reach a definitive conclusion. During this time, agencies are increasingly subject to court orders barring them from implementing the rule’s provisions.

In addition, as noted above, the near certainty of legal challenges creates strong incentives for agencies to “bulletproof” their rules to reduce the chances they will be struck down on judicial review. While some degree of deliberative and evidence-based rigor underlying rules is desirable, of course, the perverse result of this incentive structure is that agencies go far beyond what the law reasonably requires for substantiating rules, an increasingly resource-intensive undertaking that significantly delays the completion of new actions.

As noted above, many of Public Participation Planning’s distinguishing features are designed to reduce the incidence of litigation. Particularly significant in this regard is its emphasis on early engagement. Not only does engagement provide agencies with better and more timely input; it also has the additional benefit of promoting greater buy-in from stakeholders, which in turn defuses litigation risk down the road. In other words, frontloading public engagement seems to shorten the length of the rulemaking process even if agencies are technically conducting a greater number of procedural steps overall.

Several empirical studies of the implementation of the National Environmental Policy Act’s (NEPA) analytical requirements appear to confirm this effect, finding that NEPA processes that involve early public engagement are statistically shorter than those that do not. Reduced litigation and, by extension, the reduced incentives for bulletproofing NEPA analyses seem to explain this discrepancy. (Not incidentally, extensive NEPA-related delays are also the subject of extensive criticism by the Abundance movement) It is reasonable to expect that this dynamic would translate to the functionally similar rulemaking context as well.

Also important, Public Participation Planning seeks to institutionalize a more agonistic orientation into the regulatory process. As explained above, agonism seeks to avoid the pursuit of near-universal consensus over policy outcomes, which is typically impossible to achieve in practice anyway, and instead create conditions for productive disagreement. Similar to early engagement, one of the desired effects of administrative agonism is to reduce litigation risk and the perverse effects such risks create. Instead, final regulations would be treated as more contingent and subject to realistic mechanisms for ongoing revision and refinement or to various forms of implementation flexibility. In this way, agonism enabled by Public Participation Planning would attempt to lower the stakes on final rules, such that stakeholder focus could be gradually shifted from post-finalization litigation to implementation where it can be put to more productive use.

To be sure, achieving the full agonistic potential of Public Participation Planning would require other legislative changes. For instance, Congress could amend agencies’ authorizing statutes to give them greater authority to deploy back-end implementation adjustments and flexibilities, such as waivers, exemptions, and compliance extension deadlines (all subject to vigorous public participation mechanisms, as noted above). For agencies that already enjoy these kinds of authorities, implementing this general approach could serve as a valuable proof-of-concept demonstration that could help catalyze this legislative action in the near future.

Another option would be for Congress to incorporate more rigorous schedules for reviewing and updating regulations into their statutory design, such as those that exist for appliance energy efficiency standards. To ensure that these reviews are carried out expeditiously, Congress could also experiment with different kinds of “hammer provisions” that would kick in automatically – setting default regulations or standards, for instance – if an agency is unable to work with relevant stakeholders to adopt the update according to the statutory schedule. Ultimately, the goal of these reforms would be to rebuild a rulemaking process in which stakeholder contestation is increasingly shifted to the implementation phase, where dynamism and flexibility can be permitted to flourish.

Even better, the judiciary could further reinforce this litigation-dampening effect of Public Participation Planning by adopting a strong deference doctrine based upon a rule’s democratic pedigree, as noted above. Such doctrines have the potential to substantially alter the calculus for stakeholders who are contemplating a challenge against the rule. If a rule’s legal and policy bases are strongly supported by public input such that it is likely to earn some measure of enhanced judicial deference, stakeholders may refrain from undertaking the expense of bringing a legal challenge, given the reduced likelihood that the challenge would succeed.

Even with all this careful attention to the design and implementation of Public Participation Planning, ongoing vigilance from policymakers will still be required to ensure that its performance delivers on its promises of better-informed decision-making and more expeditious policymaking. Regrettably, while effective use of this tool can help to alleviate the consequences of power disparities, those underlying power disparities will still remain in place, absent other more radical power interventions. The practical upshot is that over time entrenched interests may learn to “capture” parts of the Public Participation Planning program and deploy them to advance their narrow policy preferences at the expense of the broader public. (Both the APA notice-and-comment process and NEPA’s analytical requirements appear to illustrate this general dynamic.) This is why Public Participation Planning demands that agencies continually reevaluate and update their public engagement and outreach actions. Ideally, though, the general Public Participation Planning framework will remain resistant to such capture risks, even if more specific tactics and strategies for instituting that framework do not.

Conclusion

An effective response to the climate crisis faces numerous obstacles. One of these is a regulatory system that inadvertently reinforces underlying power disparities that help to maintain status quo conditions on how we obtain and use energy. A better approach to the practice of regulatory democracy – one that takes seriously and affirmatively addresses power disparities – will be essential for overcoming this obstacle.

This paper proposes a comprehensive reform to how agencies engage the public during the rulemaking process called Public Participation Planning. The distinguishing feature of this reform program is that it would require agencies to develop tailored public engagement strategy blueprints for each of their planned rulemakings. The purpose of these blueprints is to enable agencies to draw on a variety of engagement tactics that are calculated to build a reasonably comprehensive record of the stakeholders’ views on the rule. Importantly, the blueprint would also enable agencies to determine when best to engage different stakeholders throughout the various stages of the rulemaking process – a concept known as sequential participation. This reform would also require agencies to assemble Initial and Final Public Participation Planning Statements, which document the implementation of the blueprints and the ultimate impact that the resulting public input had on the substance of the rule. These Statements would be made part of the rulemaking record where they could be considered by judges, if necessary, during judicial review of the rule.

Public Participation Planning offers two major advantages. First, and most directly, by improving the quality of public input, it will lead to better decision-making, and thus better policy outcomes. Second, its implementation is likely to expedite rulemakings in many instances. Public Participation Planning would help to accomplish this outcome by using procedures to alleviate power disparities among relevant stakeholders. Properly understood, such power disparities appear to be the root cause of delayed rulemakings in the past. Taking these two advantages together, Public Participation Planning would offer a crucial piece in the larger puzzle of addressing the climate crisis effectively and with the urgency needed to avoid its worst consequences.

Buzzwords like ‘Abundance’ and ‘Affordability’ are out. Learning policy lessons from the global community is in.

Something is wrong with American policymaking. There are obvious issues: hyperpolarization, deep public distrust of government, and outdated institutions make it difficult to implement durable laws. Pundits and think tanks try to overcome those issues by developing new framings, like ‘Abundance’ and ‘affordability’, that too often lack specific policy ideas and instead put style before substance. 

Rather than get caught up in the buzzword flavor of the month, the policymaking ecosystem should study what’s actually working. Many other countries have figured out how to develop cohesive policy agendas that deliver on their promises and build trust with constituents, resulting in improved outcomes in education, healthcare, housing, transportation, and energy—things that America still struggles with. 

We can learn valuable lessons from those governments about how to build more durable, more responsive, and more effective policy. The models discussed below offer a starting point; examples of how prioritizing implementation, outcomes-first design, and long-term and inclusive planning can result in better governance—across countries with very different political systems.

What’s not working? 

The policy tools we currently have at our disposal are not working. Faced with a dysfunctional Congress, policymakers rarely pass new laws and instead stretch old ones to fit purposes they weren’t designed for. When well-designed policies are passed, agencies often lack the workforce, funding, and organizational infrastructure to actually implement those ideas. This failure to deliver further hurts an already declining level of public trust in institutions, but it also means that Americans lose out on basic needs. Homeownership feels unobtainable for growing portions of the country. An outdated grid and rising energy prices strain communities (while an ongoing war in Iran worsens those issues and further drains federal funding). Oversized, high-emissions cars create health and safety hazards while accessing healthcare to treat those hazards can bankrupt a family.

The federal policy ecosystem’s responses have been underwhelming, despite the urgency. Consistent policy confusion, poor organization, and hyperpolarization—exacerbated by the Trump administration’s destruction of agency infrastructure and workforce—all contribute to the struggle for durable and meaningful change. The ecosystem lacks a unifying policy objective that can act as a foundation for policymakers, a set of guiding strategic principles to return to when designing and implementing policy. 

Instead, those in the Beltway look for new ways to package broad solutions. Movements like “Abundance,” or slogans like “affordability” and “dominance” might be catchy, easily marketable, and play to a big audience (or the right political network) but they lack technical substance and specificity. Abundance has been applied to everything from large-scale clean energy supply to more effective prisons, and we still don’t have a roadmap for how to actually achieve energy affordability. Even “social justice” and “diversity, equity, and inclusion,” concepts which have real academic foundations and a deep history of implementation in a range of socioeconomic fora, were co-opted after the murder of George Floyd in 2020 and applied to a whole universe of policies that didn’t always reflect the original goals of the movements and in turn undermined the actual meaning of those words. 

That approach might work to win elections, bump up polling numbers, or increase influence in the policy world, but it doesn’t actually get tangible results. Ultimately, Americans care less about Abundance than they do about outcomes: affordable houses; sustainable wages; reliable energy; quality education and childcare. So how do we get policymaking apparati to focus on deciding on the present before the wrapping paper?

How do we get it right?

To start, we can look to the rest of the world. Other governments have been successfully putting substance ahead of style—and delivering on their promises—for decades. America’s insular attitude towards domestic policymaking is supported by a culture of American exceptionalism and a view of ourselves as the ideal democratic state (although we invented some of those metrics).

That view is both incomplete and inaccurate, leaving out imperialistic tendencies, hundreds of years of oppressive policies, and the bargaining strength of being the world’s sole superpower. America is outpaced on a number of critical fronts by other countries. Building rail infrastructure costs 50% more and takes longer in the U.S. than in Europe or Canada. Americans pay more per person on healthcare than other developed countries despite faring worse on certain outcomes, including higher maternal mortality rates and lower life expectancy. Poverty rates are some of the highest among OECD countries, with more workers earning “low pay” than any other OECD country. 

That view is also limiting. It encourages policymakers to continue the ‘style over substance’ feedback loop, investing in ideas that are culturally aligned with that perspective instead of in new, ambitious ones. Those new and ambitious policy ideas don’t have to be novel – they could come from places that are succeeding where we’re falling behind. 

Many other countries have figured out how to put substance first. The examples below start with a more internally cohesive theory of domestic policy or central guiding principles, like strong government capacity, outcome-focused policy design, and an emphasis on social wellbeing, and build the messaging platform later. They focus on reflecting the actual wants and needs of constituents rather than projecting how they think the public feels about government.

Nordic countries

Several Nordic countries, including Sweden, Finland, and Norway, illustrate one model: a welfare state with social democratic tendencies, robust social safety nets, and high levels of trust and public investment in social goods. These countries start with basic principles—that government should provide a reasonable standard of living for all citizens—and the policy substance follows from there. 

Their systems of governance are built on a tripartite policymaking structure that allows for meaningful, long-term engagement between government, industry, and labor. America might not have the infrastructure (or the desire) to implement a tripartite system, but it points to deeper values that underscore their policymaking. The Nordic model values public participation—not just on one-off projects, but throughout the process. It’s not direct democracy, but co-creation by bodies that represent the organized interests of major economic players. Public participation that’s meaningful, consistent, and long-term creates buy-in from those interests and durable policy. It’s also something that the United States consistently grapples with. 

Nordic governance also supports policy design that’s targeted at specific outcomes, but integrates considerations from multiple sectors. Sweden has spent decades investing in clean energy technologies and deploying clean electricity—but has also implemented cross-cutting policies that target other areas of the transition. Several are aimed at reducing energy poverty, including subsidies, energy-inclusive rent, builder incentives, and efficiency standards. These policies are outcome-based, but are coordinated across multiple ministries rather than being siloed within one. The result is an “energy” policy that supports a clean transition but cuts across social services, labor, housing, and energy. The United States has tried this approach before with bills like the Inflation Reduction Act, but issues with implementation and government capacity limited the success of the bill. 

Another example is Finland’s ‘housing first’ initiative. It’s firmly rooted in a tangible outcome—securing housing for everyone, shored up with social service support and community integration. It’s been hugely successful, reducing long-term homelessness by 68% since 2008. Finland’s program is deeply integrated across federal, state, and local governments and civil society organizations, providing proof of concept for community navigator mechanisms that allow community expertise to steer federal dollars.

These policies deliver on their promises: housing, energy access, poverty reduction. Combining public participation with real delivery supports a continuous positive feedback loop of high trust, which creates an easy argument for more investment in the government that implements these policies. That’s necessary, because the reason this model delivers so well is that it relies on a public sector that’s well-funded by high tax rates and redistributive economic policies (which in turn are backed up by the economic powers of the tripartite system). Americans may balk at high taxes, but that’s partially because they don’t see the impact in their daily lives. They don’t trust the government to do the right thing with their money. Breaking into that low-trust cycle is difficult, but we have to start somewhere. 

China and Singapore

Singapore and China showcase another model. Although lacking in political freedoms and public participation, both countries offer examples of how to build transportation, energy, and housing infrastructure fast and well. At the core of this building is an emphasis on governance and implementation, long-term planning, and public investment in human capital. 

Singapore is consistently held up as an example of good governance in both policy design and implementation. It’s fully integrated scenario-planning and foresight tools into its policymaking processes, allowing government to be more proactive in tackling barriers and achieving desired outcomes. This type of long-term planning is only possible with detailed policy agendas and sustained commitment to outcomes. It also requires investment in and retention of a talented civil service, which additionally supports cross-government functionality, program longevity and durability, and smooth implementation of policy. 

The state’s successful delivery on social outcomes like education (students comfortably outperform the OECD average), healthcare (high life expectancy and low maternal mortality at lower-than-average prices) and economic development (doubling GDP per person over the last 20 years) helps reinforce trust in the ruling party, further strengthening its ability to continue to have outsized agency in policymaking. Some of these elements are harder to implement in the United States, given the inherent instability of changing administrations, but it underscores the need for agreed-upon foundational principles regardless of who’s in power. 

China employs similar strategies. Both China and Singapore have well-developed industrial policies – something the U.S. has lacked for several decades. China has spent years intentionally subsidizing specific industries, like transportation, clean energy, and technology, with comprehensive public spending strategies and long but detailed implementation timelines. It invested in both human and physical infrastructure, now boasting the largest industrial workforce in the world who are trained to continuously innovate. These investments have paid off: China leads the world in solar panel and electric vehicle manufacturing, has rapidly expanded its transportation networks, and has built so much housing that it helped contribute to a real estate crisis. This targeted, long-term engineering of economic development in both countries underscores the power of policy durability, strong governance, and administrative discipline in public sector delivery.

Similar to the Nordic model, Chinese and Singaporean success with delivering on outcomes is the result of high levels of trust. But their models also work because those governments enjoy a high level of agency that only exists because of the lack of liberal democracy. But the underlying principle—that government needs some amount of empowerment to make decisions—is not incompatible with U.S. aspirations. Many of the ‘lessons learned’ reports on the successes and failures of the Bipartisan Infrastructure Law and the Inflation Reduction Act lament slow decision-making that was drawn out by consensus-based processes and multiple layers of overlapping approvals across agencies. Adopting principles of agency and empowered decision-making could speed up countless government processes, improving delivery. 

None of these models is perfect. Rapid industrialization in China has led to massive pollution issues and Singapore struggles with an over-reliance on foreign labor and income inequality. Both countries have serious democratic and human rights challenges. In Sweden and Norway, consistent problems with anti-migrant sentiment sow discord and threaten policy successes. Americans should be looking beyond the surface of these policies. We don’t need to copy the designs verbatim, but rather figure out what principles we want to borrow form the foundation of our own policy agenda. 

What those principles should be is an open question, but not an impossible one. Americans value social goods, and they trust their government when they see the impact of their investments, but they also want choice. How do we identify those principles, translate them into real policy designs, and then implement them sustainably? How do we scale up existing trust and rebuild trust that’s broken? How can we create an administrative state that actually delivers on its promises to constituents?

 Building a more positive policy vision

There’s no silver bullet, making the revolving door of movements like Abundance even more frustrating. Those wrappings without substance, promising catch-all solutions, take up oxygen that could be better spent taking a step back, trying to figure out what kind of country we want to live in, and learning from those who are making it happen. 

The good news is that there is quite a bit of agreement among the public when it comes to that vision. Like many other communities around the world, we want our lives to be better. We want safe and healthy communities, a stable financial system, freedom of choice, and systems that deliver on the promises they make. Other countries have succeeded in achieving some of those outcomes. It’s worth looking around to see what we could learn.

CELS Playbook: Clean Electricity for Local and State Governments

State and Local Actions to Make Government Work for People, Reduce Utility Bills, and Deploy Clean Energy

Elected leaders across the country are staring down interlocking crises. Families and businesses are struggling to pay skyrocketing utility bills. Large new demands are straining the grid and overtaking the buildout of new power plants. And the public’s faith in government has hit new lows. We need a new playbook to solve these problems and make the government responsive to peoples’ needs. 

What’s going wrong?

Utility bills are rising rapidly for households and businesses due to an administrative state ill-equipped to protect customers from costs and risks. The cost of power supply is increasing due to growing demand, long timelines to build new cheap clean energy, and volatile natural gas prices. Utilities are spending more money on the transmission and distribution grid for both maintenance and recovery from wildfires and other disasters. Today’s regulatory construct allows utilities to drive spending decisions and pass on all these costs to customers, and regulators are under-resourced and unwilling to find alternative solutions. 

Meanwhile, we are not building clean energy nor upgrading the grid fast enough to meet demand growth and address climate change. And this problem will get worse as power-hungry data centers connect to the grid and electrification of buildings, vehicles, and factories adds additional electricity demand.

The old climate policy playbook is not equipped for this moment. While it has driven significant deployment of low-cost clean energy, it was not designed to address non-financial obstacles to building projects and upgrading the grid nor to fully mobilize the suite of finance tools needed for the energy transition, nor to demonstrate that the government can make peoples’ lives better, now and long term.

Where do we go from here? 

Policymakers and advocates need an expanded playbook. One that addresses the full set of barriers impeding financing and construction of clean energy and grid modernization projects. One that targets the root causes of high energy costs. One that reworks the administrative state to make government work for the people. 

FAS, with the help of partner organizations spanning ideology and function, launched the Center for Regulatory to Ingenuity to build a vision for a government that is agile and responsive and delivers affordable energy, abundant housing, and safe transportation for all Americans. 

As part of this work, we have developed an updated set of policies and actions for state and local leaders to meet this moment. We started by identifying the barriers to deployment and the flaws in the old playbook, published in our report Barriers to Building. Now we are developing the “plays” in a new playbook—tangible actions that state and local leaders can take now to make near-term progress and pilot new solutions. These plays will live on this landing page, which we will continue to update with additional actions.

This playbook is not a laundry list of policies but rather a cohesive strategy to achieve two goals: (1) deploy the clean energy and grid upgrades necessary to make energy affordable and combat climate change and (2) create governments that tangibly improve peoples’ lives.1

Contents (click to jump to a section)

Main Character Energy: Make Regulators Main Characters in Planning and Ratemaking

Utilities and their regulators are responsible for major decisions about what infrastructure we build and how much people pay for energy. Utilities—which can be owned by investors, the public (e.g., municipal utilities), or members (i.e., electric cooperatives)—conduct detailed analysis and provide proposals on planning and ratemaking to their regulators. The set of solutions below focuses on investor-owned utilities, who are incentivized to prioritize projects that maximize the returns for their shareholders. As a result, they underutilize solutions that could save customers money but do not earn companies a profit, like rooftop solar or technology-or maintenance-based upgrades to existing transmission lines.

In a well-functioning system, regulators—whether Public Utility Commissions (PUCs) or locally elected officials—would rigorously interrogate utility analyses and direct the utilities to shape or revise their proposals to maximize benefits to the public at lowest public cost. This lens is needed to ensure that utilities are spending money wisely in the public interest and prevent unnecessary bill increases from overspending on the wrong solutions. Active regulators are also needed to incorporate long-term considerations in planning and ensure consideration of strategies that provide long-term benefits. However, regulators are often not well-equipped or politically willing to conduct detailed analysis and push back on utility proposals. Other intervenors, like consumer advocates and environmental organizations, are outspent by the utilities, who can recover the costs of their analysis and interventions through customer bills in most states.

The result is a reactive, short-term-focused administrative state that leaves the public frustrated. Regular people are frustrated with skyrocketing bills, clean energy companies are frustrated with slow processes and broken incentives, and both are frustrated with the government’s ability to solve big problems. The administrative state itself—the officials and staff who make up regulatory body and state and local governments—are also frustrated with their perpetually reactive role and with limited say in outcomes.

We should not accept the status-quo regulatory process as a given. As representatives of the public, regulators should have both the ability and motivation to actively drive toward an abundance of cheap clean energy, affordable bills, and a modernized reliable grid. Achieving this vision requires the right personnel, clear direction and support from governors, and adequate analytical capacity.

Solutions

I. Direct Regulators to Use All Tools to Lower Energy Bills and Deploy Clean Energy (Governors and Legislatures)

When regulators take a backseat and let utilities drive, they narrow the toolkit of resources that can help meet demand and as a result leave savings on the table. Regulators with a mandate to prioritize affordability and clean energy buildout can reduce bills by both better scrutinizing utility plans and taking a more active role in enabling clean energy deployment. This includes finding creative tools to get more out of the grid through distributed energy resources, alternative transmission technologies, and flexible sources of demand like electric vehicle charging and factories with electric appliances. 

Pathways to implementation
Governors

Governors can direct PUCs to audit utility investments to find opportunities for savings, re-evaluate utility business models and incentive structures, consider distributed energy resources and alternative transmission technologies in planning, and consider climate impacts in planning and ratemaking decisions.

Legislatures

Legislatures can set statutory requirements for PUCs to consider these opportunities and expand their mandates to include clean energy goals and highest net benefit criteria. 

Legislators can require PUCs to find savings across the gas and electric systems, including by using beneficial electrification to reduce costs. 

Examples
Maine

In 2021, the Maine legislature directed the PUC to consider emissions reduction targets and equity impacts in regulatory decisions.

Oregon

Oregon Governor Brown directed its PUC to integrate the state’s climate pollution reduction goals and promote equity by prioritizing vulnerable populations and affected communities.

New Jersey

New Jersey Governor Sherrill directed the PUC to review utility business models and assess whether they are aligned with cost reductions for customers.

Minnesota

In 2024, Minnesota S.F.4942 mandated that the PUC establish standards for sharing utility costs for system upgrades, ensuring fair cost-sharing and advancing state renewable and carbonfree energy goals along with provisions for energy conservation programs for low-income households.

II. Even the Playing Field by Providing More Resources to the PUC and Consumer Intervenors and Increasing Data Transparency (Governors, Legislatures, and PUCs)

Electricity rates are determined by proceedings called rate cases, in which utilities submit proposals and justifications to regulators, other intervenors (such as consumer advocates, environmental organizations, and state and local elected officials) submit testimony, and the regulators hold hearings and make a decision. Most rate cases end in settlement agreements between the utilities and other intervenors, facilitated by the PUC. Utilities drive this process—they file initial proposals and have more information about their system than other participants. Well-resourced PUCs and public interest intervenors are important to interrogate utility proposals and ensure that settlement agreements are a good deal for regular people. 

In order to take on more responsibility in grid planning and utility oversight, PUCs need additional staff and analytical capacity. For example, a legislative commission in Texas found that the PUC needs more staff and resources to independently analyze utility sector data and provide sufficient oversight to ensure reliability. Funding for staff and analysis has a great return on investment—state leaders can save customers money and get better outcomes for a relatively small price. 

Moreover, consumer advocate intervenors are typically underfunded compared to utilities and so cannot compete with utility proposals. This disparity in funding places consumer advocates in a position of exclusively reacting to utility requests, rather than having the bandwidth to interrogate existing system inequities or to develop potential innovative solutions to address ratepayer needs. Utilities also determine the pacing of their rate case applications, which can put consumer advocates even more on their heels. For example, in a 2019 rate case in Colorado, Xcel Energy brought 21 witnesses, while only a few consumer advocate intervenors testified. 

Utilities in most states can recover the full costs of analysis and intervention legal fees from customers, giving the utilities significant resources to drive the process. States can prohibit this practice, directly reducing bills for customers and reducing utility influence over the process. 

In addition to resources for PUCs and intervenors, data transparency can help even the playing field. Utility data are often difficult to access, embedded in filings that often run thousands of pages, and not standardized. This lack of data transparency makes it difficult for PUCs and consumer advocates to track utility spending and effectively intervene in rate cases. 

Pathways to Implementation
Legislatures

Legislatures can provide additional funding for PUCs to hire additional staff and conduct independent analysis.

Legislatures and PUCs can prohibit utilities from recovering the costs of political activities from customers and limit the amount of legal fees that are recoverable from customers.

Legislatures can establish mechanisms to ensure that low‑income, consumer, and environmental justice advocates can participate meaningfully in PUC proceedings. Several U.S. states have implemented intervenor compensation programs or similar initiatives that reimburse reasonable costs for nonprofit organizations and community groups engaged in utility regulatory processes.

Public Utility Commissions

PUCs can charge utilities to fund independent analysis of utility proposals on behalf of customers.

PUCs can assess their processes with an eye toward reducing participation barriers for non-traditional docket participants, such as groups representing low-income or environmental justice communities.

PUCs can standardize reporting on utility costs and increase data transparency both during and in between rate cases.

Governors

Governors can direct agencies to conduct analysis to inform PUC proceedings and hire technical talent to engage with the PUC. Legislators can authorize and fund state agencies to conduct independent, proactive analysis to inform PUC proceedings, with opportunities for public input on the analysis.

Examples
California

California passed AB 1167 in 2025 that put an end to the use of ratepayer funds for political lobbying and strengthening enforcement against investor-owned utilities (IOUs) that illegally use ratepayer funds.

Colorado

A 2023 Colorado law prohibited utilities from charging customers for lobbying expenses, political spending, trade association dues, and other similar activities.

Illinois

In Illinois, a 2021 law expanded the Consumer Intervenor Compensation Fund to compensate consumer interest intervenors in planning and rate cases.

Oregon

The Oregon PUC provides both Intervenor Funding and a dedicated Justice Funding program, supporting groups representing environmental justice communities and low‑income customers, with clearly defined funding caps for eligible participants.

Improve State Government Responsiveness to Clean Energy Projects

To build a clean energy project, developers must navigate a complex mix of state environmental permits, local and/or state siting approvals, and utility and grid operator interconnection processes. While federal permitting reform receives the most attention, most clean energy projects do not require federal approval and often get stuck due to state processes and local restrictions. For example, 73 percent of wind and solar projects that faced opposition in the 2010s were contested only at the state and local level, not federally. 

In many places, these federal, state and local processes are not working for anybody—the clean energy developers who seek to build projects, the local communities in need of jobs and economic development, and the families and businesses struggling with rising utility bills. 

What is going wrong? State agencies are often stretched thin, and outdated processes make it difficult to respond quickly to new projects. Most states lack a single designated authority at the state level who can oversee and enforce timelines. Permitting approvals often involve regional offices who take different approaches, increasing complexity and uncertainty for developers applying for permits. Inconsistent decision timelines increase risk for projects, raising costs. 

In most states, local governments have control over siting, and each municipality has different processes and requirements, adding complexity for developers. Most states also lack a state authority that can ensure local governments do not unreasonably block or delay projects.  About 20 percent of U.S. counties now have formal restrictions on clean energy projects. 

State and local leaders can play a critical role in addressing these challenges. Governors can target agency capacity where it is most needed and legislatures can complement these efforts by funding permitting offices, creating statutory timelines to standardize reviews, and giving them enough decision-making power to actually meet those deadlines. State governments can leverage their capacity to evaluate costs, risks, and benefits—across timescales and geographies—of projects to inform decisions. Local governments can similarly improve and standardize their processes and support state implementation. 

This brief focuses on a subset of solutions that help states be more responsive to clean energy projects. These solutions expand and improve government capacity to build clean power faster, lower utility bills, and demonstrate that the government can be an active and effective partner in solving problems. 

Solutions

I. Increase Permitting Certainty and Consistency (Governors and Legislatures)

Uncertainty and inconsistency in permitting processes increases costs and delays projects. Timelines to hear back from an agency might vary considerably from one project to another, which adds uncertainty to project timelines. Some review processes are run by regional offices which may take different approaches to project evaluation (e.g., using different assumptions for modeling the impact of a project) and mitigation requirements. As a result, the same developer might go through a bespoke process for two very similar projects in different parts of the same state. 

In addition, the scopes and goals of state environmental laws are often outdated. For example, environmental review often does not consider system-wide effects or second-order emissions impacts. As a result, environmental review often gets stuck on project-by-project analysis and lacks an overarching vision for the system. 

States can address these issues minimal to no cost and without sacrificing the quality of environmental review by increasing certainty and consistency of permitting processes, centralizing capacity to run processes across agencies, and adjusting the goals and scope of environmental statute to include system-wide impacts and overarching climate goals. 

Pathways to Implementation
Governors

Governors can issue clear guidance and standard operating procedures for analysis of impacts for different clean energy project types required under different laws (e.g., state clean water or environmental review statutes) and set timelines that agencies must follow for review and decisions. 

Governors can set clear permitting goals for agencies and empower the “machinery” expertise (e.g., staff engineers, lawyers, environmental specialists, etc.) to meet those goals. Governors can also develop programs to upskill existing staff to expand the technical capacity needed for permitting operations.

Governors can issue guidance on mitigation requirements that projects can take to shorten review.

Legislatures

Legislatures can also set statutory decision timelines and limitations on what impacts are considered to further increase certainty for projects. In some cases, legislatures may need to provide agencies with the authority and resources required to standardize mitigation requirements and speed up timelines.

Legislatures can re-align the goals and requirements of permitting statutes and environmental review to prioritize system-wide goals.

Legislatures and governors can exempt certain clean energy projects from state environmental permitting or create simplified permitting pathways for such projects.

Legislatures can mandate and support adoption of instant digital permitting for distributed energy resources located at homes and businesses, drastically reducing the cost to install rooftop solar and energy storage.

Governors and legislatures

Governors and legislatures can consolidate agency authorities, reducing the number of process steps for developers and conflicts between agencies.

Examples
Pennsylvania

In Pennsylvania, solar developers must obtain a stormwater permit from the Department of Environmental Protection (DEP), a process that involves working with regional conservation districts on stormwater analysis and agreement on mitigation requirements. Developers have struggled with inconsistent approaches among conservation districts on modeling assumptions and mitigation requirements. In December 2025, DEP issued updated its Solar Panel Farms Frequently Asked Questions to clarify key analytical inputs for solar developers and will increase consistency in conservation district approaches.

New York

The New York State Legislature passed the Accelerated Renewable Energy Growth and Community Benefit Act, mandating specific timelines for permit reviews, consolidating authority across agencies, and providing funding to support dedicated staff. This statutory framework has significantly reduced approval times for large-scale renewable projects.

Pennsylvania

Pennsylvania Governor Shapiro also directed state agencies to evaluate the timelines for each permitting process and set a specified maximum timeline for eligible projects by which applications will be processed.

 

New Jersey, Texas, and Florida

In 2025, state legislatures in New Jersey, Texas, and Florida passed laws requiring local governments to adopt instant digital permitting processes for distributed resources.

Arizona

Arizona House Bill 2003 allows utilities to replace conductors or structures on an existing transmission line without needing to apply for a Certificate of Environmental Compatibility (CEC) as long the line has a valid CEC (or has been grandfathered in) and all original conditions continue to be met.

 

Minnesota

In Minnesota, HF 4700 consolidated certain permitting responsibilities into a single law and shortened the timeline for state regulators to review and permit clean energy projects.

Texas

Texas passed SB 20 in 2005, establishing Competitive Renewable Energy Zones that smooth the process of developing and integrating renewable energy projects into the grid. This program has helped bring more than 18 GW of wind capacity online.

II. Increase Siting Certainty and Consistency (Governors, Legislatures, Local Leaders)

In most states, local governments handle siting of clean energy projects. Municipalities and counties within the same state may take wildly different approaches to siting, including different fee structures, setback requirements, public input requirements, approval processes and timelines, etc. This variability makes it harder to build clean energy projects without added benefit to communities. State leaders can improve certainty and consistency without sacrificing project quality or local benefits. 

Pathways to Implementation
Legislatures

Legislatures can standardize processes across local governments, including by setting standard timelines for decisions, prohibiting excessive restrictions on clean energy projects and grid upgrades, and limiting the reasons for which a project can be denied approval.

Legislatures can move siting authority to the state level for large projects or projects that meet certain criteria (e.g., projects that create good jobs and economic benefits).

State lawmakers can create a streamlined, one-stop permitting process for distributed energy resources. This process would consolidate building, zoning, and environmental approvals. Such a framework reduces delays, lowers costs, and provides developers and homeowners with greater certainty.

Governors

Governors can develop model siting ordinances and encourage or incentivize local governments to adopt them. 

Local leaders

Local governments can voluntarily work together to align processes.

Examples
Colorado

Colorado developed a clean electricity code repository that included principles for smart local code design for clean electricity deployment.

Michigan

Michigan HB 5120 financially incentivizes local governments to avoid overly restrictive ordinances and creates a state-led pathway for projects to by-pass overly restrictive local ordinances.

Arizona

Arizona House Bill 2019 standardized timelines for municipalities to make permit decisions and took steps to ensure municipalities are responsive, including requirements on providing contact information and communicating with permit applicants. 

 

Oregon

A bill introduced in the Oregon legislature would exempt clean energy projects eligible for soon-to-expire federal tax credits from the state’s onerous state siting process.

Hawaii

Hawaii’s proposed SB588 creates a self-certification and standardized permitting system for behind-the-meter solar and storage projects.

Illinois

Illinois HB 4412 set statewide renewable energy project siting standards that takes supremacy over unduly restrictive local decisions.

Indiana

Indiana’s SB 411 set voluntary siting standards for wind and solar power projects. If communities meet those standards, they’re pre-cleared for project development.

New Mexico

New Mexico’s Renewable Energy Transmission Authority established an MOU with the Federal Permitting Improvement Steering Council to improve coordination and receive assistance on eligible permitting projects.  

III. Create Dynamic Agencies that Can Respond to Project Needs (Governors and Legislatures)

States should build dynamic, flexible agencies that are responsive to evolving barriers to clean energy deployment. Government responsiveness is often thwarted by limited or outdated information, poor information sharing across agencies, and lack of centralized decision-making. Governors and state agency leads often do not know which specific processes are causing delays or uncertainty for projects. Where agencies have that information, it is often not shared among agencies or with the governor’s office without intervention. Agencies often do not have the mandate or the capacity to track and share this information. 

A mandate and resources to collect detailed information on project barriers, and to share that information across agencies, allows states to be more responsive to clean energy industry needs. Using this information, states can ensure that limited agency capacity is targeted where it can have the greatest impact and helps agencies anticipate, rather than react to, common obstacles.

Pathways to Implementation
Governors

Governors can identify the specific government processes and other barriers that are holding up projects and increasing uncertainty through direct engagement with developers and formal processes like Requests for Informations. Governors can survey developers for specific information on the failure points in the process of getting projects built, across permitting, siting, interconnection, etc. Governors can then address the critical bottlenecks by adjusting the processes that are outdated or not serving the public or shifting capacity where processes must be maintained but are moving too slowly.

Governors can build centralized processes—for example by designating a senior official as state-wide lead for permitting coordination—that can quickly respond to bottlenecks and share information across agencies. Governors and legislatures can designate a single agency as the lead on permitting, siting, and project assistance and provide that agency with the authority to make decisions. For these steps to work, governors must provide the lead official or agency with the adequate decision-making authority and capacity to run the process.

Legislators

Legislators can provide the resources for the above-referenced information collection and the authority for centralized permitting processes.

Examples
Colorado

The Colorado Energy Office and Department of Natural Resources conducted an extensive survey of developers, local governments, community organizations, and other stakeholders to detail clean energy siting and permitting issues and develop a plan to address them.

Multi-state

Following passage of HR 1 in Congress, which rapidly phased out tax incentives for certain renewable energy technologies, Governors’ offices in states like North Carolina and Pennsylvania organized inter-agency dialogue with private sector stakeholders to identify and accelerate projects that could form cost-saving federal incentives before they expire.

California

The California Energy Commission runs a consolidated permitting process that centralizes staff capacity to manage permitting, with specified review timelines for clean energy projects that meet certain job quality and community benefits criteria.

Washington

Washington House Bill 1216 authorized the Department of Ecology to run a consolidated permitting process to collect all relevant information from developers and coordinate across agencies to speed up review. That bill also created an interagency Clean Energy Siting Council to improve how projects are sited in the state.

New York

In New York, Governor Kathy Hochul directed state agencies to accelerate renewable project approvals by reviewing and reforming agency processes to reduce backlogs and coordinate efforts across departments, from environmental review to project eligibility screening, focusing agency attention on projects ready to leverage expiring federal tax incentives.

IV. Speed Up Interconnection Timelines (Governors, Legislatures, and Public Utility Commissions)

Long timelines for approvals to connect to the grid and to complete necessary transmission upgrades are one of the largest drivers of project cancellations and delays. States have little control over the interconnection process for projects connecting to the bulk transmission system, which is regulated by the Federal Energy Regulatory Commission. However, states can help projects use surplus interconnection processes, which enable faster approval for projects that are using excess interconnection capacity at existing generators. States also have control over the interconnection process to connect smaller projects to the distribution grid, which is run by utilities and regulated by the PUC. 

Pathways to implementation
Governors

Governors can direct state energy offices proactively identify and map surplus interconnection capacity and use state procurement authority, expedited permitting processes, and incentives to encourage clean energy development at those sites. This analysis should also include sites that may have excess interconnection capacity because projects (generators or new large load sources) fell through or shut down after triggering grid upgrades

Governors and Public Utility Commissions

Legislatures can require PUCs and utilities to consider using sites with underutilized transmission (e.g. sites of peaking gas-fired power plants that operate very infrequently) for clean energy development.

Governors and PUCs can identify zones where load is likely to increase (e.g., due to data center deployment, electrification of ports, and heavy-duty freight trucking) and fast-track distributed interconnection for projects in those areas.

Public Utility Commissions

PUCs can require that utilities develop rapid procurements for clean energy resources at sites with surplus interconnection.

Examples
California

In California, AB 1408 would have required state agencies, the state grid operator, and utilities to incorporate surplus interconnection capacity into long-term planning, but it was vetoed by Governor Newsom.

Virginia

Virginia HB 1065, introduced in the 2026 legislative session, would task the State Corporation Commission with conducting a study of available surplus interconnection potential, and requires the state’s largest utility to procure new capacity via surplus interconnection.

Indiana

In Indiana, HB 240, proposed in 2026, would require utilities in their integrated resources plan to analyze how much extra interconnection capacity they have and how they can use that existing capacity to bring more generation resources online. And, it would require such analysis to be done before permitting new power plants.

V. Provide Additional Funding for Siting and Permitting (Governors and Legislatures) 

Clean energy permitting delays often stem from understaffed or under-resourced agencies struggling with outdated processes and technology. Legislatures can address this by increasing dedicated funding for permitting offices, enabling agencies to hire technical staff, invest in modern permitting platforms, and reduce backlogs. Allocating funding for targeted reforms can substantially shorten approval timelines. Potential examples of such include digital permit tracking systems, programmatic environmental reviews for common project types, and training specialized clean energy reviewers. States can start by digitizing permitting processes and making it easier for projects to submit the required information. States can then collect information from developers on the processes that are causing the most difficulty and provide targeted staffing and resources to address these bottlenecks.

Pathways to Implementation
Governors

Governors and legislatures can digitalize state permitting processes to improve transparency and interagency workflow management.

Governors and legislatures

Governors and legislatures can institute state-level digital permitting platforms.

Governors and legislatures can create shared staff resources to hire the high-demand technical expertise necessary for permitting and enable those experts to move quickly between agencies in response to need.

State agencies and legislatures can initiate programmatic environmental reviews for clean energy projects subject to state environmental review laws.

Examples
Virginia

Virginia’s Permitting Enhancement and Evaluation Platform (PEEP), now expanded as the Virginia Permit Transparency (VPT) system, was enacted by executive order. The VPT provides a public dashboard to track permits through state processes and workflow management tools for agency staff.

Washington

The Washington State Legislature created the Clean Energy Siting and Permitting (CESP) Grants Program, providing roughly $4.85 million to local governments, tribes, and state agencies to hire staff and modernize permitting workflows for solar, wind, and storage projects. By funding technical staff and process improvements, the legislature helped agencies reduce backlogs and provide more predictable permitting timelines for developers.

Washington

In 2025, Washington’s Department of Ecology, under direction from the legislature, completed programmatic environmental reviews for clean energy projects to speed permitting application and review of onshore wind, solar, and hydrogen projects in the state.

Arizona

In Arizona, digitization of several environmental permitting processes helped reduce decision timeframes by 91 percent.

Build Administrative Capacity to Plan for an Affordable & Reliable Grid

Today, the U.S. bulk transmission system faces significant constraints that limit where new clean energy projects can be built and threaten overall grid reliability. Many regions with abundant clean energy resources simply do not have enough high-voltage transmission capacity to deliver that power to population centers. As a result, developers are increasingly unable to move generation projects forward even when siting, permitting, financing, and interconnection queue positions are in place. Without new transmission capacity, interconnection backlogs grow, power costs increase, and states are forced to rely on older fossil resources simply because they are already in place.

Transmission buildout is thwarted by barriers such as long planning timelines of 7 to 15 years, route identification, environmental review, litigation, supply chain constraints, and fragmented and inadequate planning processes. 

While the permitting reforms described elsewhere in the playbook would help, we won’t build the transmission system that we need without improved planning. Building transmission lines requires utilities, developers, customers, and grid operators to work together to determine where a transmission line is needed and appropriately allocate costs across different stakeholders. Without a strong administrative state that can facilitate the process and collect and share all the required information (such as congestion on current lines, hotspots of demand growth, areas with high potential for cheap clean energy, etc.), this process often fails and very rarely results in optimal expansion of the transmission system. Today, states and grid operators lack administrative capacity to conduct this planning process, which is hamstringing our ability to expand the grid. 

States can build the capacity to improve planning in order to spur development of transmission lines with the greatest benefit for the public.

Solutions

I. Include Advanced Transmission Technologies in Planning (Legislatures, Governors, and Public Utility Commissions)

Advanced Transmission Technologies (ATTs) can be used to increase grid capacity on current rights-of-way, alleviating congestion and allowing for more efficient energy transfer without building new infrastructure. Utilities being able to increase efficiency and cost effectiveness of their infrastructure is especially important as load growth continues to increase across the country and raise retail electricity bills. For example, installing high-performance conductors increases the amount of electricity that can be transferred over an existing transmission line. By one estimate, reconductoring with these technologies could double transmission capacity on the current grid. Dynamic line ratings allow lines to carry more electricity when weather conditions are good, rather than defaulting to conservative limits on line capacity. Each type of ATT has its own advantages and benefits.

Pathways to Implementation
Public Utility Commissions

PUCs can dictate standards, enforce rules, conduct studies, and establish new policies that require and incentivize utilities to evaluate and deploy ATTs.

Legislatures

Legislatures can require utilities to include evaluation of ATTs in planning processes, conduct studies on ATT potential and deployment opportunities, and analyze ATTs as potential enhancements to new transmission infrastructure.

Governors

Governors can petition ATT rulemakings to the PUC via an executive order, can integrate ATTs into funding criteria for grid or resilience projects and direct economic development agencies to study the economic impacts of ATTs, and convene ATT task forces to set direction and collaborate with educational institutions to develop workforce training programs focused on ATTs installation, operation, and maintenance.

Examples
Utah

Utah’s SB 191 requires utilities to conduct an alternatives analysis for ATTs in IRPs and also provides language that the Commission can approve cost-recovery for ATTs if it is determined the deployment is cost-effective.

Ohio

Ohio’s HB 15 requires that utilities summarize ATT evaluation in power siting board certificates and furnish annual 5-year reports on ATT deployment opportunities, including congestion mitigation studies and that the PUC evaluate the potential of ATT deployment including consultation from stakeholders via two public workshops.

Maryland

Governor Wes Moore’s December 2025 Executive Order Building an Affordable and Reliable Energy Future creates a Transmission Modernization Working Group that makes ATT policy recommendations to the Maryland Energy Administration, which in turn makes formal petitions to the PUC.

Montana

Montana House Bill 729, adopted in 2023, enables the state PUC to set cost-effectiveness criteria to allow utilities to deploy advanced transmission conductor technologies and recoup the cost via their ratepayers, similar to investments in new energy generation.

II. Create a New Transmission Planning Authority (Governors and Legislatures)

Lack of coordination between transmission and generation planning creates inefficiencies and prevents smart clean energy development. In deregulated markets—and in some vertically integrated states—transmission and generation planning processes occur largely in isolation without systematic processes to align long-term clean energy expansion with major grid upgrades. While the federal government has authority to set the rules for planning regional and interregional transmission lines, state leaders have tools at their disposal to expand transmission buildout and improve planning.

Pathways to Implementation
Legislatures

Legislatures can create transmission planning authorities explicitly authorized to identify transmission corridors that can expand low-cost clean energy generation, lead on the permitting and siting of transmission lines, secure project finance, negotiate and collaborate with other states on interstate transmission plans, provide advice on transmission priorities and planning needs for the state, and enter into public or private partnerships to help with project development. These authorities must be empowered and resourced to collect all the necessary information (e.g., congestion on the existing system, load forecasts, sites of cheap clean energy, etc.) and to attract top talent with expertise in utility planning, project development, and financing.

Governors

Governors can create a transmission advisory or coordinating committee and reorganize state agencies, boards, and commissions to serve the purpose of a transmission authority or to create one.

Examples
New Mexico

New Mexico passed the Renewable Energy Transmission Authority (RETA) Act in 2007, creating RETA and authorizing it to “plan, license, finance, develop and acquire high-voltage transmission lines and storage projects to help diversify New Mexico’s economy through the development of renewable energy resources.”

Colorado

In Colorado, SB21-072 created the Colorado Electric Transmission Authority (CETA) to plan and develop transmission lines to increase reliability and deploy more clean energy. CETA has very similar powers to New Mexico’s authority.

III. Require Integrated Transmission and Generation Planning (Governors, Legislatures, and Public Utility Commissions)

Coordinated planning is essential to ensure that transmission is expanded in the right places and that new clean energy investments can flow to areas with sufficient transmission capacity. Around 35 states require their utilities to develop Integrated Resource Plans (IRPs), which act as a roadmap for how the utility will meet future forecasted electricity demand over a specific time period. Although transmission and generation are key inputs for energy supply, they are usually not included in these plans. The result is piecemeal grid planning, as transmission providers and developers focus on smaller lines which meet near-term needs and are profitable within their own footprint.This shortcoming is a product of both process—regulators and state agencies have not been mandated to link transmission and generation planning—and capacity, where the administrative state lacks the right staff and resources to conduct integrated planning.

Integrating these processes can ensure better coordination between load and generator interconnection, a more holistic understanding and roadmap of current and future grid reliability and supply chain needs, help avoid duplicative investments and ensure costs for upgrades remain reasonable, and can lower the likelihood of stranded or undersized assets. This integrated planning is especially important in places with projected load growth, whether from data center buildout or electrification of buildings, heavy-duty transportation, or factories. 

Pathways to Implementation
Governors

Governors can direct relevant agencies to work with grid operators, PUCs, and utilities to encourage integrated planning.

Legislatures

Legislatures in vertically integrated states can require utilities to conduct IRPs where they don’t already do so and further require generation and transmission planning to be integrated.

Public Utility Commissions

PUCs can require utilities to link transmission and generation planning.

Examples
Nevada

Enacted in 2021, Nevada S.B.448 requires an electric utility to amend its most recently filed resource plan to include a plan for certain high-voltage transmission infrastructure construction projects that will be placed into service before 2029.

California

In 2022, a Memorandum of Understanding (MOU) between the California Independent System Operator (California ISO), the California Public Utilities Commission (CPUC), and the California Energy Commission (CEC) ensured that the planning and implementation of new transmission and other resources were linked, synchronized, and transparent.

IV. Ensure Effective Implementation of FERC Order 1920 (Governors, Legislators, and Public Utility Commissions)

Recent federal actions, such as FERC Order 1920, have the potential to be a useful tool for states if implemented correctly and efficiently. FERC Order 1920 requires long-term, forward-looking, multi-value regional planning. It was designed to improve transparency in local transmission planning, including by conducting local stakeholder meetings. Under this filing, transmission providers must produce long-term, at least 20-year, regional transmission plans at least every five years, which must utilize seven specific categories of forward looking factors, select projects based on different economic and reliability benefits, and consider the use of grid-enhancing technologies.

Pathways to Implementation
Governors

Governors can take a more active role with PUCs to guide their involvement in regional transmission planning processes established under FERC Order No. 1920.

Legislatures

State legislators can hold hearings with PUCs on how utilities, regional transmission planners, and state officials plan to participate and support regional planning and put the order into action.

Example
Mid-Atlantic

In the mid-Atlantic, 69 legislators from 10 states called on PJM to implement FERC Order 1920 without delay due to the benefits of reliable, affordable and clean electricity it will bring to their constituents. 

Fix Broken Incentives to Expand Distributed Energy Resources

Misaligned incentives for utilities have limited the types of technologies and solutions in play to meet demand growth and maintain reliability. 

Distributed energy and grid flexibility solutions—such as rooftop solar, flexible demand, smart charging for electric vehicles, and distributed storage, as well as alternative transmission technologies—can help meet demand growth faster and cheaper than solely relying on large power plants and bulk transmission upgrades. Distributed energy resources are particularly useful in an era when interconnection delays and economic pressures on rate payers have slowed down efforts to build large-scale transmission projects and generation facilities.

Investor-owned utilities make a profit based on a fixed rate of return on certain expenditures. Utilities typically do not earn a return on distributed energy resources and grid flexibility programs so many utilities have underinvested in these solutions and underutilized them for grid planning.

Largely because of these broken incentives, there’s a lack of capacity to value, procure, and orchestrate these distributed resources, thus limiting their ability to scale as a utility resource. In most states, utilities and regulators do not consider distributed resources in planning processes. Where distributed resources are considered, it is often only through voluntary offerings and limited pilot programs. 

Leveraging distributed resource solutions requires state leaders to fix broken incentives and build new government capacity tools to facilitate uptake and utilization of these technologies.

Solutions

I. Incentivize adoption and use of distributed energy resources (Legislatures and Public Utility Commissions)

States can correct misaligned incentives by creating mechanisms to value the benefits of distributed energy resources and incentivize optimal utilization of distributed resources to reduce spending on new generation and grid upgrades.

Pathways to Implementation
Legislatures

Legislatures can establish Virtual Power Plant programs—run by utilities, public developers, or partnerships between public developers and utilities—to aggregate distributed energy resources to best serve the grid and compensate these resources accordingly.

Legislatures can incentivize adoption of appliances and customer energy systems, like smart chargers and thermostats, capable of supporting the electricity grid.

Legislatures and Public Utility Commissions

Legislatures and PUCs can require utilities to create mechanisms to value the benefits of distributed resources and adjust profit motives through performance-based ratemaking to align utility incentives with expanding distributed resources.

Examples
Colorado

In Colorado, SB24-218 required Xcel Energy to create a new mechanism to compensate customers for distributed energy resources that can benefit the grid.

New Jersey

In New Jersey, Governor Sherill issued an Executive Order directing the PUC to establish a Virtual Power Plant program to aggregate distributed energy resources and use them to benefit the grid.

II. Require procurement of distributed resources (Governors, Legislatures, and Public Utility Commissions)

Utilities generally do not procure distributed resources, focusing instead on procurement and buildout of large-scale generation. Formal procurement of distributed resources can maximize use of the existing grid and get new generation onto the grid fast, which can avoid spending on the distribution grid and save customers money. 

Pathways to Implementation
Legislatures

Legislatures can set statutory requirements for minimum procurement amounts.

Public Utility Commissions

PUCs can require utilities to conduct procurement of distributed clean energy.

Governors

Governors can direct PUCs to initiate solicitations for distributed clean energy and set timeframes and minimum procurement amounts that PUCs and utilities must meet.

Example
Minnesota

In Minnesota, Xcel Energy has proposed a Distributed Capacity Procurement of 50-200 MW of distributed energy storage. Under the procurement, the utility would contract with a developer to build small-scale batteries and pay households, businesses, and non-profit organizations to host them.

Illinois

In Illinois, the Clean and Reliable Grid Affordability Act required the procurement of 3 GW of storage and created a mechanism to compensate households and businesses for customer-owned storage. The state has a government agency—the Illinois Power Agency—that develops procurement plans and runs competitive procurement processes.

Maine

In Maine, the PUC issued a Request for Proposals for solar projects on PFAS-contaminated farm land.

New Jersey

In New Jersey, Governor Sherill directed the PUC to procure an additional 3,000 MW of community solar through the NJ Community Solar Energy Program.

III. Improve interconnection processes for distributed resources (Governors and Public Utility Commissions)

The interconnection process is a major hurdle for new clean energy projects. Utilities run the process to connect projects to the distribution grid, and PUCs regulate this process. Because utilities typically do not profit from distributed generation, they have generally deprioritized improvements to the interconnection process for distributed generation. PUCs have not had the mandate to push utilities on improving the interconnection process for distributed resources, which means capacity has not been channeled toward this goal. State leaders can force utilities to speed up the interconnection queue to get more clean energy on the grid.

Pathways to Implementation
Governors

Governors can direct PUCs to improve the interconnection process with specific goals (e.g., reduce the application approval time by a specified amount) and penalties for non-compliance.

Public Utility Commissions

PUCs can work with utilities to make improvements to the interconnection process to shorten timelines and provide more certainty to developers. PUCs can dedicate staff resources to this issue to ensure rapid improvements to the process.

Examples
Colorado

Colorado Governor Polis in an August 2025 directive tasked state agencies to pursue flexible interconnection and voluntary curtailment for distributed energy and community solar projects; work to facilitate the pre-purchase of project equipment and/or affiliated electric transmission and distribution infrastructure; and to pursue updates to interconnection standards for customer-sited projects, including the use of meter collar adapters and other measures to minimize the cost and time. The Colorado PUC is now working to allow projects to use flexible interconnection agreements—alowing projects to connect to the grid in constrained places if they agree to use technologies that can operate flexibly and avoid straining the grid—which can speed up timelines and reduce interconnection costs.

New Jersey

In New Jersey, Governor Sherrill directed the PUC to take several steps to standardize and speed up interconnection of clean energy projects to the distribution grid.

IV. Improve data and analysis and increase transparency to optimize deployment (Governors, Legislatures, and Public Utility Commissions)

Expanding distributed energy resources in the right places is key to maximizing benefits to the grid and reducing costs for customers. States can help inform strategic adoption through data collection and analysis on the optimal places to deploy customer-owned resources and increase transparency of those data for the public. 

Policymakers can analyze opportunities that will make the most impact through avoided costs of updating the grid or building bulk generation. Distributed energy projects are most useful when they minimize constraints on the distribution system and reduce peak demand. Information sharing can be facilitated through either Integration Capacity Analysis or regular Integrated Distribution Planning.
State leaders can also identify potential projects to provide tailored support by engaging developers and site hosts directly through Requests for Information. States can then use this information to direct support to projects. For example, data collection can enable aggregation and standardization of information about siting readiness, interconnection considerations, terms and conditions, and resilience needs which can then be converted into a pre-qualified inventory for procurement or financing.

Pathways to Implementation
Governors

Governors can direct agencies to engage with developers and other stakeholders to identify barriers to getting distributed projects built and identify solutions to support projects (e.g., connecting host sites with developers and financiers).

Governors and Public Utility Commissions

Governors and PUCs can improve distribution system planning to better anticipate infrastructure needs and ensure that distribution system planning is synced with grid operator interconnection processes and transmission planning.

Public Utility Commissions

PUCs can require utilities to conduct and publish analysis on hosting capacity and locational value of distributed clean energy resources and establish a market for distributed energy resources.

Examples
Massachusetts

In Massachusetts in 2024, the PUC directed utilities to incorporate “non-wires alternatives”, including distributed energy resources, into system planning. Now, one of the state’s largest utilities has launched an innovative mechanism to quickly procure distributed energy resources that provide the greatest costs reductions and grid benefits.

New York

The New York Build‑Ready program identifies potential host sites and shifts early development duties (i.e., negotiate the initial lease and start the interconnection process) from private developers to the state, which accelerates the move of renewable energy projects from the idea stage to construction.

New Jersey

In New Jersey, Governor Sherill directed the PUC to work with the utility to improve hosting capacity maps for distributed energy resources.

V. Create a Municipality or Sustainable Energy Utility in lieu of an Investor Owned Utility (Legislatures and Local Leaders)

Creating a municipal utility or sustainable energy utility (SEUs) can address bypass misaligned incentives and focus on the technologies and strategies that most benefit the public. These entities differ from traditional investor owned utilities because they are not-for-profit, owned by the communities they serve, and are run by local government. Benefits of this utility model include securing more affordable electric rates for consumers, achieving renewable and clean energy goals more quickly, increasing local control and governance over energy decisions and infrastructure, and contributing to local economic development. 

Pathways to Implementation
Legislators and Local Leaders

Legislators and local leaders can spearhead the effort of municipalizing by developing a concept and authorizing or establishing a municipal utility. State and local leaders can explore different options, including developing a supplemental utility that procures generation but still uses the private utility’s poles and wires or fully acquiring the private utility and creating a public entity to run the full system.

Examples
Michigan

In 2024, residents of Ann Arbor, Michigan voted to authorize Proposal A: Creation of a Sustainable Energy Utility. The Sustainable Energy Utility (SEU) will be an opt-in, supplemental, community-owned energy utility that provides 100% renewable energy from local solar and battery storage systems.

Florida

In 2005, residents of Winter Park, Florida voted to authorize the city’s use of bonds to buy the local distribution facilities from the incumbent utility.

Nebraska

The state of Nebraska receives all of its electricity from publicly owned sources.

Wield Creative Finance Tools to Drive Investment and Reduce Capital Costs

Rollbacks of federal financial support have threatened the viability of many clean energy projects. State and local leaders can help keep projects alive and build new ones with creative financing tools. In some cases, this means taking a more active role in coordinating across public and private sector actors, while in others that means building entirely new administrative capacities to perform more ambitious financial transactions or act as a public developer. 

In addition, the grid is facing new challenges that require massive investments. For example, recovery from and preparation for wildfires is inflating energy bills in the west. Gulf states are facing similar costs from hurricanes. States need creative finance tools to ensure that these costs do not continue to raise bills for regular people and small businesses. 

Beyond merely acting as a source of capital, governments of every shape and size actively participate at every stage in the project development and planning lifecycle to bring down the total cost of projects. These include lowering financing costs, securing stable or catalytic financing, and providing an avenue to complement other functions the state is undertaking. Local governments can engage in public development functions, including through creative finance tools and engagement with community choice aggregators, rural electric cooperatives, and energy service companies.

Solutions

I. Empower development entities with the legal authority and staffing to pursue high priority projects (Governors, Legislatures, Local Leaders)

State leaders can help ensure that infrastructure authorities, city and county development corporations, or energy departments of a given jurisdiction have the relevant borrowing authority, ownership and operation powers, and partnerships capabilities to support project development.

To be successful, state financing entities or public developers need clarity and certainty on how projects they support can participate in electricity market operations, including whether projects can participate in utility procurement processes or interact with grid operator interconnection processes. State financing also must be coordinated with other grid planning processes. 

Given the overlapping interests state and local economic development agencies may hold, this process will demand adequate staffing resources and may require significant stakeholder engagement with private sector actors, government officials, and others.

Pathways to Implementation
Legislators

Legislators can write or amend enabling authorities to explicitly provide state and local entities with the financing, bonding, ownership, and partnership authorities necessary to support, finance, own, and/or operate projects. These authorities should include co-financing and co-development options to blend public and private support. Legislators can also make sure that these authorities are flexible and broad so that state development can be competitive with private developers.

Legislators can allow use of public financing tools to support certain projects. In particular, legislators can expand the bonding authority available to state agencies for use on clean energy projects.

Legislators can establish state and/or utility procurement targets for clean energy, storage, and grid projects and provide direction and clarity for state financing entities to service these procurements.

Governors

Governors can use their authority over appointments and interagency coordination to align disparate entities around specific tangible objectives.

Governors can draw on recent public private partnerships in the offshore wind industry to structure offtake, procurement, and other commercial activities with utilities and developers across a range of clean energy projects. State entities can seed virtual power plants, solar, wind, energy storage and other clean power projects that mutually derisk projects for both public and private developers alike.

Governors and legislators

Governors and legislators can provide expedited permitting and siting processes for publicly sponsored projects.

Local leaders

City and county officials can form project-specific entities or special purpose authorities to make projects financeable.

Examples
New Mexico

In New Mexico, the Renewable Energy Transmission Authority (RETA) was established in 2007 and was granted statutory power to exercise eminent domain to acquire property or rights of way for eligible renewable energy projects. This authority has been critical in overcoming fragmented land acquisition barriers.

Connecticut

The Connecticut Green Bank’s Solar Marketplace Assistance Program (Solar MAP) serves as a public developer to finance and build solar projects for K-12 schools, allowing the state to own the assets and sell power back to districts at a discount. While the Green Bank has acted as a public public developer in some form since 2014, projects from Solar MAP are projected to deliver tens of millions of dollars in savings all without incurring any upfront costs for districts.

Colorado

In Colorado, SB 21-072 in 2021 created the Colorado Electric Transmission Authority as a special-purpose development authority granted power to issue bonds and corridor acquisition tools.

II. Use pooled loan funds like state bond banks to lower borrowing costs and build project pipelines (Governors, Legislatures, and Local Leaders)

Pooled borrowing authorities offer transaction efficiency and credit strength for cities, counties or small utilities paying the fixed costs of a standalone bond issuance by aggregating relatively modest projects into standardized pools. This reduces the issuance and underwriting costs, and can often enhance credit resulting in lower borrowing costs. 

Bond banks are valuable in practice because they are a repeatable financing infrastructure that can be improved and expanded over time. Governors offices, county executives, and mayors can direct agencies to build a steady pipeline of eligible projects (using Requests for Information or direct engagement) and then work with relevant financing authorities to standardize project intake, selection, and reporting and make the whole process more repeatable.

Once local governments experience lower borrowing costs and faster execution through a standardized conduit, the model becomes politically sticky and easier to scale, especially when paired with complementary tools like revolving funds or credit enhancement that can serve smaller borrowers and accelerate project turnover.

Pathways to Implementation
Legislators

Legislators in states that lack a bond bank can establish one capable of pooling local loans, issuing bonds, and relending the proceeds. They can further work to standardize project solicitation, underwriting, and closing cycles to ensure the institution creates a regular cadence.

Legislators in states that have a bond bank can expand eligible project types (to include clean energy projects and resilience priorities like building retrofits, microgrids, etc.) and create standard project templates.

Governors

Governors can work with state agencies to centralize the origination of bonds for a public developer in their state’s bond bank or otherwise help public developers and other financing agencies exercise their bonding authority.

Governors can make regular use of bond banking authority a priority by directing agencies to run a standing intake process, and appoint or empower relevant state personnel to highlight pooled lending as an innovative solution.

Local Leaders

City and county officials can create a rolling inventory of eligible projects, bundle them into multi-jurisdiction project aggregators and engage with existing bond banks on technical assistance for project scoping and diligence.

Examples
Vermont

Vermont’s Bond Bank issues bonds backed by repayments of its loans to individual municipalities, school districts, etc. and maintains a dedicated Municipal Climate Recovery Fund. The bank has the ability to backstop non-payment by municipal or county entities that fail to pay based on state funds allocated to municipal or district borrowers in what is known as an “intercept mechanism.”

Virginia

Virginia Resource Authority’s Resilient Virginia Revolving Fund was established in 2022. Jointly administered with the state’s Department of Conservation and Recreation, the pooled borrowing platform provides financial assistance for flood-mitigation projects across the state.

III. Require energy utilities to supplement portions of their debt or equity with public bonds (Governors, Legislatures, and Local Leaders)

A unique characteristic of public development is that strategic capital deployment has the potential to derisk private investment. Mandating that utilities replace a portion of their high-cost equity with state backed public debt or revenue bonds optimizes the project’s capital stack, thereby reducing the average cost of capital and reducing the total financing costs for capital-intensive grid infrastructure. Investor-owned utilities typically finance large infrastructure projects through a mix of debt and equity with regulators guaranteeing a return on equity (ROE) to attract private investors. Because this ROE is significantly higher than the interest rates on public debt, requiring public bonds to supplement the capital stack can dramatically reduce the long-term costs that are ultimately passed on to ratepayers.

This mechanism leverages the state’s superior credit rating and tax-exempt status to fund the most expensive portions of development while leaving the utility to focus on its core competencies of construction and grid operation. Establishing a public financing facility in this way allows the public sector to act as a sponsor investor for projects of high public interest, such as interregional transmission lines. By providing lower cost debt, states can ensure that critical energy targets are met without placing an undue financial burden on households. This approach creates a more stable investment environment and allocates risks more effectively across public and private stakeholders.

Pathways to Implementation
Legislators

Legislators can mandate investor-owned utilities make use of state-backed revenue bonds or other forms of public debt to finance high-priority capital investments such as grid resilience or interregional transmission.

Legislators can authorize state infrastructure banks or other financing authorities to act as sponsor investors and displace high cost equity of a project’s capital.

Governors

Governors can establish dedicated clean energy project finance working groups to examine the full scope of infrastructure financing tools needed to derisk capital investment in transmission, generation, distribution and other electricity assets.

Public Utility Commissions

Regulators and state energy offices can lower the costs passed along to ratepayers by integrating public financing facilities directly into RFP processes, allowing bidders to access lower-cost capital.

Local Leaders

City and county officials can pass local resolutions advocating for a specific local utility project to be financed via public bond rather than traditional utility equity to ensure the lowest possible rate impact for their residents. A similar strategy can be pursued via written submission or intervention within PUC docket proceedings.

City and county officials can collaborate with state energy offices to identify projects that are ideal candidates for public debt supplements.

Examples
California

California’s 2025 law SB 254 establishes a state public financing facility (the Transmission Infrastructure Accelerator) to replace high-cost utility equity with lower-cost public debt for new transmission projects, directly reducing the ratepayer impact of CAISO’s multi-decade development plans. The law requires utilities to finance billions of dollars of grid hardening investments using bonds instead of utility equity financing, reducing costs for customers and preventing the utility from excessively profiting off of this set of expenditures.

Maine

Maine’s Clean Energy Financing Study recommends operationalizing state revenue bond authority and establishing a working group on large clean energy project finance to optimize the capital stack for clean energy and transmission projects.

IV. Develop greater public understanding about the development levers available to public or quasi-public entities (Governors, Legislatures, and Local Leaders)

Some financial functions like loan issuance, co-financing, and non-dilutive debt financing may be well known to state energy offices, green banks, and certain infrastructure authorities. But in general, public financing is hampered by a lack of clarity, information, and standardization of different agencies’ authorities.

States can maximize the impact of public resources by establishing clear financing authorities and responsibilities, providing state authorities with broad powers to flexibly support projects, ensure that public finance is prioritizing the right investments, and providing clear direction on how publicly sponsored projects support utility procurement or grid operator processes. In addition, standardizing state and local financing entities drives down costs by making processes more repeatable and can pave the way for more effective federal support in the future. By surfacing all the capabilities public entities currently have and may wish to develop in the future, policymakers and advocates can align on objectives to strengthen the public developer toolkit and bring clean energy projects closer to fruition.

Pathways for Implementation
Governors

Governors can inventory borrowing, contracting, and financing authorities and provide clear guidance on roles and responsibilities between agencies.

Governors and legislatures can require reporting on key performance metrics like deal volume, borrower participation, and time-to-close to help encourage institutionalization.

Governors and legislators

Governors and legislators can publish analysis and information on areas to focus energy project development and create special zones for the installation, procurement, manufacturing, or operation of energy projects of various kinds. These industrial zones could provide access to a variety of benefits: expedited permitting, siting, interconnection, specific public finance facilities, funds for resiliency + operation, and various other coordination benefits from other interested state agencies.

Legislatures

Legislatures can provide agencies with clear financing authorities, direction on what types of projects to support, and a broad set of tools to flexibly support projects.

Local Leaders

City and county officials can examine if there are relevant state laws that require additional ordinance/resolution to use. Some tools to activate and then specify rules to create repeatable administrative playbooks.

Examples
Texas

Houston, Texas had to pass an authorizing city ordinance to activate a state program known as Property Assessed Clean Energy (PACE). The program allows commercial and multifamily property owners to finance energy efficiency, renewable energy, and water conservation improvements and has invested over $540 million dollars statewide since its inception in 2016.

Maryland

Montgomery County, Maryland created a green bank in 2016. In 2022, the county passed a statute to direct 10% of the county’s fuel tax revenue to the Montgomery County Green Bank each year. The green bank completed a new bus depot for EV buses in 2022 co-located with a 6.5 MW microgrid that can run independent of the local utility.

Colorado

Colorado has an EPC program that lends against a project’s anticipated cost savings to finance building retrofits.

Why Credit Access Makes or Breaks Clean Tech Adoption and What Policy Makers Can Do About It

Building Blocks to Make Solutions Stick

For clean energy to reach everyone, government can’t just regulate behavior. It has to actively shape credit markets in partnership with the private sector.

Implications for democratic governance

Capacity needs

Access to affordable credit is a necessary condition for an equitable energy transition and an inclusive economy. Markets naturally concentrate capital where risk is low and returns are predictable, leaving low-income communities, rural areas, and smaller projects behind. Well-designed federal policy can change that dynamic by shaping markets—reducing risk, creating incentives, and unlocking private capital so clean technologies reach everyone, everywhere. This paper explores how policy-enabled finance must be part of the toolkit if we are going to drive widespread adoption of clean technologies, and can be summarized as follows: 

The critical role of policy-enabled finance to drive widespread economic opportunity  

Access to affordable credit is not just a financial tool—it is a cornerstone of economic opportunity. It enables families to buy homes, entrepreneurs to launch businesses, and communities to invest in technologies that reduce costs and improve quality of life. Yet, across the United States, access to credit remains deeply uneven. Nearly one in five Americans and entire regions – particularly rural and Tribal communities – are excluded from the financial mainstream, limiting their ability to thrive.

Private-sector financial institutions—banks, private equity firms, and other lenders—are designed to maximize profit. They concentrate on markets where risk is predictable, transaction costs are low, and deals are easy to close. This business model leaves behind borrowers and communities that fall outside these parameters. Without intervention, capital flows toward the familiar and away from the places that need it most.

Public policy can change this dynamic. By creating incentives or mitigating risk, policy can make lending to or investing in underserved markets viable and attractive. These interventions are not distortions — they are strategic investments that unlock economic potential where the market alone cannot, generating economic value and vitality for the direct recipients while yielding positive externalities and public benefit for local communities. And, importantly, these policy interventions act as a critical complement to regulation. Increasing access to credit is often the carrot that can be paired with, or precede, a regulatory stick so that people are not only led to a particular economic intervention, but they are also incentivized and enabled.  

For decades, policy-enabled finance has delivered measurable impact through multiple programs and agencies designed to support local financial institutions – regulated and unregulated, depository and non-depository – that are built to drive economic mobility and local growth. These policies and programs have taken multiple forms, but can generally be put in three categories: 

These tools enjoy broad recognition and bipartisan support because they work. They increase access, availability, and affordability of credit—fueling job creation, housing stability, and economic resilience. Policy-enabled finance is not charity; it is a proven strategy for broad and inclusive economic growth and a key tool for the policy-maker toolkit to support capital investment, project development, and adoption of beneficial technologies in a market-driven context that can increase the effectiveness of a regulatory agenda. 

Most importantly, policy-enabled finance has led to major improvements in wealth-building and quality of life for millions of Americans. The 30-year mortgage was created by the Federal Housing Administration in the 1930s as a response to the Great Depression. Before this intervention, only the very wealthy could afford to buy a home given the high downpayment requirements and short-term loans. Since this policy change, thousands of financial institutions have offered long-term mortgages to millions of Americans who have bought homes that provide safety and security for their families, strong communities, and an opportunity to build wealth through appreciating assets. Broad home ownership is a public good, but until the government created the right policy and regulatory framework for the markets, it was out of reach for the majority of Americans. 

Similarly, the Small Business Administration’s loan guarantee programs started in the 1950s supported financial institutions, including banks and non-bank lenders, in extending credit to small businesses that would otherwise be difficult to serve with affordable credit. These programs have collectively helped millions of small businesses access the credit they need to grow their businesses, create wealth for themselves and their families, provide critical goods and services in their communities, and create a diverse and vibrant local tax base. 

The financial markets, without these types of interventions, are not structured to prioritize access and affordability. Well-designed policy and complementary regulatory interventions have been proven to drive different behaviors in the capital markets that yield real benefits for American families and businesses.  

The role of access to credit in driving an equitable energy transition 

The public and private sectors have spent decades and billions of dollars investing in the development of clean technologies that reduce greenhouse gas emissions, create economic benefits, and deliver a better customer experience. Now that these technologies exist, the challenge is to deploy them for everyone, everywhere. 

The barrier to widespread deployment is that most clean technologies require an upfront investment to yield long-term benefits and savings (i.e., an initial capital expense to reduce ongoing operational expenses) – technologies like solar and battery storage, electric vehicles, electric HVAC and appliances, etc. – which means that people and companies with cash or access to credit are adopting these better technologies while those without access to cash or credit are being left behind. This is yielding an even greater divide – creating economic savings, health benefits, and better technologies for those who can afford them, while leaving dirty, volatile, and increasingly expensive energy sources for the lowest-income communities. 

Many of the federal policy interventions to support deployment of these new technologies to date have been through tax credits. These policies have been very popular, but are not often widely adopted, particularly in rural and lower-income communities, because, (a) they are complex, (b) they often require working with individuals or businesses with large tax liabilities, and (c) they typically come with high transaction costs, making smaller, more distributed projects harder to make work. The energy transition is a huge wave of change, but it is made up of many small component parts – individual buildings, machines, vehicles, grids – so if our policies fail to enable small projects to get done, we will fail to transition quickly and equitably.

To deploy everywhere, households and businesses need credit to offset capital expenses. To expand access to credit, we need supportive clean energy policies that work within and alongside local financial services ecosystems – just like we’ve seen with housing and small businesses. 

Regulation is insufficient to drive widespread adoption 

Pursuing a carbon-free economy is a massive undertaking and, understandably, much of the state and federal government’s toolkit has focused on regulation of people and businesses to drive behavior change – policies like fuel economy standards, pollution restrictions, renewable energy standards, and electrification mandates. This is an important piece of the puzzle – but insufficient to drive broad (and willing) adoption. 

Take, for example, the goal of electrifying heavy-duty trucks in and around port communities. States like California have attempted to set a date at which all new trucks on the registry must be zero-emissions vehicles. Predictably, this mandate was met with a lot of pushback from truck drivers, small operators, and industry associations who struggled to see a path to complying with this regulation without a major increase in cost. 

It wasn’t until the regulation was paired with direct incentives for truck purchases and an attractive and feasible financing package for vehicle acquisition and charging infrastructure that the industry actors started to come around. This has helped change behavior of both buyers and incumbent sellers in the market. 

Policy-enabled finance creates tools – often used in conjunction with other policy mechanisms – that can more effectively meet people where they are with affordable, appropriate, and tailored solutions and can help demonstrate a feasible path to adoption that can help buyers and sellers in these markets adapt accordingly. 

The Greenhouse Gas Reduction Fund as an innovative policy-enabled finance program 

The Greenhouse Gas Reduction Fund (GGRF) is more than an emissions initiative—it is a strategic investment in economic equity and market innovation that took lessons in program design from many sectors and programs of the past. Designed with three core objectives, the program aims to:

GGRF programs, including the National Clean Investment Fund, the Clean Communities Investment Accelerator, and Solar for All, were built to complement other Inflation Reduction Act (IRA) programs by occupying a critical middle ground between grant programs and tax credits. Grant programs provide direct, one-time support for projects and programs that are not financeable (i.e., not generating revenue). Tax credits are put into the market to incentivize private investment for anyone interested in taking advantage but are not typically targeted to any specific project or population. 

GGRF bridges these approaches. It channels capital into markets where funding does not naturally flow in the form of loans and investments, ensuring that clean energy and climate solutions reach every community—but does so in a way that often extends the benefits of the tax credits and incentive programs so that they reach a broader set of projects and communities where the incentive is insufficient to drive adoption. GGRF focuses on increasing access to credit and investment in places that traditional finance overlooks by reducing risk and creating scalable financing structures, empowering local lenders, community organizations, and national financing hubs to deploy resources where they are needed most. Also, because the program makes loans and investments, it recycles capital continuously – akin to a revolving loan fund – so that the work filling gaps in market adoption can continue for decades. 

GGRF’s design was built on a strong foundation of successful direct investment programs for local lenders, such as CDFI Fund awards and USDA programs. What makes it unique is its scale—tens of billions of dollars—and its centralized approach, leveraging national financing hubs to drive systemic change with and through new and existing local financial capillaries (i.e., credit unions, community banks, green banks, and loan funds). This program was not built to drive incremental progress; it is a market-shaping intervention designed to accelerate the clean energy transition while promoting widespread economic growth.

Unfortunately, the program was stopped in its tracks when the Trump administration illegally froze funds already disbursed to awardees, leading to multiple lawsuits to restore funding. Without this disruption, awardees and their partners across the country would be driving direct economic benefits for families and communities across all 50 states. In the first six months of the program, awardees had pipelines of projects and investments that were projected to create over 49,000 jobs, drive $866 million in local economic benefits, save families and businesses $2.7 billion in energy costs, and leverage nearly $17 billion in private capital. The intention and mechanics of the program were working – and working fast – to deliver direct economic, health and environmental benefits for millions of Americans.  

Moving at the speed of trust: Bringing the public and private sectors together for effective implementation 

For a program like the Greenhouse Gas Reduction Fund to succeed, both the private and public sectors need clarity, confidence and accountability. But most importantly, they need a baseline of trust between the parties to support ongoing creative problem solving to implement a new, scaled program with exciting promise and a limited blueprint. 

For the private sector, certainty is paramount. Investors and lenders (and importantly, their lawyers) require clear definitions, consistent requirements, and transparency about the availability of funds, requirements of use, and the ability to forward commit capital to projects and businesses. They need mechanisms to leverage public dollars with private capital and assurances that counterparties will be shielded from political, compliance, and policy risk. Flexibility is equally critical, allowing actors to adapt to rapid market shifts and technological innovations without being constrained by rigid program structures. Understanding these requirements – and the needs of the financial market actors involved – is outside the comfort zone of most government agencies and employees and requires significant experience and capacity building to strengthen this muscle. Nimble thinking is not often associated with government agencies, but in policy-driven financial services, it is paramount. 

At the same time, the public sector has its own requirements which require patience and understanding from the private sector. Policymakers and the EPA, the implementing agency of the GGRF, must ensure that funds are used properly and that Congressional and public oversight is robust. This means designing programs that comply with all laws and regulations while advancing policy priorities. It requires mechanisms for accountability—certifications, reporting, and transparency in how funds flow – along with safeguards against undue influence from purely profit-motivated private actors. Balancing these needs is not optional when managing taxpayer funds; it is the foundation for building trust and ensuring that the program delivers on its promise of reducing emissions, benefiting communities, and transforming markets. 

Implementation requires striking the balance between the needs of the private and public actors; this was difficult and time consuming for both the federal employees and for us as private recipients. There was pressure to deploy quickly to demonstrate impact and the value of the program, but it took a long time to get contracts signed and funds in the market because of the many requirements of the public and private parties involved. We speak different languages, are solving for different constraints, and work in drastically different environments – all which led to complexity and delays. 

Internal EPA requirements and federal crosscutters (i.e., federal requirements from other related laws that applied to this program) increased time to market and transaction costs. Many of these requirements came with high-level policy objectives without the ability to get to a level of detail required for capital deployment. 

For example, two of the major policy crosscutters were the Davis Bacon and Related Acts (DBRA) requirements around labor and workforce, and the Build America Buy America (BABA) requirements for equipment manufacturing and component parts. While the agency and private awardees were aligned at a high level on policy intention – good-paying jobs and domestically-manufactured goods – down streaming these requirements to borrowers and projects required significantly more detail and nuance than was available to the agency, adding weeks and months onto implementation and frustration among private counterparties. 

Clear expectations up front on how to manage the trade-offs – policy priorities versus capital deployment – could have helped create a high-level framework for implementation, which was a one-by-one review of use cases to determine feasibility and applicability. This added complexity and friction to the process without driving outsized results. 

More requirements and complexity led to slower, more costly deployment, which meant fewer communities would benefit from the program’s goals of cutting emissions, creating jobs, and cutting household and business costs. 

Another key feature of the program for the National Clean Investment Fund and Clean Communities Investment Accelerator was the ability for the federal government to leverage a Financial Agent to administer the funds. This arrangement was developed between the EPA and Treasury, leveraging a long-standing practice of the Treasury Department of contracting with external banks to provide financial services that were hard for the government to provide directly. This was particularly important for the National Clean Investment Fund program because the disbursement of funds into awardee accounts enabled the awardees to meet a core statutory requirement to leverage funds with private capital. Without this function, the cash would not be available on the balance sheet of the awardees and would be difficult to leverage with private investment. 

Lastly, the reporting requirements for the program were complex, making it hard to provide clarity on what data collection was required for early transactions. Again, both parties recognized the importance of transparent data collection and dissemination but implementing that intent in practice was time consuming. A simple, standardized framework to get started that could evolve over time would have helped reduce uncertainty and supported faster deployment. 

Altogether, the cross-sector translation – finding common ground between two disparate worlds – added many months onto the process of getting the program to the market which, in the current political climate, was time not spent doing the important work to educate a broad set of stakeholders on the program’s promise, potential, and purpose. A lot of this complexity could have been reduced by developing a baseline of trust between the parties through the application and award process, complemented by a common goal to improve program implementation over time. 

Strange bedfellows create weak alliances 

In addition to the programmatic elements of translation, the actors involved in implementing direct investment strategies tend to be unknown entities to government agencies and Congress. Even though many of the implementing organizations – the “awardees” – have been around for decades doing similar work, there were weak ties with Congress, federal agencies, and other related stakeholders. Similarly, there was a lack of understanding of the role that nonprofit and community-based financial organizations play in addressing market gaps. This mutual lack of understanding and engagement leaves room for misunderstanding, distrust or generalizations that can hinder the ability to make collective progress. 

Within the agency, this was a new program type for the EPA, so requirements and design process took many months before anything was shared publicly. The Notice of Funding Opportunity was released nearly a year after the legislation was signed. 

The unique form and function of the program and limited direct engagement with lawmakers and other stakeholders about the program left a vacuum of information, which led to skepticism and confusion. Because the funds were provided to awardees as grants, many interpreted this as just another grant program – a large federal spending package that would lead to “handouts” – instead of what it was, the federal government seeding a sustainable fund with “equity” that would be lent out, returned, and reinvested in perpetuity. For example, here is the Wall Street Journal editorial page,and later, the EPA press release conflating investments with “handouts”: 

“Imagine if Republicans gave the Trump Administration tens of billions of dollars to dole out to right-wing groups to sprinkle around to favored businesses. That’s what Democrats did in the Inflation Reduction Act (IRA). The Trump team’s effort to break up this spending racket has led to a court brawl, which could be educational.”

The fact that this policy structure and the private sector entities charged with implementing it were relative strangers led to confusion and delay during a period that could have been spent on outreach, engagement, and education. Without that broad base of support, the program unnecessarily became a political punching bag.

To mitigate this risk going forward, there needs to be greater investment in relationship building, education, stakeholder engagement and capacity building within and among the implementing partners across all relevant government actors and their private sector counterparts, especially after award selections are made. This connective tissue would go a long way in creating a baseline of common understanding of the policy objectives, program design, and implementation partners involved so all parties are aligned on strategic intent and path forward. 

Making policy-enabled finance programs work in the future 

If we agree that policy-enabled finance is essential to drive the energy transition and deliver broad benefits, the next step is asking the right questions about how to design these interventions for success, drawing lessons from the GGRF and other related programs.

First, what mechanisms should we use, and what are the trade-offs for each? Federally supported direct investment programs, such as managed funds, can deploy capital quickly and target underserved markets, but they require strong governance, thoughtful program design, and radical transparency, otherwise they are susceptible to the “slush fund” narrative or similar risks (i.e. conflicts of interest and political favors). 

Tax credits and incentives have proven effective in attracting private investment, yet they often favor actors with existing tax liability and can leave smaller players behind. Guarantees reduce risk for lenders and unlock private capital, but they demand careful structuring to avoid moral hazard and can struggle to reach communities that are truly under-resourced. 

Despite the many pitfalls of direct investment programs, they address a challenge that has plagued many of the more distributed policies: centralization and market making. Often in an attempt to let a thousand flowers bloom, policymakers underestimate the need for centralized or regional infrastructure to help with asset aggregation, data collection, product standardization, and scaled capital access. This yields local infrastructure that is sub-scale, inefficient, and unable to access the capital markets for private leverage – too small to truly shape markets.

While the GGRF’s future is uncertain given pending litigation, its purpose and role as a set of centralized financial institutions within the broader community-based financial ecosystem is critical – and needs to be more broadly understood as policymakers set future priorities. 

Second, should government manage funds and programs internally or partner with external experts? Internal management within an agency offers control and accountability but can strain agency capacity and impede the ability to be an active market participant. It is also difficult to attract the right talent within the government’s pay scale, leading to an inability to recruit and high turnover. This model has been attempted through programs like the Department of Energy’s Loan Programs Office (LPO), but even that market-based program has been slower to execute, delaying critical infrastructure and technology investments by months, if not years.   

On the other hand, external management brings specialized expertise and market agility, yet it raises questions about oversight and influence. No matter who the private party is, there is skepticism around the use of funds, their personal or professional gain, and their intentions with taxpayer money. In our deeply politicized world, this puts a target on the leaders of these organizations that may limit who is willing to play this role. 

Quasi-public Structures

Despite the challenges, on balance it seems that internal agency management or a quasi-public structure is the most feasible path. Internal management pushes the boundaries of public agency function but goes a long way to build trust and accountability. Quasi-public structures seem to be a good compromise when feasible. Other countries have figured out how to manage these programs within a government or quasi-government agency (see the Clean Energy Finance Corporation and Reconstruction Finance Corporation, both in Australia). We can too. 

At the federal level, credit programs should be managed by agencies with the skills and capacities to hold an investment function, like the Department of Energy or the Treasury Department, and leverage lessons learned from programs like DOE’s LPO and EPA’s GGRF to structure new entities. Or – like many of the state and local green banks have done – create quasi-public entities that have public sector governance and appropriations but otherwise operate independently as financial institutions with their own balance sheets, bonding authority, and staffing structure. 

Lastly, if public-private partnerships are preferred, who should the government work with to implement policies meant to expand access to capital and credit? Nonprofit financial institutions often prioritize mission, community impact and are willing to arrange complex financings that require a higher touch approach but often lack scale and institutional capital access. For-profit firms bring scale and expertise but often find it hard to manage a government program with a mindset or culture that differs from their typical profit-maximization frameworks. 

Depository institutions such as banks offer stability and regulatory oversight, whereas non-depositories can innovate more freely to reach the hardest to serve communities. Regulated entities provide robust and trusted infrastructure and controls, but unregulated actors may move faster and can be more creative in supporting traditionally under-resourced opportunities. Specialty firms bring deep sector or asset-class knowledge, while generalists offer broad reach and experience in managing across asset classes. 

To identify the optimal path, it is helpful to look to existing programs for lessons. The U.S. Treasury’s Emergency Capital Investment Program (ECIP) demonstrates how direct investment into regulated depository institutions can mobilize significant capital for underserved communities through an existing financial ecosystem. The Loan Programs Office shows what internal management can achieve for large-scale projects. Tax credit programs like the New Markets Tax Credit (NMTC) and Investment Tax Credit (ITC)/Production Tax Credit (PTC) illustrate how incentives can transform markets, while guarantee programs such as the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI) Fund Bond Guarantee and SBA 7(a) and 504 guarantees highlight the power of risk mitigation in activating and standardizing products to support secondary market access. These precedents offer valuable insights as we design future policies to accelerate a broadly beneficial energy transition.

Educating policymakers to build trust in the community finance ecosystem

Regardless of path forward, one thing remains critical – building better relationships between policymakers and the community finance industry, including community banks, credit unions, loan funds, and green banks. These are the boots-on-the-ground organizations that share a mission with many policymakers to expand economic opportunity and broaden access to capital and credit. And they are often the organizations navigating multiple public products and programs to bring affordable, quality financial services to communities. 

The challenge is that most advocacy and educational work for these organizations has been siloed – there are groups representing credit unions big and small, those representing housing lenders, loan funds, green banks, and community banks. The disaggregation of these efforts has diluted the potential for policymakers to look at this ecosystem as a whole to determine how best to leverage it for public good. This is not to say that each of these individual groups does not have a role to play for their members – they all have different needs and requirements and deserve representation. But the broader industry would benefit from collaboration across these organizations to create a mechanism for these institutions to help with outreach, advocacy and education around policy-enabled finance overall. This would bring a strong and powerful group of actors together for a higher collective purpose and, ideally, create a large and diverse constituency with common goals. 

State and local governments stepping up  

In the near-term, the absence of federal support for clean technology deployment through policy-enabled finance creates an enormous opportunity for state and local governments to step up and push forward. Hundreds of local financial institutions were doing work to prepare for the delivery of GGRF funds to and through local projects and businesses to drive broader adoption of clean technologies. These organizations continue to have the skillsets, capacity, and pipeline to finance these projects – but need access to flexible and affordable capital to do so. 

State funding efforts could mirror the program and product design of the GGRF to get deals done locally, working with one or more of the constellation of financial institutions preparing to deploy federal funds. Just because the GGRF’s programs were cut short, it doesn’t mean that the infrastructure and learnings generated should go to waste – if there are public institutions willing to commit capital, there should be many financial institutions across the country ready to put it to good use. 

Conclusion 

If our shared goal is an equitable, rapid energy transition, policy must do more than regulate — it must enable finance and focus on deployment, or getting great projects done. The Greenhouse Gas Reduction Fund showed both the promise and the pitfalls of large-scale, policy-enabled finance: when designed and governed well, these tools can unlock private capital, deliver measurable local benefits, and sustain long-term market transformation. When implementation gaps and weak relationships persist, even well-intentioned programs become politically vulnerable and ripe for attack. To make these programs successful within our current political context, future efforts should prioritize clear governance, cross-sector capacity, and sustained stakeholder engagement so public dollars can catalyze private investment that reaches every community. 

Policy-enabled finance snapshot (illustrative, not exhaustive)

ProgramDirectTax IncentiveGuaranteeFederal agencyImplementing entit(ies)
CDFI Fund Financial Assistance ProgramXTreasuryCertified nonprofit loan funds
Emergency Capital Investment ProgramXTreasuryCommunity banks and credit unions
Opportunity ZonesXTreasuryPrivate funds and other financial intermediaries
Low-income Housing Tax Credit (LIHTC) ProgramXIRS, State Housing Finance AgenciesPrivate housing developers, lenders and syndicators
New Markets Tax Credit (NMTC) ProgramXTreasuryPrivate Community Development Entities (CDEs)
Investment and Production Tax Credit (ITC/PTC) ProgramXTreasuryPrivate developers, investors, and syndicators
USDA Business and Industry Loan GuaranteeXUSDABanks, credit unions, and farm credit lenders
USDA Single Family Loan GuaranteeXUSDAPrivate mortgage originators
SBA Loan Guarantees (7a, 504, etc.)XSBABank and non-bank private business lenders
DOE Loan Programs Office Guarantee ProgramXDepartment of EnergyDOE direct to companies, alongside private lenders and investors
CDFI Fund Bond Guarantee ProgramXTreasuryCertified Community Development Financial Institutions (CDFIs)
Greenhouse Gas Reduction Fund National Clean Investment Fund and Clean Communities Investment AcceleratorXEPANational nonprofit specialty finance organizations in partnership with local lenders (community banks, credit unions, green banks, and loan funds)

DOE 4.0: Rethinking Program Design for a Clean Energy Future

DOE’s mission and operations have undergone at least three iterations: starting as the Atomic Energy Commission after World War II (1.0), evolving into the Department of Energy during the 1970s Energy Crisis to focus on a wider range of energy research & development (2.0), and then expanding into demonstration and deployment over the last 20 years (3.0). The evolution into DOE 3.0 began with the Energy Policy Act of 2005, which authorized the Loan Programs Office (LPO), and accelerated with the infusion of funding from the American Recovery and Reinvestment Act of 2009. Finally, the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA) crystallized DOE 3.0’s dual mandate to not only drive U.S. leadership in science and technology innovation (as under DOE 1.0 and 2.0), but also directly advance U.S. industrial development and decarbonization through project financing and other support for infrastructure deployment.

While DOE continues to support the full spectrum of research, development, demonstration, and deployment (RDD&D) activities under this dual mandate, the agency is now undergoing another transformation under the Trump administration, as a large number of career staff leave the agency and programs and budgets are overhauled. The Federation of American Scientists (FAS) is launching a new initiative to envision the DOE 4.0 that emerges after these upheavals, with the goals of identifying where DOE 3.0 missed opportunities and how DOE 4.0 can achieve the real-world change needed to address the interlocking crises of energy affordability, U.S. competitiveness, and climate change. 

Crucial to these goals is rethinking program design and implementation to ensure that DOE’s tools are fit for purpose. BIL and IRA introduced new types of programs and assistance mechanisms, such as Regional Hubs and “anchor customer” capacity contracts, to try to meet the differing needs of demonstration and deployment activities compared to R&D. Some were a clear success, while others faced implementation challenges. At the same time, the majority of funding from these two bills was still implemented using traditional grants and cooperative agreements, which did not always align with the needs of the commercial-scale projects they sought to support. Based on lessons learned from the Biden administration, this report provides recommendations to DOE to improve the implementation of different types of assistance and identifies opportunities to expand the use of flexible and novel approaches. To that end, this report also advises Congress on how to improve the design of legislation for more effective implementation.

The ideas and insights in this report were informed by conversations with former DOE staff who played a role in implementing many of these programs and experts from the broader clean energy policy community.

Distribution of BIL and IRA Funding

Before diving into program design, it’s helpful to first understand the range of technologies and activities that BIL and IRA programs were meant to address, especially where that funding was concentrated and where there may have been gaps, since programs should be tailored to the purpose.

Authorizations and Appropriations

Congress intentionally provided the lion’s share of BIL and IRA funding to demonstration and deployment activities. The table above shows the distribution of BIL and IRA authorizations and appropriations for DOE. The table excludes DOE’s revolving loan programs – the Tribal Energy Financing Program (TEFP), the Advanced Technology Vehicles Manufacturing Loan Program (ATVM), the Title XVII Innovative Energy Loan Guarantee Program (Title 1703), the Title XVII Energy Infrastructure Reinvestment Financing Program (Title 1706) – which are discussed in the following section.1 The Carbon Dioxide Transportation infrastructure Finance and Innovation program (CIFIA) was included in the table above because that program’s appropriations could be used for both grants and loan credit subsidies. 

The technology areas that received the most DOE funding from BIL and IRA (excluding loans) were building decarbonization, grid infrastructure, clean power – combining solar, wind, water, geothermal, and nuclear power, energy storage systems, and technology neutral programs – carbon management, and manufacturing and supply chains, which each received over $10 billion in funding. 

Below is a breakdown of the funding distribution for each sector/technology. 

Grid Infrastructure received a total of $14.9 billion, second only to building decarbonization. All of the funding went towards demonstration and deployment programs, the majority ($10.5 billion) of which went towards the Grid Resilience and Innovation Partnerships (GRIP) program. The remainder of the funding went towards Grid Resilience State and Tribal formula grants, the Energy Improvement in Rural and Remote Areas, Transmission Facilitation Program, and transmission siting and planning programs. No funding went to R&D or workforce programs. Grid infrastructure was also eligible for the Title 17 and Tribal loans programs.

Power Generation received a total of $13.2 billion, with funding unevenly distributed across technologies and stages of innovation. Nuclear power received the largest share, with over $9.2 billion allocated to the Advanced Reactor Demonstration Program and the Civil Nuclear Credit Program, supporting demonstration of advanced reactors and production incentives to maintain existing nuclear plants, respectively. Geothermal energy received the least funding among power generation technologies, with only $84 million allocated to the Enhanced Geothermal Systems (EGS) Demonstration Program and no other support for R&D or deployment. 

Modest amounts were provided for RD&D in solar ($80 million), wind ($100 million), and water power technologies ($146 million). For deployment, hydropower also received production and efficiency incentives to support existing facilities ($754 million); wind energy received funding for Interregional and Offshore Wind Electricity Transmission Planning and Development ($100 million); and solar qualified for the Renew America’s Schools program ($500 million). To complement these technologies, $505 was provided for energy storage demonstration programs to enable reliable deployment of variable renewables. 

Power generation was also eligible for the Title 17 and Tribal loan programs.

Manufacturing and Supply Chains received $10.8 billion in funding from BIL and IRA. The majority of that funding, $6.3 billion, went towards battery supply chains, primarily for the Battery Materials Processing Program ($3 billion) and the Battery Manufacturing and Recycling Program ($3 billion). Additional focus areas for funding included EV manufacturing ($2 billion), advanced energy manufacturing and recycling ($750 million), high-assay low-enriched uranium (HALEU) supply chains for nuclear power plants ($700 million), and heat pump manufacturing ($250 million). Energy manufacturing and supply chains are eligible for Title 1703 loans, while EV and battery manufacturing and supply chains are eligible for ATVM loans. 

Critical Minerals received a total of $6.9 billion, of which $6 billion was allocated for the Battery Materials Processing Program and the Battery Manufacturing and Recycling Program, which funded demonstration and commercial-scale critical minerals processing and recycling projects. The remainder of the funding went to R&D programs on mining, processing, and recycling technologies; technologies to recover critical minerals from coal-based industry, mining and mine waste, and other industries; and technologies that use less critical minerals or replace them with alternatives. Critical minerals were also eligible for all of DOE’s revolving loan programs, except for CIFIA.

Industrial Decarbonization and Efficiency received a total of $7.5 billion. Six ($6.0) billion of this funding went towards the Industrial Demonstrations Program (IDP), which was sector and solution agnostic and accepted projects for both new facilities and retrofits, making the money extremely flexible. Much smaller funding amounts were allocated to deployment and workforce programs like rebates for energy efficient technologies and systems, decarbonizing energy manufacturing and recycling facilities, and Industrial Training and Assessment Centers. No funding was allocated to R&D programs. 

Hydrogen and Clean Fuels received $8 billion for the Regional Clean Hydrogen Hubs program to support near-term demonstration and commercialization of hydrogen production, transportation, and usage. Hydrogen and clean fuels were also eligible for all of the loan programs, except for CIFIA. Investment across the full research-to-deployment (RDD&D) continuum was lacking. Dedicated funding for clean fuels besides hydrogen was also missing. 

EVs and Transportation funding from BIL and IRA was largely focused on light-duty personal EVs. By contrast, investments in medium- and heavy-duty vehicles and urban transportation were limited. 

EV manufacturing and supply chains received $8.3 billion in funding. The largest single allocations went to the Battery Materials Processing and Battery Manufacturing & Recycling Programs ($6 billion), strengthening domestic battery supply chains for EVs. Domestic Manufacturing Conversion grants ($5 billion), further supported downstream manufacturing of advanced EV technologies. Additional funding supported R&D for battery recycling and second-life applications. EV and battery manufacturing were also eligible for ATVM loans. 

A notable new focus for DOE under BIL was the deployment of EV charging infrastructure. Charging infrastructure was eligible for $1.05 billion in DOE funding through the Renew America’s Schools program and the Energy Efficiency and Conservation Block Grant Program. DOE played a key role in the Joint Office of Energy and Transportation’s implementation of the National Electric Vehicle Infrastructure (NEVI) Formula Program, funded by DOT ($5 billion), and other charging programs. This marks a shift from DOE’s previous focus on developing vehicle technologies and fuels to a broader focus on all of the technology and infrastructure needs for widespread EV adoption. 

Building Decarbonization and Efficiency received the most non-loan funding from BIL and IRA at $15.2 billion. The largest share of this funding, $12 billion, went towards deployment and affordability programs such as the Home Energy Efficiency Rebate Program, High-Efficiency Electric Home Rebate Program, and the Weatherization Assistance Program – all of which aim to reduce energy costs for low-income households by increasing the energy efficiency of their homes. Additional funding supported workforce training and the improvement of building codes. Little to no funding went to R&D and demonstration programs, signaling the relative maturity of building decarbonization and efficiency technologies compared to other sectors. District heating and cooling facilities are eligible for TEFP loans. 

Carbon Management received a total of $11.6 billion. The majority of the funding went towards demonstration and deployment activities, of which $2.1 billion went towards CIFIA to support the deployment of transportation infrastructure, $2.5 billion went towards carbon storage validation and testing, $3.0 billion went towards carbon capture pilots and demonstrations, and $3.5 billion went towards the development of Regional Direct Air Capture (DAC) Hubs. Carbon management was also eligible for loans from the Title 17 programs. 

Loans

DOE’s loan programs operate differently from the way authorizations and appropriations work for traditional assistance programs, which is why they are not included in the chart above. These programs receive both a certain amount of loan authority, which set limits on the size of their portfolios, and appropriations for program administration and credit subsidies, which allows the office to provide low-cost financing. The IRA appropriated $13.8 billion total for these four programs and provided an additional $310 billion in loan authority for Title 1703, Title 1706, and TFP. CIFIA was established in the IRA without a cap on its loan authority. The IRA also repealed the cap on ATVM’s loan authority, which remains uncapped.2

During the four years of the Biden administration, the Loan Programs Office (LPO), now renamed the Office of Energy Dominance Financing (EDF), issued a total of 24 loans and 28 conditional commitments, worth over $100 billion in total. Energy storage, battery manufacturing, clean power, and the grid received the greatest number of loans and conditional commitments, while nuclear energy, carbon management, and non-battery or EV manufacturing received the least. No loans were issued for CIFIA, which is why that program is not shown in the following figures.

Program Design & Implementation

Flexible Contracting Mechanisms: Grants vs. Other Transactions

The majority of BIL and IRA funding (excluding loans) was implemented in the form of grants and cooperative agreements governed by 2CFR 200 and 2CFR 910. Even for programs for which the legislation did not specify the exact type of assistance mechanism that DOE should use (i.e., unspecified or “financial assistance”), the agency largely defaulted to those grants and cooperative agreements. One argument for this approach was that program officers and contracting officers are trained and experienced in using these mechanisms, which may have helped programs deploy faster. 

However, these grants were originally designed for R&D programs and faced some drawbacks when used for demonstration and deployment programs. 2CFR 200 and 2CFR 910 are almost 200 pages long, requiring extensive compliance that smaller organizations and organizations new to federal applications may not be equipped to navigate. Additionally, some terms and conditions required by those rules (e.g. for intellectual property, real property, and program income) were not compatible with private sector needs for demonstration and commercial-scale projects. Most consequentially, they require a termination for convenience clause, which allows the government to cancel an award without providing a reason. The Trump administration is now using that clause to terminate awards. 

Alternatively, DOE could have more frequently used its Other Transaction Authority (OTA) to enter into contracts without 2CFR regulations, allowing the agency to negotiate contracts more like the private sector would, developing terms and conditions as they make sense for the purpose of the specific purpose. This can enable DOE to design and implement more creative arrangements, such as for demand-pull or market-shaping mechanisms. DOE could have also leveraged OTs to make process improvements, rethink the traditional solicitation and evaluation process, and potentially accelerate implementation.3

DOE 3.0 missed a major opportunity to leverage these benefits of OTs. The few exceptions were the Hydrogen Demand Initiative (H2DI), the Advanced Reactor Demonstration Program, and Partnership Intermediary Agreements. Towards the end of the Biden administration, DOE discussed transitioning some of OCED’s awards to OT agreements, but did not get a chance to follow through before the presidential transition.4

DOE 4.0 should pick up where DOE 3.0 and deploy OTs more broadly among demonstration and deployment programs to overcome the challenges of traditional financial assistance regulations and processes. Congress should ensure that future authorizing legislation is designed to enable this flexibility–for example, by not specifying the type of assistance that DOE should use to implement new programs. 

Flexible Funding

BIL and IRA authorized and appropriated funding for a wide range of programs, many with very specific goals and eligible uses. That approach allows Congress to provide detailed direction to DOE on legislators’ priorities. However, DOE should also be able to respond dynamically to industries and markets as they develop. For example, when BIL and IRA were being developed, next-generation geothermal technologies were still quite nascent and received very little funding from these bills. Within two years though, the technology rapidly advanced, thanks to the success of the first few demonstration projects, and now shows enormous potential for meeting clean, firm energy demand, but DOE has limited funding available to support the industry.

In future legislation, Congress should consider establishing a few flexible funding programs that would give DOE a greater range of options to support the development of energy technologies and infrastructure as the agency’s experts know best. This could look like a pooled pot of funding with broad authority for DOE to use across technologies and/or activities, such as a single fund for demonstration and deployment activities broadly, or a single fund for grid infrastructure needs. If Congress is wary about this, legislators could start with creating flexible funding programs designed to fit within the scope of a single DOE office, before testing programs that cross multiple offices, which may come with intra-agency coordination challenges.

Program Design: Regional Hubs

The Hydrogen Hubs and Regional Direct Air Capture (DAC) Hubs were a new type of program established by BIL, designed to fund clusters of projects located in different regions rather than individual, unrelated projects. BIL invested $7 billion and $3.5 billion in these programs, respectively, and they made some of the largest awards by dollar amount – on the order of $1 billion per award – out of all of the BIL and IRA programs. 

The hub approach aimed to foster an industrial ecosystem, including not only multiple projects aiming to deploy the technology, but also future suppliers, offtakers, labor organizations, academic partners, and state, local, and Tribal governments. Concentrated regional investment and greater coordination would not only accelerate commercialization of hydrogen and DAC technologies but also help distribute the benefits of new clean energy industries across the nation. 

Due to the ambitious size and complexity of their goals, the Hydrogen Hubs and DAC Hubs required, and still require, a long timeline to develop. The structure and oversight DOE applied to the hub development process also extended timelines further. When the Trump administration began re-evaluating Biden-era programs and Congress started looking for funds to rescind, these two programs became appealing targets because of the large amount of funding they held and the lack of on-the-ground deployment progress – even though that was to be expected based on the program timeline.5 

Project cancellations and funding rescissions are a massive waste of both federal and private sector resources. In the future, before creating any other large-scale programs modeled on the Hydrogen Hubs and DAC Hubs, policymakers should first determine whether there is long-term bipartisan commitment to the program’s goals to avoid the possibility that a change of administration will jeopardize the program. If that commitment isn’t guaranteed, this model may simply be too risky to use; other types of assistance may be easier to implement or more resilient to changes in administration.

An alternate regional hub model that Congress and DOE could consider is the CHIPS and Science Act’s Regional Technology and Innovation Hubs and NSF Engines. These programs had a much lower level of ambition, providing awards – on the order of tens of millions instead of one billion – to seed early-stage innovation, build a research ecosystem, and support workforce development, rather than deploying specific technologies. 

Program Design: Demand-Pull 

Demand-pull mechanisms have emerged in conversations between FAS and former DOE staff as a very underutilized but promising tool for enabling the scaling and deployment of clean energy technologies and large-scale infrastructure projects. Confidence in long-term offtake is a requirement for private lenders to provide financing at a viable rate for projects. DOE can help provide that certainty through a wide range of tools, including purchase commitments and capacity contracts, contracts-for-difference, and other financial arrangements. 

By unlocking private sector investment, demand-pull mechanisms can reduce or eliminate the need for DOE to provide additional financing for project construction. However, public sector funding is still useful for pre-construction stages of project development, such as planning, siting, and permitting, which can be hard to get private sector financing for when other risks to a long-term revenue model have not been addressed yet.  

There are three primary use cases for demand-pull mechanisms: building shared infrastructure, demonstrating innovative technologies, and expanding industrial capacity. 

Shared infrastructure projects require a large number of customers and can sometimes struggle with securing them: customers are afraid to commit without the developer demonstrating that they’ve secured other customers first. DOE can help address this challenge by serving as an anchor customer for these projects and help attract additional customers. This also makes it easier to finance the project. 

A successful example of this from BIL is the Transmission Facilitation Program, which authorized DOE to purchase up to 50% of the planned capacity of large-scale transmission lines for up to 40 years. Once the transmission line is built, DOE can then sell capacity contracts to actual customers who need to use the transmission line and recoup the agency’s investment. This approach could be used for other types of shared infrastructure, such as hydrogen or carbon dioxide transportation, or even large clean, firm power plants (e.g., nuclear) for their generation capacity. 

First-of-a-kind projects often struggle to secure offtakers due to the unproven nature of their technology and the lack of a pre-existing market. For example, H2DI was designed to complement the Hydrogen Hubs program by directly supporting demand for select hydrogen producers and also helping establish a transparent strike price for the nascent market that would benefit all hydrogen producers. Other demonstration programs (e.g. IDP) would have also benefited from DOE support for demand and market formation.

Lastly, the development of new industrial capacity for producing energy technologies and their inputs can also face demand challenges because while there may be a pre-existing global market, the domestic market may be small or nonexistent, and existing offtakers may not be willing to reroute their supply chains without market or policy pressure to do so. This was most obvious with the critical minerals and battery supply chain projects that DOE tried to support. 

One successful model from the IRA was the HALEU availability program. DOE set up indefinite delivery, indefinite quantity contracts with companies developing HALEU production capacity and set aside $1 billion to procure HALEU from the five fastest movers. The purchase commitment created demand certainty, while the competitive model incentivized faster project development and ensured that the DOE’s funding would only go towards the most viable projects. More programs like this would be transformative for domestic supply chain development.

In designing demand-side support programs for these latter two categories, DOE must tailor the programs to the unique challenges of different technologies or commodities, and whether or not there are additional goals of domestic market formation and/or market stabilization. For example, auctions are a great tool for price discovery, while contracts-for-difference can help projects hedge against price volatility and overcome domestic price premiums. 

There are also double-sided market maker programs where DOE serves as an intermediary between producers and buyers, entering into long-term offtake commitments with project developers up front to provide demand certainty, and then reselling the product to buyers on a shorter-term basis when the project comes online This helps make supply chain connections and address mismatches between project developer vs. buyer timelines. For example, for low-carbon cement and concrete, buyers typically procure building materials on a short-term basis as needed for each project, but developers of first-of-a-kind production facilities require long-term offtake commitments in order to secure project financing.

Authorizing language and/or appropriations can be a barrier to DOE using demand-pull mechanisms. To address this issue, Congress should factor the following considerations into the design of legislation:

  1. Flexible Authorities. Due to the variety of demand-pull mechanisms and the need to tailor them to the unique market challenges of different technologies or commodities, they are best implemented using OT agreements. Statutory language that prescribes the exact type(s) of assistance (e.g., grants) for a program can prevent DOE from using demand-pull. Instead, Congress should provide clear goals for a program to achieve and leave DOE with the flexibility to determine the best type of assistance mechanism. 
  2. Budget Scoring and Timelines. Demand-pull mechanisms often involve multi-year advance commitments of funding, but the exact amount and timing of transactions may be uncertain, since it is conditional upon project performance and overall market conditions (e.g. contracts-for-difference payments are based on the market price at the time of the transaction). This results in budget scoring issues. Legally binding commitments of money can typically only be made if the agency has enough funding to obligate the full amount of the contract when it is signed, even if that funding probably won’t be paid out until much later.6 This results in the need for a significant amount of upfront funding, which can be difficult to obtain from Congress, and long timelines before the outcome of that funding is fully realized, which can make it difficult to manage congressional expectations. These long timelines also mean that no-year funding is ideal for DOE to be able to run demand-pull programs without the funding expiring.7
  3. Revenue Management. Some demand-pull mechanisms are designed with the potential for revenue generation, so legislation should ideally be designed to include the authorization of a revolving fund to allow revenue to be reused for program costs. Alternatively, DOE may contract with an external entity to manage the program funds, as it did with H2DI, so that the revenue can stay with the partner entity and be reused. 

Program Design: Prizes

Unlike most financial assistance, which operates on a cost-reimbursement basis and requires cost-share, prizes reward performance and are awarded after activities are completed and criteria have been met. This means there are no strings attached to the funding and no IP requirements, making these programs easier for applicants to work with.8 Prizes are also of a fixed amount, which incentivizes innovators to find least-cost solutions in order to maximize revenue from the award. On the flip side, innovators are responsible for any cost overruns, and DOE is not required to shoulder that risk. 

In the past DOE has used prizes wrongly to try and reach potential applicants that struggle with the application process for traditional assistance. It’s important to keep in mind the best use cases for prize programs. For example, prize programs rely on clear milestones, but are agnostic on the approach, making them great for interdisciplinary innovation. They can be beneficial for incentivizing new innovators to get involved with problem areas that don’t have many pre-existing solvers. They are also well-suited for small dollar amount awards that otherwise may not be worth the administrative overhead, since the overhead costs for prize programs are lower than traditional assistance programs once they have been designed.

Moving forward, DOE should keep in mind best practices for designing equitable prize programs. Prize programs should ideally be designed as stage-gated competitions with incremental prize payments for each phase, rather than one big payment at the end, so that innovators with fewer financial resources can participate. For example, the first stage could be the submission of a whitepaper with a proposed plan for developing and testing the technology, then the second stage could be lab work, and so on. Participants would be whittled down between each stage to hone in on the most competitive projects.

Program Design: Loans

DOE 4.0’s loan programs could be improved by setting clearer expectations on risk, clearer guidance on State Energy Financing Institution (SEFI) projects, and a strategy for using additional tools such as equity. 

Risk Tolerance. Discrepancies between statutory language and congressional oversight for DOE’s loan programs have historically made it difficult for the agency to determine the right balance of risk. For example, Title 1703 is designed by legislation to fund innovative, higher-risk, hard infrastructure projects that the private sector is typically reluctant to fund. A high-risk, high-reward program should, by nature, be allowed to have some failed projects and still be considered a success. However, Congress has historically been extremely critical of any defaulted loans, making DOE hesitant to use Title 1703 and ATVM to its full potential.

DOE 3.0 made some attempts to improve communications on its approach to risk management, but the agency could do more to communicate the success of its loan programs. Congressional authorizers should help the agency by building risk into the statute of DOE’s loan programs and budgets and better managing the expectations of oversight members.

State Energy Financing Institution (SEFI) Projects. Another area of reform that DOE 4.0 should tackle is the SEFI-supported projects under Title 17, authorized by BIL, which allows DOE to finance any energy project that also receives “meaningful financial support” from a SEFI, such as state energy offices or green banks. However, ambiguity in the statute behind this new carveout caused confusion among states on how exactly to partner with DOE’s loan program. What is considered meaningful financial support? What qualifies as a SEFI? To clarify these questions from states, either DOE 4.0 should create model SEFI guidance or Congress should amend the statute with clear definitions. 

Equity and Other Financing Tools. The Trump administration’s restructuring of the Lithium Americas Thacker Pass loan to include an equity warrant, which gives DOE the right to acquire equity of the company at a set price in the future, has raised questions as to what DOE’s role should be if it were to become an equity owner in a company and what guardrails and visibility is needed in such a scenario.9 Policymakers may also want to consider the risks and benefits of expanding DOE’s loan program authorities to include direct equity investments and other financing tools that agencies like the International Development Finance Corporation (DFC) have access to.10

Program Design: Technical Assistance

DOE 4.0 should expand its technical assistance offerings in three primary ways: technical advising and verification, navigating federal funding, and talent and workforce needs.

Technical Advising and Verification. DOE’s in-house scientific and engineering expertise is a major draw for funding applicants. For example, according to FAS conversations with former agency staff, the project developers behind Vogtle Units 3 and 4, which received a loan guarantee from DOE, would seek advice from LPO engineers when they had engineering questions. Private investors, who may lack the expertise needed for technical due diligence, often use DOE awards as a proxy for assessing project risk. As a result, some project developers will apply for DOE funding to prove their credibility to private financiers and negotiate lower financing rates. 

In the face of potential budget cuts, DOE 4.0 could leverage this strength by offering project certifications that would entail the same technical support and verification as a demonstration award or loan, without the funding support. This would provide a similar market signal to private investors, without costing DOE as much – just staff time. And since DOE is not taking on any project risk, the application and negotiation process could also be simplified and streamlined to align better with private-sector timelines. 

Navigating Federal Funding. DOE should dedicate increased resources to conducting outreach to underserved communities, small businesses, innovators, and new applicants about funding opportunities and shepherding them through the application process. For example, despite awareness of available funding opportunities, some Native American tribal organizations in Alaska were unable to pursue them due to a lack of bandwidth or expertise to participate in resource-intensive (and often times confusing) application processes, and the awards sizes were too small to make them worth the costs of external private consultants to support. Community Navigator Programs and other forms of technical assistance could help communities overcome these barriers to accessing federal support. PIAs can also help with reaching small businesses and new applicants to apply for programs.

Talent and Workforce Needs. DOE has had success with placing talent at state energy offices and other critical energy organizations like public utility commissions through the Energy Innovator Fellowship to embed expertise in under-resourced offices. DOE should consider expanding this program or establishing new programs to place experts at other institutions, such as grid operators, investor owned utilities, and local governments, to advise and support them in adopting new energy technologies and accelerating infrastructure deployment. 

Program Design: Community Benefit Plans

For all of its demonstration and deployment programs, DOE 3.0 introduced a new requirement that awardees create community benefit plans (CBPs) to ensure that communities would share in the benefits of local clean energy projects. CBPs have been both lauded and criticized by community and labor organizations: they praised their intent, but expressed frustration over their limited influence on companies’ plans and that allowable cost limits constrained what could be included in awards. Where CBPs were most effective, they encouraged developers to consider local communities and jobs, though this often required significant internal coordination to use DOE’s funding contracts as leverage. At the same time, CBPs were seen as an additional administrative burden on program implementation, contributing to delays. Under the Trump administration, CBPs will no longer be enforced and are no longer required for future funding opportunities. 

DOE 4.0 presents an opportunity to restore and improve CBPs as a mechanism for both distributing the benefits of federally-funded projects and improving project quality. To maximize impact, DOE 4.0 should focus on a smaller set of high-priority outcomes with clear, measurable success metrics. DOE 3.0’s broad mandate, which spanned jobs, justice, climate, and deployment across multiple programs, sometimes diluted effectiveness and created confusion for staff managing both program design and operations. In DOE 4.0, these outcomes should be closely linked to actual project success, whether through facilitating social license to ease permitting, or supporting workforce development to train and retain workers, as developers themselves emphasized when aligning with program goals. Providing actionable guidance, including templates and real-world examples of successful community benefits plans, can further improve project outcomes. The advocacy community can help lay the groundwork for DOE 4.0 by documenting successful case studies and model agreement language. Congress could help embed key priorities in statute, providing clear, practical guidance that reflects DOE’s administrative capacity and enhances the likelihood of successful implementation.

Additionally, it is critical that future CBP mechanisms account for community preferences, including local prohibitions on certain technologies and other expressions of community priorities. By proactively respecting local concerns, DOE can foster trust and strengthen the long-term impact of projects. DOE 4.0 will also need to navigate tensions around labor preferences. While the department cannot explicitly require union labor, questions about labor practices may signal preferences that vary across states, including right-to-work contexts. This underscores the importance of sensitivity to local norms and expectations.

Where resources allow, DOE 4.0 should hire and dedicate staff with expertise in labor engagement and community partnerships to review applications and provide technical assistance, supporting applicants in navigating the CBP process and designing high-quality, community-centered projects. Technical assistance needs to be done carefully though to avoid perceptions of bias and influencing the award selection process. 

Lastly, clear and consistent guidance across DOE offices is essential. For example, applicants have reported a lack of clarity about what activities qualify as “allowable costs” in CBPs, and different offices have applied inconsistent standards. Establishing a unified, expansive approach to allowable costs—including activities that indirectly support clean energy workforce development, such as community child care programs—can unlock transformative opportunities for local communities. This standardization should be done for other aspects as well. In general, official guidance needs to find a better middle ground between the overly technical, lengthy documents and vague webinars produced by DOE 3.0, so that ideally applicants can understand requirements without staff intervention. 

Conclusion

Good program design is fundamental to effectively engaging with researchers, industry, state and local governments, and communities, in order to realize the full potential of DOE funding. Though much of the real-world impact of BIL and IRA is still yet to come, DOE can already begin learning from the challenges and successes of program design and implementation under the Biden administration. The recommendations in this report are just as applicable to the remaining funding from BIL and IRA that DOE has yet to implement, as they are to future programs. Moving forward, Congress has the opportunity to reconsider the way that programs are designed in future legislation, especially those targeting demonstration and deployment activities, and make sure that DOE has clear direction and the right authorities and flexibility to maximize the impact of federal funding.

Acknowledgements

The authors would like to thank Arjun Krishnaswami for coining the idea of DOE 4.0 and his insightful feedback throughout the development and execution of this project. The authors would also like to thank Kelly Fleming for her leadership of the clean energy team while she was at FAS. Additional gratitude goes to Claire Cody at Clean Tomorrow, Gene Rodrigues, Keith Boyea, Kyle Winslow, Raven Graf and all the other individuals and organizations who helped inform this report through participating in workshops and interviews and reviewing an earlier draft.

Appendix A. Acronyms

ATVMAdvanced Technology Vehicles Manufacturing Loan Program
BILBipartisan Infrastructure Law (a.k.a the Infrastructure Investment and Jobs Act)
CBPsCommunity Benefits Plans
DACDirect Air Capture
DFCInternational Development Finance Corporation
DOEDepartment of Energy
DoWDepartment of War
EDFOffice of Energy Dominance Financing
EGSEnhanced Geothermal Systems
FEOCForeign Entity of Concern
FERCFederal Energy Regulatory Commission
FORGEFrontier Observatory for Research in Geothermal Energy
GDOGrid Deployment Office
GETsGrid Enhancing Technologies
GRIPGrid Resilience and Innovation Partnerships
GTOGeothermal Technologies Office
H2DIHydrogen Demand Initiative
HGEOHydrocarbons and Geothermal Energy Office
IDPIndustrial Demonstration Program
IRAInflation Reduction Act
LPOLoan Programs Office
NARUCNational Association of Regulatory Utility Commissioners
NASEONational Association of State Energy Officials
OBBBAOne Big Beautiful Bill Act
OCEDOffice of Clean Energy Demonstrations
ORISEOak Ridge Institute for Science and Education
OTOther Transactions
OTAOther Transactions Authority
PPAsPower Purchase Agreements
SEFIState Energy Financing Institution
TEFPTribal Energy Financing Program
TFPTransmission Facilitation Program
Title 1703Title XVII Innovative Energy Loan Guarantee Program
Title 1706Title XVII Energy Infrastructure Reinvestment Financing Program
USGSU.S. Geological Survey

Appendix B. BIL and IRA Funding Distribution Methodology

The funding distribution heat map at the beginning of the report includes all of the BIL and IRA programs with funding authorized and/or appropriated directly to DOE, excluding loan programs. The following were not included in this table:

  1. Loan programs, which are funded differently than traditional programs;
  2. Tax credits that DOE helped design (e.g., 45X), which are also funded through a different mechanism; and
  3. Programs implemented by DOE, but funded by other agencies’ appropriations, such as the Methane Emissions Reduction Program funded by the Environmental Protection Agency.

Programs were tagged according to their sector or technology area, their activity area, and type of assistance based on key words in their statutory language. Programs could be tagged with multiple sectors/technologies, activity areas, and/or types of assistance.

To determine the amount of funding for each sector/technology and activity area combination, all of the programs with the corresponding tags were included in the sum. Because of this duplicative counting, the sum of the dollar amounts in the table exceeds the total amount of funding for all of these programs. Sector/technology totals were calculated without this duplication, which is why those amounts are less than what one would obtain by summing all of the activity area amounts for a sector/technology. 

Activity area categories:

Sector/technology categories:

One Year into the Trump Administration: DOE’s FY26 Budget Cuts and the Path Forward

This piece is the last in a series analyzing the current state of play at DOE, one year into the second Trump administration. The first piece covers staff loss and reorganization; the second piece looks at the status of BIL and IRA funding and the impact of award cancellations.

Overview of DOE Funding for FY26

On January 15th, Congress passed the FY26 E&W Appropriations as part of a second minibus along with the Commerce, Justice, Science and the Interior and Environment Appropriations (bill text and joint explanatory statement). Assuming the President signs this package into law, it will dictate DOE’s funding through the rest of FY26, which ends in September, and potentially into FY27 if any continuing resolutions are passed in the next appropriations cycle. 

Though the administration originally requested drastic cuts to all of DOE’s offices involved in clean energy RDD&D, the FY26 E&W Bill takes a much more restrained approach to budget cuts and reprograms some BIL funds to bolster EERE, NE, FE, and SC budgets. Notably, Congress increased appropriations levels for SC, NE, and SCEP, despite DOE’s request to zero out the budget for SCEP. Overall, compared to FY25, the FY26 Appropriations enact a 1.4% cut to the agency’s budget – a modest amount compared to DOE’s original request for a steep 7.0% cut. 

The passage of the FY26 E&W Appropriations is a major accomplishment for Congress, especially given the short timeline over which the conferenced bill came together and the rejection of the deep cuts advocated for by this administration. Nevertheless, even minor cuts threaten to decelerate progress on energy innovation, manufacturing, and infrastructure necessary for the United States to meet energy demand growth, reliability, affordability, and security challenges – precisely when we need it the most. As we begin the FY27 appropriations process this year, it’s all the more important that Congress not only maintain stable funding levels for DOE, but also begin to rebuild momentum for energy innovation and technological progress.

Reallocation of Unobligated BIL Funds

Section 311 of the FY26 E&W bill repurposes $5.16 billion in unobligated funding from BIL for the following programs:

The Civil Nuclear Credit Program is a new addition that was not present in either the House or the Senate’s original versions of the E&W bill. The other programs targeted for reallocation and the corresponding amounts were all proposed in either the House and/or the Senate’s original versions of the E&W bill. Notably, funding for the Hydrogen Hubs was spared after conferencing, despite previous inclusion in both chambers’ E&W bills.

The reprogrammed funds are to be used as follows:

These moves reflect Congress’ emphasis on advanced nuclear demonstration projects, growing concern over grid supply chain bottlenecks, and continued commitment to funding EERE activities, as well as skepticism about the goals and execution of carbon management demonstration programs. 

Zooming in: EERE Suboffices

DOE’s FY26 budget request proposed a major contraction of the EERE portfolio, explicitly requesting zero funding for four sub-accounts Hydrogen and Fuel Cell Technologies, Solar Energy Technologies, Wind Energy Technologies, and Renewable Energy Grid Integration. For the first three, the Department argued that these technologies had reached sufficient market maturity to rely primarily on private capital—which is definitely not the case for hydrogen and fuel cell technologies, and inconsistent with DOE’s continued funding for more mature technologies such as nuclear, coal, and gas. For Renewable Energy Grid Integration, DOE argued that the work would be absorbed into other programs. DOE also sought to near-eliminate the budget for the Building Technologies Office (BTO) and the Vehicle Technologies Office (VTO) by requesting only $20 million and $25 million, respectively, signaling a broader retreat from technologies that would support electrification, energy efficiency, and affordability.

Congress largely rejected wholesale eliminations in the FY26 bill they passed. Compared to FY24 and FY25 enacted levels, the deepest cuts for FY26 were for Solar Energy Technologies (31%) and Wind Energy Technologies (27%). Hydrogen and Fuel Cell Technologies was also targeted for deep cuts in the original House and Senate appropriations bills, but ended up with only a 6% budget cut after conferencing and passage, putting the office in a better position than many of the other EERE suboffices that lost more than 10% of their annual budget. The only two offices that received budget increases were Geothermal Technologies (27%) and Water Power Technologies (10%), reflecting Congress’ prioritization of clean firm energy technologies. 

EERE suboffice funding amounts are dictated in the Joint Explanatory Statement, a report that accompanies annual appropriations bills and provides detailed guidance on how funds are to be allocated within the topline account numbers set by the appropriations bill. Historically, agencies have always adhered to report language; even under full-year continuing resolutions, agencies would still follow the funding guidance set in the prior fiscal year’s report language. 

The second Trump administration broke this precedent: DOE’s FY25 spend plan – released more than three-quarters of the way through the fiscal year – shifted more than $1 billion away from core clean energy programs under EERE, disregarding Congressional direction in the FY24 appropriations report.1 DOE moved funding away from Vehicle, Hydrogen and Fuel Cell, Solar, Wind, and Building Technologies, towards Renewable Energy Grid Integration and Water Power, Geothermal, Industrial, and Advanced Materials and Manufacturing Technologies. These actions have raised concerns about whether the administration will attempt to do the same in FY26.

Zooming in: National Labs

The Joint Explanatory Statement does not provide guidance on how DOE allocates funding to national labs, though there tends to be a trickle down effect depending on which offices labs are reliant on funding from. DOE proposed drastic cuts to the FY26 budgets of many national labs, particularly those that get a significant amount of funding from EERE. Under the proposed budget cuts, the national labs would reportedly plan to lay off 3,000 or more scientists and other staff. 

The National Renewable Energy Laboratory (NREL) – recently renamed the National Lab of the Rockies, or NLR for short – faces the largest proposed budget cut of 72% because it’s affiliated with EERE and gets the majority of its funding from that office. Such deep cuts would require NLR to lay off up to a third of its staff and shut down many of its facilities and ongoing activities. 

With the passage of FY26 appropriations, hopefully, DOE will reconsider funding for national labs and adjust budgets upwards to reflect the much milder cuts that Congress passed.

Long-Term Impacts

Sustained budget cuts to DOE pose significant long-term risks to the nation’s scientific enterprise and ability to compete globally. Because DOE is the federal government’s primary engine for energy research and advanced technology commercialization, reductions in funding have both immediate operational consequences, as well as lasting structural ones. 

Budget cuts translate directly into workforce attrition across DOE program offices, national laboratories, and partner institutions. When staffing levels fall, the federal government’s capacity to execute world-leading scientific research diminishes. Essential functions like managing user facilities, overseeing complex R&D portfolios, and ensuring the continuity of long-term research programs are all jeopardized, slowing the pace of innovation and limiting the nation’s ability to respond to emerging scientific and energy challenges.

Loss of program funding and workforce capacity raises a broader strategic concern: the U.S. may no longer retain the scientific and engineering talent necessary to develop next-generation energy technologies. DOE plays a critical role in cultivating and sustaining technical talent pipelines through early-career research programs, national lab fellowships, university partnerships, and long-term R&D initiatives that span decades. When the continuity of these programs is disrupted, students, postdocs, and mid-career researchers may exit the field entirely or shift their expertise abroad, diminishing the domestic talent base. These losses cannot be quickly reversed as rebuilding a skilled scientific workforce takes sustained investment, stability, and opportunity signals that cuts fundamentally undermine. 

Attrition is not limited to DOE itself. The broader U.S. science and innovation workforce – spanning clean energy startups, universities, private-sector R&D, and communities that host national laboratories – absorbs the shock of federal retreat. Reduced research funding forces universities to shrink labs, scale back graduate cohorts, and limit collaborations with DOE facilities. National laboratory communities, often in rural or specialized high-tech regions, face economic consequences when jobs disappear or major facilities reduce their operating capacity. The ripple effects of lost researchers, technical staff, and support personnel weaken the entire innovation ecosystem that underpins clean energy deployment. 

Quantifying these long-term losses is essential. Each scientist or engineer who leaves the field takes with them years of specialized training, intellectual and institutional capital, and future contributions to technological advancement. The economic value of these foregone innovations – from delayed commercialization timelines to missed breakthrough discoveries – can be substantial. A shrinking innovation pipeline also slows private-sector investment domestically and increases dependence on imported technologies at a moment when global competition in clean energy, advanced computing, and critical minerals is accelerating. 

In the long run, sustained budget cuts compromise the United States’ ability to remain a global leader in science and innovation. They jeopardize advancements in energy innovation, undermine national competitiveness, and reduce the nation’s capacity to deliver affordable, secure, and clean energy solutions. Protecting DOE’s workforce and research infrastructure is therefore not only a matter of annual appropriations, but also a long-term investment in America’s economic strength and technological leadership. 

Conclusion: The Path Forward

As we begin the second year of the second Trump administration, DOE sits upon the precipice of transformation. Over the past year, the rapid pace and unprecedented scale of changes to the agency’s staff, organizational structure, programs and awards, and budget have generated waves of uncertainty and volatility that has rippled out across the energy sector, destabilizing commercial projects worth billions of dollars, as well as DOE’s relationship with the private sector, state and local governments, its own career staff.

After all these changes, whether DOE transforms for better or worse will depend on the decisions this administration makes over the next three years. Realizing this administration’s priorities of energy dominance and abundance will require DOE to rebuild its technical and organizational capacity to design and implement programs, oversee loans and awards, and engage in public-private and intergovernmental partnerships. 

This should start with carefully managing the agency’s reorganization and providing clearer, more detailed explanations to the public on the mandate and internal structure of new offices and where existing programs and activity areas have been moved, and guidance to employees about how the reorganization will impact their roles and the programs on which they work.  DOE leadership should then evaluate the functions and capacities missing under the new organizational structure and rehire for those roles, ideally with the reinstatement of remote work flexibility.

As the agency rebuilds internal capacity, it should reorient efforts away from reacting to the previous administration and towards actions that will build the infrastructure necessary to modernize and expand the energy system, ensure reliability and affordability in the face of demand growth, secure energy supply chains, and maintain U.S. leadership in energy innovation. The wave of funding opportunity announcements for BIL critical minerals programs over the past few months was a good start, but that is not DOE’s only mandate. DOE must also restart activities across other technologies and sectors. Luckily, the agency still has $30 billion plus in funding from BIL and IRA that has yet to be awarded. In implementing the remaining funding, DOE can learn from the many lessons learned reports on the previous administration’s experience and adopt internal reforms. The agency should also make sure to adhere closely to the statutory intent behind this funding.

Lastly, stable year-to-year funding is essential for progress. As Congress begins the FY27 appropriations process this month, congress members should also turn their eyes towards rebuilding DOE’s programs and strengthening U.S. energy innovation and reindustrialization. Higher DOE funding levels will be necessary to put the United States back on a growth trajectory with respect to global energy leadership and competitiveness. 

Acknowledgements

The authors would like to thank Megan Husted and Arjun Krishnaswami for their pivotal roles in shaping the vision for this project, planning and executing the convenings that informed this report, and providing insightful feedback throughout the entire process. The authors would also like to thank Kelly Fleming for her leadership of the project team while she was at FAS. Additional gratitude goes to Colin Cunliff, Keith Boyea, Kyle Winslow, and all the other individuals and organizations who helped inform this report through participating in workshops and interviews and reviewing an earlier draft. 

One Year into the Trump Administration: DOE Awards Cancelled and Programs Stalled

This piece is the second in a series of analyzing the current state of play at DOE, one year into the second Trump administration. The previous piece on staff loss and reorganization can be read here.

Introduction

$25.8 billion in BIL appropriations, over a third of the total amount, have yet to be awarded, plus up to $4.3 billion in IRA funding left after OBBBA rescissions. Yet, for the entire first year of the Trump administration, DOE has focused primarily on undoing the work of the prior administration. Politically motivated award cancellations and the delayed distribution of obligated funds have broken the hard-earned trust of the private sector, state and local governments, and community organizations. DOE also carried out a significant internal reorganization that eliminated many of the commercialization and deployment focused offices and moved their programs into other offices, leaving their futures unclear. 

The implementation of remaining BIL and IRA funding has been stalled across the board (except for critical minerals-related programs), and the administration has attempted to push the limits of legislative interpretation by redirecting funds for carbon capture and rural and remote energy improvements towards bringing inactive coal power plants back into service and/or extending the life of coal plants near retirement. 

Overview of BIL and IRA Funding Status

BIL and IRA appropriated $71 billion and $35 billion, respectively, in funding for DOE clean energy programs. Once appropriated, DOE funding moves through three phases before being received by awardees:

  1. First, funding is awarded when DOE selects and announces the recipients for a program. Only 57% of BIL funding and 52% of IRA funding was awarded by the end of the previous administration.
  2. Then, funding is obligated when DOE legally commits the amount to the recipient through a contractual agreement. Obligations may be made in phases over time, especially if the award is of a large amount. Thirty-three percent (33%) of BIL funding has been obligated as of December 17th, 2025.
  3. Finally, funding is outlayed when the money is paid to the recipient(s) and officially transferred out of the federal government’s account. This can occur in installments over the course of the period of performance or through a single up-front payment. Four point eight percent (4.8%) of BIL funding has been outlayed as of December 17th, 2025.

Under the current administration, at least $11 billion, or 32%, of unobligated IRA funding was rescinded through the One Big Beautiful Bill Act (OBBBA), including the IRA credit subsidy appropriations for DOE’s loan programs, while $5.16 billion in BIL funding was transferred for other purposes by the Fiscal Year 2026 (FY26) Energy and Water Development (E&W) bill. Mass rescissions and reallocations of funding on this scale have been unheard of in the past.

A further $6.8 billion in BIL awards and $2.5 billion in IRA awards have been cancelled by the Department of Energy, primarily because they do not align with the new administration’s priorities. For BIL, the cancellations will impact 17% of awarded funding, 14% of obligated funding, and 3% of outlayed funding. For IRA, the cancellations will impact 7% of awarded funding. While DOE has in the past made one-off cancellations of individual awards for various reasons, mass cancellations on this scale are unprecedented and uniquely destructive to the relationship between DOE and the private sector, not to mention state and local governments and community organizations.

Award Cancellations

The first round of DOE award cancellations were announced in May 2025. The 24 cancelled awards, worth $3.7 billion, all came from OCED programs funded by BIL and IRA. The Industrial Demonstration Program (IDP) was the most severely impacted: 18 awards worth $3 billion, half of the total for the program, were cancelled. The other primary targets from this round of cancellations were the Carbon Capture Demonstrations Program and the Carbon Capture Large-Scale Pilots Program.

In early October 2025, DOE announced the cancellation of another 321 awards, worth over $8 billion. Of those awards, five from the IDP were duplicates from the May announcement. Once again, OCED’s programs were the most heavily impacted, with GDO a close second. The largest awards cancelled were the two west coast Hydrogen Hubs, each worth at least $1 billion and three of the Grid Resilience and Innovation Program (GRIP) awards located in California, Minnesota, and Oregon. Unlike the first round, other DOE awards not funded by BIL or IRA, roughly half of the list, were also cancelled. These awards primarily came from EERE and FE.

Only about 1.5% of the funding for these BIL and IRA awards was outlayed before they were cancelled. Non-BIL and IRA awards fared slightly better, with 38% of funding outlayed before they were cancelled. As a result of these cancellations, awardees may decide to abandon their projects entirely, which would end up wasting the hundreds of millions of dollars of federal funding that has already been spent.

The most direct impact of these cancellations is that communities that were promised jobs and other benefits will no longer get them. DOE is breaking its commitment to companies, workers, and other stakeholders, taking away the economic opportunity that new investments provided. 

Moreover, federal funding would not be the only funding wasted: many of the canceled awards came with matching private-sector investments, totaling over $5.7 billion. In order for those private-sector investments to be put to use, project developers would need to seek additional funding to close the gap left by cancelled DOE awards. Even in the best case scenario, that process requires additional time and effort, resulting in delays and higher overall project costs. 

The vast majority of these private-sector investments were intended to fund grid resilience and modernization projects. In the face of demand growth and grid reliability challenges, particularly from data centers, it seems counterintuitive to pull funding from these projects rather than doubling down on investments to improve and expand our grid infrastructure. These cancellations also run counter to the administration’s stated priority of “unleashing American energy” and will make it harder to provide the electricity needed to power the AI applications and innovations touted by this administration.

An additional list of projects has been circulating since the beginning of October, said to contain an additional $16 billion worth of projects being considered by DOE for cancellation. In late October 2025, Politico’s E&E News reported that DOE confirmed the cancellation of five of the projects on that list, totaling $718 million in funding, because they were not “economically viable.” All of the projects were funded by the Office of Manufacturing and Energy Supply Chains (MESC), which had been largely spared by the previous rounds of cancellations. Four of the cancelled awards were from the Battery Materials Processing and Battery Manufacturing Grant Programs, while the other award came from the Advanced Energy Manufacturing and Recycling Program. Since then, at least one of the projects, a lithium iron phosphate plant in Missouri, has folded, partially as a result of the DOE award cancellation.

In response to the cancellations, most companies are challenging the decision and seeking as much compensation as they can through the courts. The Supreme Court has ruled that challenges to the termination of specific awards must be filed through the U.S. Court of Federal Claims, which is understaffed and struggling with significant backlogs and delays. However, while large companies may be able to wait six months or up to one year for compensation, many small businesses and startups will go under if they cannot get recourse in time and run out of funding to keep paying their employees. Furthermore, the Federal Claims Court does not have the authority to reinstate terminated grants or contracts, which is what companies actually want.

A coalition of energy and environmental organizations filed a lawsuit over seven of the cancelled grants and won, arguing that DOE’s termination decisions were politically motivated and thus illegal, targeting awards primarily because they were located in blue states and/or funded clean energy technologies that the administration opposes. Those seven award cancellations have now been blocked by the judge’s decision, but the hundreds of other cancellations will continue unless additional lawsuits are brought forth.

All of this has resulted in a growing belief across the private sector (and also local governments and community organizations) that federal grants and contracts are no longer guaranteed to survive a change in administration. This destroys the trust built by 50 years of DOE upholding its contracts and commitments to the private sector. The Biden administration expanded this partnership with the private sector further, conducting significant outreach to improve interest from top tier companies in BIL and IRA programs. Now, all of that hard-won trust has been undone. 

Members of Congress from both sides of the aisle have been watching these cancellations with concern. Section 301 of the FY26 E&W Bill introduces a new requirement that DOE must notify both the House and Senate Appropriations Committees at least three full business days before the agency issues a letter to terminate a grant, contract, other transaction agreement, or lab call award in excess of $1 million. The same requirement applies to any letter to terminate nonoperational funding for a national lab if the total amount is greater than $25 million.

Loan Cancellations, Delays, and New Terms

In addition to reevaluating and cancelling awards, DOE leadership also reevaluated the loans and conditional commitments made under the Biden administration, slowing down the evaluation process. So far, DOE has publicly terminated a $4.9 billion conditional commitment for the Grain Belt Express transmission. DOE was also reported to have plans to cancel six more conditional commitments and one active loan, totaling $8.5 billion. Former LPO staff have shared that these terminations were mutually agreed upon between the borrowers and DOE due to project economics. Some of this administration’s policies (e.g. the permitting ban on wind energy projects) may have indirectly contributed to worsening project economics.

Under the current administration, DOE has moved some projects that align with the White House’s priorities from conditional commitment to close – namely, AEP’s transmission upgrades and Wabash Valley Resources’ Coal-Powered Fertilizer Facility – and fast tracked a loan to restart the Three Mile Island Crane nuclear unit directly to close. However, for other projects less aligned with this administration’s priorities, DOE appears to be delaying the process to move conditional commitments forward and close out the loans. Former agency staff from the office claim that this is a way to softly cancel loans by putting timelines in limbo and waiting out the borrower, since conditional commitments have a maximum window of two years to either move to close or be rejected.

Changes to the term sheet when closing a loan is another way to force applicants out of the pipeline. Applicants typically receive an initial term sheet with the conditional commitment and then a final term sheet when closing the loan; applicants may not be able to accept or accommodate drastic changes between the two.

Notably, this administration restructured Lithium Americas’ Thacker Pass loan after it was closed, but before funds were disbursed. LPO has the right to restructure loan terms and get new conditions or concessions to protect taxpayer resources if there are concerns, but this is rarely done. LPO negotiated the right to 5% equity in Lithium Americas and 5% equity in the Thacker Pass joint venture in the form of a warrant. The agency statement points to LPO’s loan to Tesla in 2010 as precedent for using warrants. This move raises the question of whether LPO will be negotiating additional equity stakes in future loan agreements, given this administration’s many other equity deals. 

Remaining BIL & IRA Funding and Awards

Loans are not the only thing DOE has slow-walked: recipients of active BIL and IRA awards have complained that DOE also delayed the distribution of obligated funds and was not paying invoices in a timely manner. This issue was especially acute in the beginning of 2025, when many grants and contracts were frozen and recipients were told to stop all work while new DOE leadership reviewed their funding. While some projects were allowed to move forward, some remained in limbo even towards the end of 2025, causing significant uncertainty and financial stress to awardees.

As for the remaining unobligated BIL and IRA funds, DOE has not issued any new funding opportunity announcements (FOAs), except for critical minerals-related programs, which have been favored by this administration, and a repurposing of BIL funding to support coal power plants:

Acknowledgements

The authors would like to thank Megan Husted and Arjun Krishnaswami for their pivotal roles in shaping the vision for this project, planning and executing the convenings that informed this report, and providing insightful feedback throughout the entire process. The authors would also like to thank Kelly Fleming for her leadership of the project team while she was at FAS. Additional gratitude goes to Colin Cunliff, Keith Boyea, Kyle Winslow, and all the other individuals and organizations who helped inform this report through participating in workshops and interviews and reviewing an earlier draft. 

Appendix: Methodology for BIL and IRA Funding Analysis

Data on total BIL and IRA appropriations and award amounts was obtained from the archived Invest.gov website created by the Biden administration’s White House. Loan amounts were not included, since loan authority is separate from appropriations. The archived Invest.gov website has not been updated since the end of the Biden administration. As of December 17th, 2025, the Trump administration has not made any new awards yet with BIL or IRA funding, so the data should be accurate up to that date.

Data on obligations and outlays came from the Department of Treasury’s USA Spending database. The total amount of obligations and outlays of BIL funding for DOE was determined by filtering for the Disaster Emergency Fund Codes for Infrastructure Spending associated with BIL and DOE as the Awarding Agency. All assistance awards and contracts that resulted from these filters were included in the total amounts. 

The obligations and outlays for cancelled BIL and IRA awards in October were determined by searching the database for each unique award ID found in the list obtained by Latitude Media. The total amount of obligations and outlays for cancelled BIL and IRA awards in May was determined by searching the database for the awardees in the list reported by The New York Times and matching the award amounts, award location, and/or award description. All available data up until December 17th, 2025 was included. USA Spending tracks the amount of obligations and outlays for each award that came from BIL; this data was used to determine whether or not a cancelled award was funded by BIL. Whether or not a cancelled award was funded by the IRA was determined based on whether or not the award description explicitly mentions IRA and/or searching official DOE announcements and other public documents for the specific award using the recipient name and award description available on USA Spending. Any remaining awards were assumed to be funded by neither BIL nor IRA.

In this report, the total amount of unobligated funding rescinded by OBBBA is a minimum estimate. The minimum rescission amount for every loan program listed in Section 50402 of the OBBBA was determined by subtracting the total funding obligated from the loan program account between FY23 and FY25 (found on USA Spending) from the total appropriations for the program from the IRA (found in the bill text). The minimum rescission amount for every other program listed in Section 50402 of the OBBBA was determined by subtracting the total funding awarded for the program from the total appropriations for the program (both obtained from Invest.gov).