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. 

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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.

Hot Takes: What the FY27 Presidential Budget Request Means for Climate and Energy

President Trump released his FY27 budget plan last week. What should we think about it?

Once upon a time, the President’s budget was a realistic proposal to Congress about what the federal government should spend money on. These days, it’s essentially just a declaration of everything the President would do if Congress didn’t matter at all.

There’s an argument, then, that we shouldn’t take the President’s budget too seriously: after all, recent history shows us that Congress doesn’t. President Biden repeatedly asked for, and failed to receive, massive IRS expansion, housing investment, and tax hikes on the wealthy and corporations; President Trump last year suggested massive cuts to federal science funding that Congress essentially ignored.

Yet the current Trump administration has also shown that it’s not taking seriously Congress not taking it seriously: including by impounding funds and pursuing other avenues to push its spending (and cutting) priorities through using executive action.

The way to calibrate is by treating the President’s budget as a fever dream…albeit one that might come true. With that in mind, here are some of the key dream sequences we’re paying attention to from a climate, environment, and energy perspective. Warning: some may keep you up at night.

Topline numbers

In terms of non-defense discretionary spending, the $660 billion FY27 request is a 10% decrease from current levels – a smaller swing than last year’s $557 billion FY26 request, which proposed a 23% cut that Congress largely ignored. However, the difference can be attributed almost entirely to the fact that Congress reset the baseline upwards when it rejected those FY26 cuts, as well as to proposed increased spending at the Department of Veterans’ Affairs (for improving medical care) and Department of Justice (including funding for increased law enforcement in cities, funding FBI salaries, and re-opening Alcatraz).

For climate and energy policy specifically, FY27 largely runs the same plays as FY26: slashing line items related to climate change and advancing a fossil-oriented “Energy Dominance” agenda while rolling back clean energy and environmental justice investments from what this administration terms the Biden-era “Green New Scam”. As with FY26, the request targets climate, energy, and environmental programs with demonstrated bipartisan congressional support. One example is the CDFI Fund, which finances clean energy and community development lending in underserved communities and which Congress explicitly preserved last year after the administration first proposed eliminating it. 

Overall, the President’s FY27 budget request is less a new proposal than a budget formalization of many climate- and environment-related cuts that the Trump administration has pursued over the past year through executive action and impoundment. 

Energy

For the second year in a row, the Trump administration is requesting to cancel almost all remaining unobligated IIJA funding across the Department of Energy ($15.2 billion in total). What’s striking about these cuts is how indiscriminate they seem to be, including cuts to programs that align with this administration’s stated priorities (including critical minerals, geothermal energy, and hydropower). The throughline appears to be less about policy judgment than about demonstrating categorical opposition to anything passed under the IIJA banner.

Yet not all of this funding is being outright cancelled: some is being redirected. $4.7B of unobligated IIJA funding intended for Hydrogen Hubs is being steered toward baseload power and AI supercomputers instead. When you dig deeper into that redirect, it’s a mixed bag. $1.2B will go to new supercomputers at Argonne and Oak Ridge National Labs, as part of DOE’s new Genesis Mission. The remaining $3.5B would largely support coal, oil, and gas infrastructure upgrades and prevent 4 GW of coal plants from retiring as planned. The same tranche of funding will also support some genuinely needed improvements, such as strengthening grid reliability, installing new battery storage, and improving the power output of nuclear and hydropower facilities. Funding for geothermal, ostensibly an administration priority, is surprisingly absent given its status as a firm baseload power source.

Mixed messages around geothermal continue in the budget for the new Hydrocarbons and Geothermal Office (HGEO), created during DOE’s November 2025 reorganization by merging the Geothermal Technologies Office with Fossil Energy. The administration requests $676 million for the combined office, a 14.1% decrease from the FY26 enacted. The most striking line item within HGEO is a 329% surge in funding to modernize coal mining processes and extend the productive life of existing mines, including through the use of AI and robotics. Geothermal funding is preserved at $150 million, emphasizing pilots and R&D over commercial-scale projects. Again, what’s conspicuously missing – given the administration’s stated enthusiasm for geothermal as a firm baseload source – is any meaningful push toward commercial-scale deployment. 

Beyond the IIJA cancellations, the administration is requesting a massive 63% cut to the budget of the new Office of Critical Minerals and Energy Innovation (CMEI) – the reorganized successor to the former Office of Energy Efficiency and Renewable Energy – compared to the FY26 budget of the offices folded into it. The only winner seems to be critical minerals, which receives a $281 million (339%) increase in funding compared to FY26. Similar to FY26, the request zeroes out the budgets for hydrogen, solar, and wind programs, as well as state and community energy programs and the Federal Energy Management Program. The request also nearly zeroes out budgets for bioenergy, vehicle, and building technologies, while making deep cuts to hydropower and industrial efficiency and decarbonization technologies. 

Cuts continue for DOE offices responsible for keeping America’s lights on. The Office of Electricity (OE) and the Office of Cybersecurity, Energy Security, and Emergency Response (CESER) face cuts of 22% and 16%, respectively, from 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 now carries real risk for the administration’s own energy dominance goals, let alone broader reliability and resilience.

Wildfire resilience

The two largest federal landowners – the Department of the Interior (DOI) and the U.S. Department of Agriculture (USDA) – are both slated for significant cuts under this budget, at 13% and 19% reductions from FY26 enacted levels, respectively. The takeaway: while the FY27 budget makes some new investments in wildfire resilience, it does so against a backdrop of overall austerity.

That said, the budget request acknowledges the escalating urgency of the wildfire crisis. Wildland fire suppression resources at DOI received a modest 3.5% increase; preparedness and fuels management at the agency also saw a slight bump. Additionally, the budget introduces a Fire Intelligence and Technology line item in DOI’s budget funded at $123.5 million. This includes $20 million to support a Wildfire Intelligence Center that appears broadly aligned with proposals such as those laid out in the bipartisan Fix Our Forests Act (S. 1462), which FAS endorsed. 

The real-world efficacy of these wildfire-specific investments could be undermined by cuts to fire-relevant research and monitoring infrastructure. While the request states that “the USWFS will fund all wildland fire resources currently funded separately by [USDA and DOI],” proposed cuts to Forest Service programs such as State, Private, and Tribal Forestry and Forest and Rangeland Research could also impact fire resilience.  Budget cuts and layoffs at FEMA, NOAA, NASA, and EPA could also materially compromise capacity for other critical wildfire tasks the government is responsible for (e.g., fire detection, fire response, weather forecasting, smoke monitoring, and post-fire ecosystem assessment). For example, the NASA/USGS Landsat program helps us understand the impact of wildfires on the landscape and support better management. NASA’s FY27 budget justification allocates $109 million “to support a phased transition of the Landsat program to a commercial solution” rather than continued government involvement. The justification offers no detailed rationale for why privatization is the right path forward.

Cuts to USDA Forest Service Wildland Fire Management accounts reflect the Administration’s intent to consolidate wildland fire functions across DOI and the Forest Service. Echoing an earlier Executive Order, the budget proposes fully unifying the USDA Forest Service’s wildland fire resources and operations into Interior’s newly created U.S. Wildland Fire Service (USWFS). While DOI has reportedly begun consolidating wildfire operations across its own agencies under the USWFS, integration of the Forest Service is on hold; FY26 appropriations bills directed Interior and USDA to contract a feasibility study of this approach. It is unclear how this reorganization would interact with the recent proposal to move Forest Service headquarters to Salt Lake City. 

Environmental pollution 

From an environmental protection standpoint, the most glaring single number in this budget is President Trump’s proposal to cut EPA’s budget by $4.6 billion — a 52% reduction that would bring the agency to its smallest budget since the Reagan administration. How does the administration propose slashing the EPA’s budget by more than half? By targeting specific programs that have historically done some of the agency’s most consequential work.

Among the casualties: the program that oversees Superfund site cleanup. Superfund sites are locations that are so contaminated by pollution that they’re considered dangerous to human health. Think sites of former mines, toxic waste dumps, and other nastiness that make the families that live around them very sick. There are more than 1,800 Superfund sites across the United States, concentrated heavily in Texas, California, Pennsylvania, New York, New Jersey, Florida, and Washington. Without the Superfund program, cleanup won’t happen, and families living nearby – who often can’t afford to move or don’t even know the risk exists – will just keep getting sick. 

Like breathing clean air? Happy the ozone layer is healing? Too bad. If Congress follows the President’s proposed budget, then the Atmospheric Protection Program will be eliminated. The APP is the EPA office responsible for reducing air pollution, restoring the ozone layer, improving energy efficiency, and researching climate change. These aren’t marginal cuts. They’re core federal functions that have measurably improved air quality and public health over decades.

The contrast with what the EPA is being asked to invest in is telling. One notable increase in EPA’s budget is a $14 million boost for NEPAssist, the web-based tool that streamlines permitting under the National Environmental Policy Act. This boost reflects the administration’s vision of what EPA is for: making it faster to approve projects, but not study or reduce the pollution they might produce.

Energy affordability, extreme heat, and public health

The FY27 proposal once again tries to eliminate the only sources of funding to support families struggling with energy affordability. The proposed budget would fully defund the Low Income Home Energy Assistance program, which supports families with heating and cooling bills at a time when one in three American households are facing energy insecurity and electricity rates are surging across the country. The budget also zeroes out the Weatherization Assistance Program, which funds home retrofits that reduce energy consumption and help families stay safe during extreme heat and cold. Getting rid of both LIHEAP and WAP simultaneously leaves no federal backstop for the most vulnerable households at the precise moment that climate-driven temperature extremes are intensifying.

The FY27 proposal also targets research and data collection critical to evaluating extreme weather and heat’s risks and impacts. The proposed $1.6 billion cut to NOAA’s Office of Research and Development by $1.6 billion would eliminate programs to help communities prepare for and protect against extreme heat events, flooding, and other climate-linked weather hazards. The planned commercialization of NASA’s Landsat raises further concerns about data continuity and access, particularly for local governments and planners who depend on Landsat data to assess heat islands, drought conditions, and other environmental risks.

On the health system side, the budget would eliminate the Hospital Preparedness Program (HPP), the only program supporting health care systems ready for all hazards – including floods and storm surge that can inundate hospitals, and extreme heat waves that can overwhelm emergency rooms. HPP funding has helped regions such as the Pacific Northwest, where extreme heat has already been deadly, avoid repeating past disasters. The budget proposes redirecting these functions to the CDC’s Public Health Emergency Preparedness program, which experts have long identified as insufficient for the scale of the need.

Workers and families face additional exposure under this budget, which scales back prevention and enforcement dollars for workplace safety. The proposal budget cuts the Occupational Safety and Health Administration’s budget by 10%, with reductions focused on enforcement capacity and workplace safety training funding. And two of the primary federal vehicles to support community-level climate resilience would be eliminated. The Community Services Block Grant and the Community Development Block Grant, have both been backbone sources of funding to support efforts to prepare communities for extreme weather’s impacts. For example, the Community Services Block Grant provides the operational funding for Community Action Agencies, which are a key pass-through organization for implementing efforts like home weatherization.

Climate and environmental science

The FY27 budget doesn’t just target programs aimed at reducing emissions and cleaning up our environment. It targets the scientific infrastructure that tells us what’s happening and how to fix it. The President’s budget request would systematically defund the agencies, offices, and university programs responsible for climate observation, modeling, and research across the federal government. NSF has historically been the nation’s primary funder of basic research, including the university-based science that generates most of what we know about climate systems, ecosystems, and environmental change. The administration proposes cutting roughly 55% (~$5 billion) from NSF’s budget, with about a third (~$1.8 billion) of this coming from the parts of NSF (geosciences, biological sciences, engineering, and polar programs directorates) most directly relevant to climate and environmental science. AI and quantum computing are the only areas the administration proposes to protect or grow within the agency.

The DOE’s Office of Science would take a $1.1 billion hit, with just under half of that coming from the Biological and Environmental Research program, which funds atmospheric science, climate modeling, and ecosystem research. The administration’s own budget language is candid about the intent: these cuts will, it states, “stop wasting Biological and Environmental Research resources on climate change” and refocus funding toward “AI-enabled earth-energy system modeling to support the Energy Dominance agenda.” At the same time, $1.1 billion is being invested in the new Office of Critical Minerals and Energy Innovation (CMEI), though this number is both a cut compared to FY26 enacted levels from CMEI and is framed explicitly around supply chain security and domestic resource extraction rather than decarbonization.

For the second year in a row, the budget proposes eliminating NOAA’s Office of Oceanic and Atmospheric Research, which houses the nation’s core weather forecasting and climate modeling capabilities (including the Geophysical Fluid Dynamics Laboratory, the birthplace of modern climate modeling). What’s notable about the FY27 request, as analyst Alan Gerard points out, is that it doesn’t even acknowledge OAR’s existence despite Congress having essentially fully funded it in FY26. This illustrates the administration’s willingness to pursue its biggest priorities by hook or by crook.

Finally, EPA’s research and development budget would be reduced to only what federal law legally requires, effectively eliminating the agency’s in-house capacity for the modeling, technical research, and expert analysis that underpins national environmental regulation. An EPA stripped of scientific capacity is an EPA that can neither generate the evidence base for new rules nor credibly defend existing ones.

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.

Solving the Clean Energy Infrastructure Finance Rubik’s Cube

Building Blocks to Make Solutions Stick

Capital is not the constraint, alignment is: Catalyzing large-scale climate and energy infrastructure requires government to act as a systems integrator—synchronizing policy, de-risking commercialization, modernizing valuation, and coordinating markets so private capital can move with speed and confidence.

Implications for democratic governance

Capacity needs

Deal templates and archetypes: Clear, standardized financing pathways that signal how government capital will engage at different risk tiers and technology stages. 

Jump to…

Executive Summary

Historic commitments. Huge demand. Massive cost reductions. Ready technologies. Yet, infrastructure deployment levels are underperforming their potential. What gives?  The U.S. clean energy sector has achieved remarkable milestones: solar and wind have tripled since 2015, costs have fallen 90%, and annual clean energy investment now exceeds $280 billion. Yet deployment has arguably fallen short of what both markets and the climate moment demand. The culprit isn’t a single bottleneck: not permitting, not subsidies, not technology readiness alone. The real constraint is misalignment across the multiple interdependent factors that investors need to see in place before committing capital at scale.

Think of it like a Rubik’s Cube: solving one face means nothing if the other five stay scrambled. This paper identifies six strategic levers that, when pulled in concert, can unlock the conditions for large-scale capital deployment:

The good news: the capital exists, the technologies are ready, and infrastructure is a solvable problem. With over 1,000 GW of clean energy in development and electricity demand projected to grow up to 50% over the next decade, the infrastructure build-out represents one of the largest capital deployment opportunities in American history. And global demand for U.S. clean energy technology has never been higher. The barriers identified in this paper are structural and systemic, not fundamental; most of the solutions proposed are actionable in the near term, without waiting for perfect legislation or perfect markets.

The window is open, but not indefinitely. For policymakers and investors alike, the question is not whether to act, but whether to act with the clarity, coordination, and urgency the moment demands. The frameworks, partnerships, and policy tools outlined here offer a practical roadmap for unlocking decades of economic growth, cost-of-living relief, and energy security for communities across every region of the country and beyond. The energy transition is not a cost to be managed; properly coordinated, it is a generational economic opportunity.

America has experienced extraordinary momentum in the growth and transformation of the energy sector. Solar and wind generation has more than tripled since 2015. In 2024, 50 GW of solar power was added to the U.S. grid, which is not only a record, but is the most new capacity that any energy technology has added in a year. Technology costs have plummeted dramatically: utility-scale solar and battery energy storage have each fallen 90% since 2010. Those declines have made them among the lowest cost forms of electricity in many places. Domestic manufacturing capacity has also surged with hundreds of clean energy manufacturing facilities, many of which have already come online. These technologies and projects have been reinvigorating communities and creating jobs across the nation, and we should see the benefits from these advances continue as capital is flowing into this sector at an unprecedented rate. Clean energy investment in the United States more than tripled since 2018 to $280 billion annually, with multiples more in commitments, and private markets alone have raised nearly $3 trillion over the past decade. For more established technologies like utility-scale solar and onshore wind, financing has become standardized. This includes established project finance structures, robust secondary markets, accurate energy production forecasts, and predictable returns that align with the needs of institutional capital. These asset classes now exhibit many of the hallmarks of market maturity: transparent pricing, deep liquidity, sophisticated risk assessment frameworks, and predictable transaction execution. This progress has been galvanized by unprecedented governmental support, including the Bipartisan Infrastructure Law of 2021 and the Inflation Reduction Act of 2022 (IRA), alongside bold state policies, aggressive corporate clean energy procurement, sustained advocacy, and relentless technological innovation. 

Yet despite these achievements and the trillions of dollars in committed capital, the pace of deployment has arguably fallen short of what the market opportunity demands and what the climate crisis requires. Hundreds of IRA-supported energy and manufacturing projects have faced delays or cancellations: much of that is due to increased economic and logistical uncertainty (e.g. in the cost and availability of equipment, permitting timelines, import and export regulations); much of that too is due to sharp reversals in federal funding priorities (e.g. tax incentive changes from the One Big Beautiful Bill Act (OBBBA), direct project cancellations). Moreover, emerging solutions are still taking time to achieve true commercial liftoff. Despite billions in federal funding allocations, only a few carbon capture projects have meaningfully progressed, with others indefinitely delayed or cancelled. Growth of some demand-side energy solutions, like behind-the-meter solar and virtual power plants, has remained relatively regional, despite favorable economics. Advanced nuclear energy, though it remains a policy priority, has been challenged with long delivery timelines, and many project investors remain wary of the risk of cost overruns. Sustainable aviation fuel production capacity increased by ten times in 2024, but it is still a very small fraction of jet fuel demand. Furthermore, transmission capacity has not grown nearly as quickly as needed and remains a key constraint to progress. 

The situation – deployment deficiencies despite historic support – can be entirely solved with just one thing… and that is… to stop acting as if there is just one thing. The relative underperformance described earlier is not attributable to any singular constraint: contrary to what some have argued, for instance, it’s not solely about removing permitting roadblocks nor creating more subsidies. Rather than seeking silver bullets, real progress can be made by recognizing that there are multiple elements involved and misalignment between those elements have curbed the rate of progress.

Accelerating new energy project investment is somewhat like solving a Rubik’s Cube. The key to solving the puzzle lies in its interdependence: every twist of one face ripples across the others. You can solve one face perfectly, but if the other five remain scrambled, you haven’t solved anything in the grand scheme. Progress requires coordinated progress across multiple dimensions simultaneously in the right sequence. The cube rewards systems-thinking and algorithms over siloed, non-coordinated actions. All six of its faces must align to win.

The same is true for new energy finance. When most project investors look at a sector, they approach it as a puzzle and look for as much alignment of the full picture as possible before being sufficiently comfortable to deploy capital. That’s the indicator for the risk-reward balance being in the right place to justify investment. Rather than defining the theory of progress by singular issues, policy and industry stakeholders need to create sufficient alignment of multiple puzzle pieces at the same time. 

This paper offers a few perspectives on how to achieve the conditions for larger-scale capital deployment, drawing on both lessons learned and promising concepts from across the industry. Like the six faces of the Rubik’s cube, six priority strategy areas are articulated: market defragmentation, commercialization partnerships, transaction execution speed, policy synchronization, holistic valuation methodologies, and proactive investor engagement. Note that while some of the underlying strategies may take time and require deep structural realignment, most of the concepts discussed herein are actionable in the near term. A range of stakeholders, from policymakers to infrastructure investors to community and industry advocates, need to move in concert to solve the puzzle and unlock greater investment. 

The opportunity before us is immense. With over a thousand gigawatts of clean energy in development and electricity demand projected to grow up to 50% over the next decade, the infrastructure build-out required represents one of the largest capital deployment opportunities in American history. Similarly, global demand for U.S. clean energy technologies to be a bigger part of the mix has soared over the past few years, as many countries are seeking to diversify away from China or access some of the more unique technologies that the U.S. is developing. And solutions can’t come quickly enough, in this era of fast-growing energy demand, spiking electricity bills, aging physical infrastructure, and burgeoning new industries, not to mention a plethora of old and new technology solutions and operational strategies poised to meet the moment. The question is not whether the capital exists (it does!), whether energy solutions are available (they are!), nor whether there is a silver bullet salve (there isn’t!). It’s whether we can align the six faces of our energy finance cube quickly enough and strategically to channel the right types of capital where it’s needed most, when it’s needed most. The energy transition presents a real opportunity to drive economic transformation that, when properly coordinated, can unlock decades of strong economic growth, cost-of-living reductions, innovation, and prosperity across every region of the country and the planet.

Chapter 1. “Come together”: Defragmenting markets through regional coordination

For many companies across multiple sectors, the U.S. market can seem like the golden goose. Its big population, high income, diversified economy, and strong purchasing power typically mean large total addressable markets (TAM). While those drivers can be true, the reality for many energy and climate solutions, especially early on, is that the large TAM is challenging to realize, as the market can be highly fragmented. In those sectors, the U.S. is less of a “market” per se and more of a loose mosaic. There are about 3000 utilities, ranging from large publicly traded corporations to rural cooperatives, in regulated and regulated markets. States and territories not only have different market drivers, but they also have their own regulations and  regulators, business processes, permitting requirements, and market rules. This also complicates the go-to-market as you typically need large and locally-focused commercial organizations to tap the markets, which can be expensive and time-consuming to build, especially for newer companies. It also often means a less efficient path to scalability, as each set of local customers and  regulators need to be brought up to speed and convinced about the fit of a solution (compared to having a few entities that speak for the entire country). In addition to the commercial elements, this dynamic introduces technical barriers to scalability, especially where deep integration and redesign are required to meet local requirements. Over the years, this has often flummoxed both U.S. startups and experienced foreign investors, who have approached the U.S. market with high expectations, only to be confounded by these complexities.

Harmonize local requirements to avoid the piloting death spiral

To the extent possible, to promote more rapid and widespread investment and deployment of solutions that could benefit their communities, local (and national) governments need to work more closely together to harmonize market designs and project requirements.  Oftentimes, a solution provider may implement a solution in one state, but when they go to another state, that utility might make them start from the beginning and prove themselves all over again – many innovators have likened these continuously repeated pilots to death by a thousand cuts. If a good solution is successfully deployed in one place, the barriers associated with deploying the same solution in another market need to be lower. This concept applies to permitting and design as well. The more that permitting  processes and tariff structures, or modular elements within, can be templatized, time and uncertainty are reduced. Additionally, uniformity lowers development costs because the solution doesn’t have to be fully reengineered for each locale. This could also correspond to standardizing equipment and project technical requirements between them, to minimize costly product redesigns and reengineering. Furthermore, state stakeholders seeking to deploy similar solutions should consider entering into reciprocal partnerships or MOUs, supporting collaboration that’s both technical (e.g., between their utilities and independent engineering organizations) and policy-focused (e.g., between their policymakers and regulators). As such, when a solution under that type of agreement is evaluated and approved in one state, when that solution is brought forward in a partnering state, the solution can be given an expedited evaluation and approval process. 

Not just physically, but digitally

The dynamic described previously is not limited to hardware. It is present for many software solutions as well, particularly those that have to integrate with local operators’ control systems. For example, a locality may be interested in deploying a virtual power plant (VPP), which is a relatively low-cost, software-based approach to aggregate distributed and controllable energy resources in order to provide large-scale energy services. A VPP deployment would have to connect to a utility’s and/or grid operator’s distributed energy management system (DERMS) to talk to devices, energy management systems (EMS), energy dispatch and trading system for wholesale market participation, customer information systems to track billing and energy usage, and also be cybercompliant – note too that several utilities have yet to fully roll out these foundational modern digital systems. Not only that, each utility and grid operator might have their own implementations (vendors, versions, configurations, rules) of these systems. Even outside of controls-oriented functions, the variety of data structures, naming conventions, and IT systems can make it difficult to access available market data (e.g., energy pricing), electricity tariff rate structures, and other highly important information. This is a reason why you tend to see that many energy software solutions have their operations concentrated in just a few markets, as the costs and time associated with integrating with another market’s cadre of systems can be hard to justify and thwart efforts to scale. 

This is an area where states can work together (along with their respective utilities, grid operators, technology providers, and regulators) to agree upon more uniform ways to structure data, access market information, and securely interface with market and control systems. This could include partnering with groups that are developing common standards and protocols (such as RMI VP3, LF Energy), building an implementation roadmap across those states and utilities (accelerating implementation of FERC Order 2022), and taking corresponding legislative actions to ensure investments are made to build out the enabling foundational digital systems.   

Aggregated demand and collaborative procurement

In a similar vein, collaboration between state and national governments can level the playing field and expand markets. When it comes to infrastructure, states and countries may often endeavor to ensure that local manufacturing capacity and supply chains are set up within their territories – this can create long term economic growth opportunities, reduce equipment delivery risks, and improve the public’s return on their investment. 

However, issues can arise when multiple states are trying to duplicate efforts in the same sector. Take offshore wind in the early 2020s. Multiple eastern U.S. states were not only supporting a new wave of projects, many funding programs had requirements that the projects needed to source materials and equipment from suppliers located in the state.. The effect of this for a small, burgeoning industry was dilutive and slowed down factory investments as the scaling factors were harder to justify. After all, there are only so many blade, monopile, vessel, and cabling factories that can be supported at a given time, especially early on in the industry’s development. In response, thirteen states and the federal government signed a memorandum of understanding, where they agreed to take more regionalized, collaborative approaches to procurement and supply chain development. 

Relatedly, an area where significant improvements could be made is around the procurement of critical common equipment. To accommodate the load growth from new factories, data centers, and building and vehicle electrification efforts, there are many pieces of equipment that will be needed irrespective of what types of energy are associated: things like transformers, circuit breakers, switchgear, and so on. There are considerable production capacity shortages and long lead times on these, which raise costs and create execution risks for projects. Despite the robust market demand, manufacturers have been somewhat hesitant to invest in expanding production as they worry that the demand will not materialize, which would leave them with underutilized or even stranded assets. 

State and local governments can respond to these challenges in multiple ways. For instance, they could pool together their demand and drive standardization of the equipment so that the equipment is more fungible and interchangeable, as has been previously highlighted by the U.S. National Infrastructure Advisory Committee’s report on protecting critical infrastructure. Also, states  can create well-defined demand guarantees where they can provide assurances to manufacturers and consumers that necessary  equipment will be there, as needed.  

For example, in 2013, the Illinois’ Department of Transportation led a seven-state procurement initiative to jointly acquire a standardized set of efficient locomotives and railcars, with additional funding provided by the Federal Railway Authority to support domestic manufacturing. This effort pulled forward new, more efficient railway vehicles into the market and lowered lifecycle costs. These concepts can additionally apply to secondary markets as well, for example, providing residual value guarantees on heavy-duty electric trucking procurement, to help mitigate risks on the initial purchase (e.g., traditional resale markets not emerging or asset residual values not being realized as projected).

Chapter 2. “That’s what friends are for”: Overcoming commercialization barriers through partnerships

The next facet of the cube pertains to early market formation and investment into technologies that are not yet fully commercialized, especially first-of-a-kind (FOAK) and early-of-kind (EOAK) infrastructure, and why capital formation has been easier for some types versus others. Differences in the ability to demonstrate, commercialize, and scale new infrastructure do not purely depend on the ultimate value of the solution; they are often driven by how the characteristics of that infrastructure affect the pathway to value realization, particularly the inherent capital-intensity and modularity of the solution. 

For highly modularized solutions with lower capital requirements, the pathway can be much more straightforward. Take solar photovoltaics. Though module R&D and fabrication are far from trivial, technical demonstration and deployment are relatively simple. One can usually install and field-test new solar quickly and inexpensively. The advantage extends when scaling the solution to bigger projects: once you reach megawatt scale, given the modularity of solar cells and their balance of plant (inverters, cables, trackers, etc), you can obtain a reasonably clear picture of how even gigawatt-scale projects should fundamentally work. Other highly-modular solutions like batteries and EV chargers have enjoyed similar advantages. Tesla, for instance, in order to address potential range anxiety issues for its customers, leveraged its own balance sheet and government funding to build out a network of standardized superchargers, taking advantage of charger modularity to build in waves. This characteristic has made it easier for rapid demonstration and scaling of those solutions, as the financial community can enter the market, investigate, learn, and expand with relatively low risk.   

However, the commercialization process becomes significantly more challenging with more capital- intensive and complex technologies, such as carbon capture, nuclear, e-fuels, etc. For some of these types of solutions, the early projects can require billions of dollars to construct and demonstrate.  For these types of infrastructure, smaller-scale systems might not provide comparatively representative technical proof points of how the larger system needs to operate. Furthermore, larger sums of capital are often needed for early deployments. What’s more, the financial risk can be compounded as the long-term payoff is not guaranteed, as FOAK & EOAK projects typically have more uncertainty, and the learning rates of subsequent projects may also be less obvious. Furthermore, instead of a typical first-mover advantage that you often see with new technologies, early project investors here might actually suffer from a first-mover disadvantage, where they have the risk and cost of participating in the earlier projects, but don’t accrue the benefits and learnings that are seen in projects executed down the line. 

To help address these types of challenges often seen with capital-intensive, less modular FOAK and EOAK infrastructure projects, adopting a new suite of partnership structures can greatly help to accelerate market formation and improve investability.

Multi-project joint ventures

Catalyzing capital for this class of infrastructure may mean going significantly farther than providing a few incentives and having strong advocacy efforts. More complex and elaborate agreements, private and/or public, are often necessary to drive deployment. Particularly in the form of deployment coalitions, consortiums, and joint ventures that support multiple projects. At the highest level, this can exist in several forms and can be originated by the private or public sector, as appropriate. For illustration, a few examples of commercial approaches to scale new nuclear energy projects, roughly in increasing order of relative deployment impact:

All of them offer significant advantages over pursuing projects on an individual basis. They provide demand signals to supply chains to create manufacturing capacity and to labor groups to create a workforce. Generally, both of these stakeholders may need to see firm demand signals before they will undertake significant investments, which are in turn typically needed to reach a solution’s cost and performance entitlement (otherwise creating a chicken-and-egg problem). They also create more concrete opportunities to drive project standardization; this not only allows a technology to achieve faster learning curves, but it also helps to derisk and justify the investment by providing a more tangible line of sight to the large market. The point for manufacturers and workforce development groups is equally applicable for financiers, who often want to see a pipeline of repeatable opportunities before spinning up their underwriting teams. 

Risk and reward sharing

Having an orderbook of the first several projects, per se, may not be sufficient to create sufficient activation energy at the project level. Though it sends a good signal for supply chains and others, it does not necessarily address the first-mover disadvantage issue that may exist. 

A differentiator in partnership approaches, including the ones described previously, is how to think about alignment and value creation. Traditionally, the way in which governmental entities approach financial partnerships is through mechanisms like subsidies, loan guarantees, offtake guarantees, backstops, and fast-tracked processes. These help to reduce financial exposure to stakeholders, but alone, they miss a key part of the story: the long-term upside that can be created by successfully deploying and opening up a market for these solutions. 

Usually, for the product owners and corporate investors, this is more naturally accounted for and balanced against the downside risk. For instance, companies, from software providers to aircraft manufacturers, might sell their first products as loss-leaders, providing lower pricing to early adopters to reduce the risk to the buyer, which they justify knowing that they should be able to rapidly recoup the costs of early expenses (and even failures) over the broader market pool, if they are successful. For large infrastructure projects, this is more challenging to achieve. When projects are highly capital-intensive, the financial exposures may be too great for the product company and/or equity investor to bear – that company or fund might be entirely wiped out by an individual project failure (for example, Westinghouse had to declare bankruptcy in 2017 when their two U.S. nuclear projects faced challenges). Project stakeholders and financiers might be asymmetrically exposed to the downside risk and, therefore, be inclined to avoid investing in early projects. For a promising technology, you may often find several customers (e.g., electric utilities) lining up for the ‘third’ or ‘nth-of-a-kind’ project, which would likely be derisked and less expensive, while at the same time taking a passive wait-and-see approach with the first project – which produce a stalemate if the first project is hard to get off the ground. 

This is where deployment partnerships with structures that more fully align economic incentives and share in both the downside risk and upside of value creation can be a powerful catalyst for action. Amazon’s structure, for instance, creates this too by being involved in multiple projects where they would ultimately benefit from improvements over time and also through their equity investment into X-energy itself, so they should (depending on terms) continue to benefit down the line if the company is successful. 

In addition to encouraging the formation of joint ventures and consortia as described earlier, states and/or national governments can work together to strategically invest in key solutions, run competitive tenders to prospective providers, and strike profits-sharing agreements and/or warrants (as opposed to pure equity) in situations where government investment played an outsized role in value creation. 

A potential example of this is the recent $80 billion framework agreement between Brookfield and the US Government to deploy new large nuclear reactors. Notably, beyond packaging existing products and authorities (e.g., low-interest government loans for projects), this proposed deal additionally stipulates a proposed profits sharing mechanism where the US Government would receive a share of future profits from reactor sales. Noting that this partnership is early-stage and important details have yet to be disclosed, this mechanism could be appropriate here as you have a hard-to-commercialize sector, with strategic national and geopolitical value, with effectively no domestic competitive products. 

State entrepreneurship

Public sector funders can also play a significant role in creating and incentivizing these kinds of deployment partnerships. Though more commonplace in countries with state-run industries, countries with free market economies have often found it more delicate to navigate. There may be legitimate concerns about how governments’ “picking winners” may create adverse incentives and undermine competitive markets, in some cases. Plus, it may confuse governments’ role of trying to maximize public benefit, versus showing favoritism or extracting economic rents from corporations.  

All that said, there are models for state entrepreneurship that can be very powerful here, balancing the need to pull forward solutions and capital, while protecting the public and maintaining market competition – particularly in markets that are pre-commercial, have few players, have outsized national strategic benefits, and otherwise would not develop on their own without heavy external intervention. These are cases where, though the market benefits are considerable, the activation energy may be too high to stimulate deployment without deep governmental intervention. 

Furthermore, consider where you have first-mover disadvantage challenges but a strong set of prospective fast-followers. To avoid the risk of a Spiderman-meme-like situation where stakeholders (e.g. local utilities or individual states) are pointing at each other to make the first move, downstream project investors could, for instance, co-invest (debt, equity, or backstops) for the first project, even on a minority basis, which would both mitigate risk on the first project and also enable them to access a cost-effective pathway to the technologies they desire to build down the line. You do not traditionally see state and local entities investing in infrastructure projects in other jurisdictions, but doing so could be net beneficial as a faster and lower-cost way to derisk and execute their own projects. 

In addition, where appropriate, public financing entities investing domestically (e.g., states, green banks, federal agencies) could, where appropriate, consider extending their authorities to borrow some concepts from the US’s international playbook. Organizations like the Development Finance Corporation (DFC) can make equity investments in strategic, high-value projects, particularly where the normal capital markets would otherwise struggle to enter until the investment thesis is more clearly actionable. Such a process would have very clear scopes, firm guardrails, clear commercial competition plans, and be compatible with legal and market structures to create the intended benefits without confusing or distorting markets. 

In any scenario, there should be a corresponding plan for how the public profits would be used. For example, it could be used to raise capital for other governmental activities or directly returned to the public in some way. Or it could be efficient to recycle the funding towards related activities and balancing of the governmental ‘venture capital’ portfolio, as would a strategic sovereign wealth fund.

Chapter 3. “Highway to the deployment zone”: Faster, risk-weighted transaction execution

There’s a common cliché from finance that time kills or wounds all deals. Increasing the speed of policy formation and deal execution is essential to unlocking growth and investment, especially for newer sectors. We will particularly focus on the public capital side of the equation. Here, there is a great mismatch between public and private investment decision time scales.  In the private sector, deals are expected to be completed on the order of months or even weeks. Often in the public sector, this can add many months to years, with a high degree of uncertainty, depending on the program. There can be many idiosyncrasies associated with public funding – e.g. infrastructure projects with federal dollars may have additional compliance requirements (e.g. for environmental regulation or for domestic manufacturing). Though there are many deep policy questions here, for this discussion, this piece will focus on ways to accelerate the process.  

Staffing for success

While it’s easy to say that the government should move faster, the reality for many is that the individual government program officers are typically working at a rapid pace. This is especially true at the political level where the motivation to make progress in a short amount of time tends to be very high. Particularly, when it comes to developing new programs, they do a massive amount of work, mostly unseen by the public, and with very few resources and are often overstretching to meet deliverables. 

The other side of this is that when new programs and initiatives are rolled out, there often isn’t a similar level of flexibility in staffing levels and allocations. In fact, staffers at the federal, state, and city level can get overwhelmed by the volume of direct work and information requests, following the relevant laws and statutes. A new capital program may get introduced, but the number of people to implement that program might not change rapidly. For instance, the Inflation Reduction Act of 2022 introduced and/or influenced dozens of tax credit programs, and accordingly had to issue almost a hundred pieces of new guidance, so the market could act on them. A relatively small group of people led by the Treasury Department’s Office of Tax Policy were charged with generating that official guidance (as required, to ensure consistency and fairness). In addition, a number of the programs therein had complex elements which required deep technical expertise (e.g. tax law, energy markets, carbon accounting, energy technology) to complete their work well – skills that are in relatively short supply and in high demand, both inside and outside the government. The rate of progress was also slowed by some ambiguity in the law itself, where key technical questions (e.g. accounting methodologies and criteria) accordingly needed additional time to be addressed during implementation instead of beforehand. The associated teams ran at breakneck pace to complete all those issuances in just two years. Yet, many engaged market actors who were excited to proceed with shovel-ready projects experienced challenges, as they waited for guidance, thereby slowing initial progress. 

To meet the rapid needs of an eager market and particularly in times when the governments are trying to push comprehensive reforms, agency leaders and legislators need to consider ways to make sure that the implementing organizations are sufficiently well-staffed and resourced. This should not only consider program staff (both existing and new), but also functional teams (e.g. legal, communications, stakeholder engagement) where bottlenecks can often form as they support multiple programs. This can include having surge capacity resources (either short and/or long-term, internal or external) bringing on technical and subject matter experts to help enable fast and fair processing. Also, an implementation staffing needs assessment should ideally be conducted as part of the policy-formation & legislative process so that the appropriate resources can be allocated early and efficiently. To further ensure efficiency of resource allocation and implementation speed, legislators should consider expedient ways to drive greater clarity and specificity at the point of legislation, where applicable. 

Iterative capital deployment programs 

It is tempting and important to get things totally right on the first try, particularly when it comes to government funding, which is highly scrutinized. That said, an approach which has delivered success is to release capital in phases. Here, instead of issuing all funding at one time, the program office (especially for a large competitive program) might split the deployment into phases over time. The first phase is executed quickly and the subsequent phases are introduced later. While this may introduce some short-term friction, it not only gets capital and projects moving faster, perhaps as importantly, it gives both the funders and market chances to build momentum, learn from one round, and improve towards the next ones. A good example of this was the DOE’s Grid Resilience and Innovation Partnerships (“GRIP”) program. This was a $10 billion program from the Bipartisan Infrastructure Law to enhance grid flexibility and improve the resilience of the power system against extreme weather.  That $10 billion allocation was split into three phases to be issued over a few years. Over those three phases, the quality and ambition of the applications and programs funded increased significantly as all stakeholders were able to learn and adapt with each round. 

Progress over perfection

For public programs, this is a major challenge driven by misalignments of risk tolerance. Many ambitious government funding programs are faced with a strange pickle. On one end, they have the duty, mandate, and power to drive innovation, do deals ahead of the commercial markets, and derisk promising solutions to a point where they can scale on their own and deliver the broad public benefits associated with that solution. On the other hand, the funds being used are raised from people’s hard-earned money or a state or country’s valuable natural resources, and neither should be handled frivolously. The fear of the political fallout from the latter may drown out the benefits of delivering the projects; that is, in the eyes of an underwriter or program officer, the downside risk may often outweigh the upside creation; doing no deal may feel safer than doing a ‘bad’ deal. 

Take the case of two companies that received funding from the DOE’s Loan Programs Office (LPO) in the early 2010s. One is the solar cell manufacturer Solyndra, whose idea was to decrease the cost of solar energy by using cylindrical, thin-film solar cells that could capture the sun’s energy from multiple angles, compared to their conventional flat-panel counterparts, and thereby bring down their levelized costs. Solyndra received $535 million in federal loan guarantees, which it defaulted on and went bankrupt when market conditions changed (they, and other promising new solar companies, were undercut by plummeting prices of silicon solar cells from China). The default filled the news cycles for months, sparked several congressional hearings and investigations, and also left a profound imprint in the minds of many program funders. No government underwriter wants to be dragged to the Hill or see their name in the papers for this reason. On the other end of the spectrum, you have a little-known car company called Tesla, which received a $465 million loan to expand electric vehicle production. Tesla, as we know, went on to become one of the most transformational and successful automobile companies in recent history. And yet, comparatively little fanfare has been made about the government’s role in making that a success. Two loans, about the same size, issued around the same time, by the same organization. Not only did their actual outcomes differ, but the financial outcomes to the upside and the political fallout to the downside were diametrically-opposed.

This contrast becomes even more stark when looking at the broader picture. Again, taking the example of the LPO (now Office of Energy Dominance Financing (EDF)). It has historically had a loss rate of less than 3%, which is on par with most commercial and investment banks – entities which often invest in markets with more proven solutions and less uncertainty. Moreover, other governmental programs, like DARPA, NIH, and ARPA-E, also have strong investment track records. All that said, the perception of risk has led to an overly deep risk conservatism and a sense of fear of doing deals that might go sideways. This creates huge process drag for the entire organization and curbs the rate of progress that can be made, as underwriting processes can become elongated and difficult to navigate. Furthermore, for many loan applicants, it can take several years to get through the loan process; anecdotally, some applicants have complained it was slower and harder to access than what they could wrestle from the commercial market. 

Overall, this is a situation where the tolerance for and understanding of losses for public financing needs to be reconceptualized and appropriately balanced, given the mission. Not all losses are bad. Individual losses are not necessarily detrimental if outweighed by net gains. There are significant opportunity costs of not taking risks appropriately. More can be accomplished without jeopardizing public interest. 

Given the governments’ having historically demonstrated their ability to be good stewards of capital across long periods of time, the inherent risk that accompanies the pre-commercial asset classes they support, and the urgent need to make progress and unlock markets, this is a situation where more streamlined, faster underwriting processes that increase the speed of execution are critical and warranted. Furthermore, governmental funding organizations need to be given more ‘air-cover’ so that individual misses do not get over-politicized, but are understood to be reasonable elements of a process for progress. Note that accomplishing this process and cultural shift requires major work internally with staff, policymakers, and the broader public. This is an aspect where integrating concepts like state entrepreneurism and more balanced portfolio-based risk and reward approaches, described previously, can also unlock new investment and risk management strategies, greater societal benefits, and increased comfort to staff and leaders to usher in that kind of transformation.  

Creating longer and more durable windows of action

A more obvious reason to move quickly on policymaking is to deliver benefits faster to project and community stakeholders – which is, of course, the main objective of the policy in the first place. But beyond that, investors understand that the political time windows covering favorable conditions could be short. This is particularly acute for assets with long development cycles and/or high upfront costs: e.g., building new manufacturing facilities or developing interregional transmission lines can take years. Indeed, it was estimated that 60% of committed IRA-funded clean energy manufacturing projects were originally not slated to come online until between 2025 and 2028. 

Moreover, the IRA timeline created some interesting time crunches. Though the law was thoughtfully conceived with some longer time horizons for tax credits, in practice, the actionable investment window for that version ended up being incredibly short. The law was passed in August 2022. It then took time for programs to be formed and guidance to be released, as described earlier. In parallel, the investment community had to learn, come up the learning curve on the new opportunities, and build ecosystem collaborators (which themselves are also reacting and forming). Next thing you knew, as the election window started to ramp and policy uncertainty increased, many investors started to park their capital and take a wait-and-see approach in early 2024, as evidenced by strong increases in fund ‘dry powder’ (raised but uncommitted capital) but a sharp dropoff in actual capital deployment and assets under management at that same time. 

Moving quickly is critical to give investors, communities, and other associated stakeholders as much time as possible to understand the landscape, develop deployment pathways, build new solutions, and ideally iterate, given the chance to take more shots. 

That was a shorter-term perspective. In the spirit of leveraging speed to open the front end of the window, longer term, some thought should be made to how one extends the investability window. Investors typically do not decide to invest in a project purely due to the project’s merits. Particularly when entering a new sector, it’s also driven by the commercial prospect of potential follow-on deals. Short political windows and the associated ‘stroke-of-pen’ risks often raise major flags for the risk committees at financial institutions. As was mentioned earlier, many IRA programs arguably had much less than two years of impact. Deeper policy stability is critical to ensure continued, long-term investment. That type of stability has, at least historically, been a hallmark of the US regulatory & commercial system and a positive differentiator in the race to attract capital and talent from across the globe. For sectors with high strategic value, high early capital requirements, and long investment cycles, policymakers should consider more mechanisms to provide longer-term policy guarantees to give investors assurance that they have long enough windows to justify their business cases.

Chapter 4. “Okay, now let’s get in formation”: programmatic policy synchronization for fast market formation

Catalyzing the deployment of new infrastructure is usually enabled by a bevy of policy actions. This can be important as transforming a sector may require several changes in economics, behaviors, and processes. Especially when resulting from expansive new legislation and/or executive actions, the government may be required to deliver a host of new policy programs, including new rules (e.g., permitting reforms, categorical exemptions), funding allocations and programs, implementation guidance (e.g., for tax rules), informational reports (e.g., National Lab technical studies, commercialization reports, etc). These types of activities are highly valuable as they tackle different aspects of the deployment challenge and take huge amounts of effort to be effective. However, they often get rolled out and implemented on separate and independent processes. This can actually stall and frustrate deployment efforts as most investors will want to see the major policy puzzle pieces locked in place before getting comfortable enough to deploy capital – for most risk organizations, ‘stroke-of-pen’ risks are often viewed as red flags. Conversely, this hesitation can cause consternation for policymakers and advocates who may feel that they have done the heavy lifting in passing new legislation, but don’t see a corresponding flood of serious commitments immediately after. 

Policy deliverable schedule alignment

One way to address this is to implement a visible and synchronized schedule, showing all the related policy efforts and programs for an initiative. The interdependencies between those activities would be easier to identify and allow relevant stakeholders to see when all the major puzzle pieces would be in place, and in turn, also align their investment and advocacy efforts accordingly. 

An example of this comes from carbon capture: the federal tax credit for carbon dioxide sequestration (45Q) was first issued in 2008; however, the first set of tax guidance was not issued until 2020, as the IRS, Treasury, EPA, and other agencies had to build a suite of complex regulations around reporting, verification, stakeholder comments, and more. A consequence is that, though the tax credit was in place (and though there were strong complementary financing capabilities from renewables tax equity and thermal power plant development already in place), little to no investment went into this sector, effectively ‘wasting’ many years of eligibility and frustrating many interested stakeholders. 

By contrast, take advanced transmission technologies: despite being rapidly-deployable and cost-effective solutions to increase transmission and distribution system capacity and performance, they have been historically underutilized. To increase awareness and deployment, the federal government developed a suite of products including the formation of the Federal-State Modern Grid Deployment Initiative, grant funding via the DOE’s Grid Resilience Innovation Partnerships program, loan funding from the LPO’s Energy Infrastructure Reinvestment program, categorical exemptions in federal environmental permitting on upgrading existing transmission lines, a Pathways to Commercial Liftoff report on grid modernization, new national deployment goals, technical reports and new assistance programs by the National Labs, and more. These were all released within a couple of months of each other in 2024, so the market had a fuller picture to which it could react and begin to make greater progress. Since then, dozens of states have passed new laws, and the number of projects being pursued and funded has also been on the rise.

Capital source navigators

Relatedly, new legislation may result in several new governmental funding programs or changes in missions for existing funding programs. Many of these efforts and changes might go unnoticed or disproportionately utilized. Take the energy- and climate-tech startups, who may be seeking capital to grow or transform their businesses. Government capital tends to be attractive as it is often willing to embrace early technology risk (unlike most commercial capital), is often non-dilutive to the company’s capital stack, and can give the company extra visibility. Most people in the energy sector will know of programs like DOE’s ARPA-E (Advanced Research Program Agency for Energy) or the Loan Programs Office. Far fewer may know that there may be funding available through ‘non-energy’ agencies like the US Department of Agriculture, Small Business Administration (SBA), the Governmental Services Administration (GSA), or the Department of Defense (DOD). These have increased the pool of capital available and provided a wider array of financing products that increase the chances that the right kinds of capital are available to serve the spectrum of company needs.

Initiatives like the Climate Capital Guidebook, published in 2024, can be helpful to make these types of programs less opaque and easier to access, especially for startups and small businesses. At the state level, databases like DSIRE USA have been providing a beneficial service aggregating information on state incentive programs for years. 

Making information on federal, state, and/or municipal funding programs highly accessible and searchable from a centralized, common location is key. Or else they may get lost, buried in webpages that few know where to access. This process can be further enhanced using cross-cutting discovery technological tools. For example, AI-based agents could be used to continuously and automatically map these programs and keep information organized. Also, large language models can be deployed to allow stakeholders to more readily identify and compare programs of best fit (matching things like user capital needs versus program ‘ticket sizes’, usage restrictions, and eligibility requirements). 

Zooming out from individual needs, this would also augment new solution developers’ and investors’ ability to more comprehensively understand the relationship between governmental capital programs and the role they play in energy solution commercialization and deployment. For instance, related to technology readiness, it would make it easier to chart what programs are available to technologies at different stages of maturity. From the National Science Foundation (NSF) for fundamental research, or the Advanced Research Program Agency-Energy (ARPA-E) for more applied technology development and early manufacturability demonstration, to planning grants from various agencies, and federal tax credits for infrastructure projects. 

Similarly, funding programs could be mapped against project development phases. In areas like international project finance, this exercise would be valuable to demystify which programs and institutions are suitable for various phases of project development. In some cases, an international energy project developer using American technology might need to navigate a gauntlet of different funding institutions: from the US Trade and Development Association (USTDA) provide grants for front-end engineering development (FEED) studies, the Export-Import (EXIM) bank for domestic manufacturing loans, to the Development Finance Corporation (DFC) for equity co-investment and political risk insurance. Not to mention multilateral development banks like the World Bank and International Finance Corporation (IFC), which themselves have an array of funding programs and instruments. Here, providing clearer, more cohesive representations of how a patchwork of funding sources can work in tandem and be packaged together can have outsized strategic competitiveness for American companies. This would thereby help level the playing field for companies competing against companies backed by governments that can provide fully wrapped financing solutions.

Chapter 5. “C.R.E.A.M.”: More holistic valuation tools and methodologies

This facet addresses the challenge, which is still too common in solution valuation. Not of valuing the companies themselves, but of proving to customers and investors that the proposed energy solution is worth adopting. Especially because regulation alone is usually not a salve for driving energy transition activities in free market economies. While regulation may steer what should happen, costs and economics are often bigger drivers of how quickly that transition occurs. Borrowing a chemistry analogy, economics determines the activation energy and kinetics of transition policy. Solutions need to demonstrate their fit and attractiveness in often economically competitive and constrained environments. In addition, stakeholders with shared interests (e.g., not just federal, but also at the industry and state & city levels) should invest to build a common valuation infrastructure (e.g., resource characterization data, system models, and more) that helps lower the barriers to deployment and investment. Doing so will also make it easier to appropriately size any associated financial programs (like subsidies and grants), to ensure that there is sufficient catalysis to get multiple stakeholder groups moving and investing. 

Understanding end-use unit economics 

This means that solution providers, policymakers, and advocates need to develop very deep understandings of the commercial drivers and realities of the markets they are looking to serve. They need to put themselves in the shoes of their customers and related stakeholders. This is particularly important when trying to sell solutions into new and competing markets or applications that may not otherwise be required to change (e.g. regulations on fuel use or emissions).  This should seem obvious and has always needed to have been a primary focus, yet it’s a step that some innovators, policymakers, and advocates have not always adequately prioritized.  

This is a recipe for failure, particularly in the infrastructure space. Saying it’s good for the world is not sufficient to get traction; a need does not mean there’s a market. Getting a strong, detailed, and accurate understanding of customer unit economics is foundational to the success of any infrastructure. By their nature, this should encompass more rigorous estimations of how much a solution costs to produce and deliver (which often tends to be underestimated in early stages, and leave stakeholders to be surprised later on by cost overruns upon implementation). And it should likewise reflect an understanding of the customer’s cost and value drivers, as this affects project revenue and adoption readiness. This is a question that sometimes gets missed in the early stages, but in later stages, particularly when seeking significant capital to fund projects, it becomes highly pertinent as investors tend to take a much more critical viewpoint of the economic potential of the project, both to the upside and downside. As part of the process of developing detailed assumptions, they should develop reasonable sensitivities and scenarios that illustrate how the financial performance of the project may vary due to changing internal and macroeconomic conditions. 

Diagnosing this early not only helps the solution providers to be better positioned for commercial success with their customers but also enables them to catch potential flaws early enough, make different design choices, and ensure the product’s value proposition is more robust and resilient. In turn, this helps reduce project risk and gives comfort to financial investors along the way. 

Governments can help by driving easier price discovery and transparency, collaborating with project stakeholders (especially developers and customers) to compile and share relevant cost and value data in more public forums. Reports generated by government agencies (e.g., the series of Pathways to Commercial Liftoff reports by the US Department of Energy’s Office of Technology Transition/Commercialization), national laboratories, and private third-party analysts (e.g., BNEF, S&P, Lazard) have made strong contributions in attempting to fill those information gaps. Continuing to support and drive efforts like those would be valuable. Having state and regional actors (e.g., groups of state economic development organizations) can also help to make them even more granular, and perhaps more local, which would drive even more actionability. They could also compel information disclosure through legislation (akin to efforts in healthcare and drug pricing transparency over the past few years) or require a greater level of disclosure as a part of some government-funded programs, especially with new industries. 

Development of accessible, trustworthy technoeconomic evaluation analysis tools

Intending to perform the types of deep technoeconomic analyses described in the previous paragraph is one thing. But having the ability to do that is another. In many situations, you either suffer from data unavailability or asymmetric access. Taking the electricity system, for example, there are very few stakeholders (usually utilities and grid operators) with deep access to information about how the system and its underlying assets are performing.  Sometimes, this is intentional due to potential concerns around security and market manipulation.  Sometimes, like often in the case of customers requesting their own historical hourly usage data, the process might be archaic and difficult. 

That said, a major downside of this situation is that third parties are often not in a position to interrogate resource plans, challenge priorities, or test and validate new ideas. There are third-party analytics tools, but they sometimes don’t have the requisite data, fidelity, or trust to ensure that their results cannot be readily dismissed. That also makes it too easy for grid operators to dismiss new ideas without adequately considering them. Not having accessible data and models can result in excluding beneficial solutions from being part of the menu of options or from making it to market. 

This has been a pretty common battle with an array of more ‘disruptive’ energy technologies, like distributed energy systems and advanced transmission technologies. But it also occurs with generation. One example is the prospective transition of the Brandon Shores coal plant in Maryland. The plant’s owner, Talen Energy, filed to retire the facility because it was no longer economically viable to operate (following a trend with many coal plants around the country). However, the grid operator, PJM, sought to force an extension of its operation (via striking a reliability must run (RMR) contract) for four years until new transmission capacity can be brought in, citing potential reliability concerns. State and congressional officials strongly opposed this plan as extending the operation via an RMR contract would increase costs to ratepayers and increase local pollution. A group of advocates and energy experts, led by the Sierra Club and GridLab, proposed replacing the plant with a mix of energy storage, reconductoring, and voltage supports, which they claimed would be not just cleaner, but more cost-effective than what was proposed – even more so in the likely event that the transmission project is delayed. Note too that a similar concept was deployed in New York City at the Ravenswood power plant. However, that suggestion was dismissed by PJM, without real allowance for iteration, arguably for not using the right modeling methodology, and for not being a project sponsor. Aside, the decision is also reflective of PJM’s energy storage market structure’s inability to effectively value energy storage’s benefits as both energy and transmission assets. Though an agreement was ultimately reached, many stakeholders view this settlement as suboptimal, not just because of its outcome (even more so as it does not help wider issues like high-capacity market prices), but because the advocates did not have the modeling tools in place to meaningfully evaluate the options and force a more substantive dialogue with the grid operator. 

Rebalancing this situation is essential in order to allow additional key stakeholders like policymakers, regulators, project developers, solution providers, and other experts to interrogate the opportunity space and propose actionable new ideas. This should include creating common, accessible infrastructure for data, models, and evaluation methodologies that an interested stakeholder would need to know to assess potential project options – which are otherwise difficult or prohibitively expensive to access. Note too that government endorsement of these tools greatly assists the credibility of the prospective solution. 

The Australia Energy Market Operator (AEMO), for example, did exactly this by implementing the world’s first connection simulation tool. This tool is a digital twin of the country’s electric grid that project developers are using to rapidly evaluate their prospective solutions in an accurate, safe, and trustworthy environment. 

Also consider two approaches to accelerate geothermal project development, where insufficient quantification of the resource can add significant development costs and project risks. One example is Project InnerSpace: this is a collaborative effort funded by philanthropy, the US federal government, and Google to provide a common, open set of surface and subsurface characterization data. Another example is the Geothermal Development Company: this is a special purpose vehicle fully-owned by the Kenyan government, which performs the resource characterization and steam development themselves, and shares the information with prospective geothermal power producers, which in turn has significantly lowered the barriers to entry and made Kenya a global leader in geothermal power production. Both approaches are being used to help project investors to be more targeted, capital-efficient, and prolific. 

Similarly, Virginia recently passed a grid utilization law requiring their local utilities to measure the utilization of their transmission and distribution systems, including establishing metrics as well as plans to improve those metrics. If implemented well and the associated data is made available, having that data can drive more targeted investments, more cost-effectively manage customer energy bills, and allow new solutions like virtual power plants, distributed energy, and grid-enhancing technologies to be appropriately valued and play bigger roles in the energy solution mix.  

Quantify, aggregate, and internalize external benefits and costs

Many solutions labeled for “climate” often have a wide array of other benefits – lowering costs, boosting reliability, creating jobs, improving health, to name a few. In some cases, reducing emissions might be a secondary or even tertiary benefit. This often results in the cost-benefit of a potential solution being understated and capital being underallocated. Alternatively, it can lead to greenwashing, where the benefits are overstated relative to the impact and capital being misallocated. 

In some cases, like in electricity markets and industrials, decisions are made on a narrower set of financial criteria, ignoring the broader value proposition – e.g., which solution has the lowest upfront cost? What is the least costly way to meet power demand on hourly basis or does the solution pay itself back in three years? There have been some directional approaches that at least help with the first issue of benefit underquantification. 

An example is with FERC Order 1920, a rulemaking that covers new approaches to transmission planning and cost allocation. It called on state decision criteria to be expanded from just cost and reliability to a consideration of seven benefits: avoided or deferred infrastructure costs, reduced power outages, reduced production costs, reduced energy losses, reduced congestion, mitigated extreme weather impact, and reduced peak capacity costs. As it gets implemented across the country, that should provide a considerably more fair and holistic basis to assess the potential benefits of transmission projects and will likely increase the viability of game-changing concepts (e.g., reconductoring, interstate/interregional transmission). 

In other cases, like in some larger governmental grantmaking or policy efforts, a suite of benefits may be quantified but are estimated and presented in siloes, where the benefits appear to be orthogonal and nonadditive. So, the key to addressing that is developing valuation frameworks that do the difficult task of weighing the benefits together in a clear manner that’s directly relatable to the investment thesis. Applying ways to translate those benefits commensurately into the project’s financial terms is critical to ensure they get prioritized and realized. The IRA had elements of this at least conceptually, for instance, by applying bonus credits to low-carbon energy projects that paid fair wages, were put in economically disadvantaged areas, or used domestically-manufactured equipment. On a local level, there are state laws like Montana’s transmission law that established a new, elevated cost-recovery mechanism for transmission projects that used more efficient, high-performance conductors. 

Going further along the point of internalization, there are more structural issues where markets may not be designed to solve for the outcomes that stakeholders are seeking.  In electricity, for example, power markets generally solve for meeting demand for the least cost in a short time period (following a narrowly-defined reliability scheme). This may not only ignore solutions that may save more money over longer periods of time, but it also does not explicitly solve for attributes like resilience, sustainability, or flexibility. That often means external out-of-market solutions are needed to create desired outcomes (e.g., reliability-must-run contracts, tax credits, renewable energy credits). While those have had a great impact on their specific goals, they are imperfect and may have unintended consequences, like distorting market behavior or disincentivizing cost-cutting innovations. Solving that on a greater scale and more fundamental basis in some segments may require greater reforms, like redesigning electricity market structures, revisiting the Energy Policy Act and Federal Power Act, and more.

Chapter 6. “Take it to the bridge”: Rethinking the ‘missing middle’ problem

For the last face of the cube, it is incumbent to describe the role that a whole cadre of investors needs to play. Not just venture and early stage, but particularly later stage capital providers such as project financiers (equity and debt), institutional investors, pension funds, insurance funds, and even utility balance sheets. They have a massively important role and arguably need to be more proactively involved with ensuring the maturation of promising earlier-stage solutions. The ‘missing middle’ problem in energy, where a lack of transition and demonstration capital thwarts promising venture-backed solutions from progressing to mainstream infrastructure, is well-known. While continued innovation is needed to form new capital solutions to fill that gap, there is a lot that investors can do to shrink the gap and make that chasm easier to traverse. 

Engaging earlier to pull companies to maturity

Though they control the greatest share of the majority of assets under management and can support bigger ticket sizes, by the nature of their investment mandates, late-stage investors’ risk tolerances tend to skew more conservative. They tend to concentrate their efforts on solutions with established track records and large addressable markets that provide greater certainty of execution and relatively consistent returns. And they typically have more than enough deal volume to justify their focus in those markets. Consequently, though these investors typically at least follow major new trends, they tend to be hesitant to enter newer markets; in fact, many are content to just ‘wait’ for the market to come to them before they engage. This introduces several challenges. 

First, at the most basic level, it means that many lower-cost sources of capital may be hard to access for newer solutions, whether climate and otherwise, which makes it more challenging for them to compete on a level playing field early on. Next, as importantly, it means that companies may miss critical opportunities to get sharper earlier. The attributes that are valued by investors change dramatically over the life cycle. 

For instance, many early-stage products are rated by things like their uniqueness, differentiation, disruptiveness, and total addressable market. Those attributes that tend to attract venture capital and garner the most market visibility in the media. By contrast, at later stages, especially for project uniqueness and differentiation, might actually be seen as sources of risk: risks that get compounded if the solution is supplied by a new market entrant. Moreover, fungibility and supplier optionality may hold even greater weight. To mitigate the risk of a situation where things could go wrong with a project’s vendor, project investors are often comforted knowing there are substitutes that can be brought in as part of a contingency plan. In addition, though addressable market matters to both groups of investors, early-stage investment tends to focus on alignment with macroeconomic trends. While for later stages, micro arguably supersedes macros, as diligence tends to be more deeply and narrowly-focused on project-specific questions, like contracts, pricing, and execution. Furthermore, late-stage underwriters may need to conduct deeper diligence and acquire more data to get comfortable with the new technical attributes, features, and vendors, which can be a drag on their process as they have to spend more time and money to go through that process. Whereas for earlier stage investors, that deep focus on the new features already tends to be an integral part of the diligence and value creation process, and they get rewarded for that accordingly. 

Overall, not understanding these differences can create shocks for new companies that have had great success with attracting capital early, but get stopped in their tracks when graduating to the next level of maturity. This has also often meant that prospective solutions providers miss the opportunity to sharpen their pencils, address more detailed questions, and have their key assumptions stress-tested. Even if they are not prepared to transact, later-stage investors, especially in infrastructure project finance, and their partners (such as independent engineering firms and insurers) should devote additional time to engage with promising technologies early on and bring them along. This is also in the investors’ interest as it allows them to get up the learning curve faster, be better positioned to take advantage of those opportunities when the markets come around, and ensure that the solutions that do make it to later stages are of higher quality and more likely to yield successful transactions. 

Formulate deal templates and archetypes

The previous steer for early engagement comes with a conundrum. For many investors, it is hard to meaningfully engage until there is a complete deal on the table. By complete, I mean a fully-fleshed out representation of all core theses, puzzle pieces, assumptions, and more, mapped to a specific, actionable situation. This is the scaffolding onto which the financing packages are built and the basis by which most risk managers are trained to evaluate the financeability of a solution. This can be true for governmental and commercial financing programs; “bring us deals to look at” is a common refrain.  

The conundrum comes because many of those details may not be fully known early on, so there may not be a fully-formed deal to bring per se, and in addition, there might not be a clear set of underwriting criteria that the company can aim for. Even for offices like the DOE LPO, which was proactive and engaged, struggled to get significant market traction for a few years, both to their and the market’s frustration. Instead of both sides staring at each other like the Spider-man meme, the impasse can be broken by creating deal templates and archetypes, which can take a more hypothetical representation of assumptions, including reasonable scenarios, and frame what the financial structure and execution pathway would look like for that. 

The LPO, for instance, did just that, creating several deal archetypes based on customer type and technology, with terms and execution timing aligned based on the associated risk. For instance, deals involving more established energy solutions (e.g., solar, storage, transmission) with investment-grade utilities providing corporate guarantees were allowed to have faster execution processes than some other deals, commensurate with the comparatively low level of credit risk involved. Next, deals associated with a narrow focus, like the Advanced Technology Vehicle Manufacturing program, tended to have more well-defined execution processes. For others that may have more default risk (e.g., newer technologies, non-investment grade counterparties), those deals might take more time to diligence and underwrite. This benefitted both the Office and the applicants, as this created clear, agreeable expectations for each.  Providing this clarity greatly increased deal volume and traction, as more clients brought more loan applications and had greater clarity and confidence in the transaction process they were entering into. 

More broadly, this is an area where the companies, industry associations, and other advocates can play an active role, independently and in collaboration with governments. Formulating early pictures and archetypes for financial stakeholders and investors can significantly enhance feedback and capital formation. 

Collaborate, Celebrate, and Replicate 

Finally, energy investors, especially in less mature sectors, need to find ways to be more open, as appropriate, about their investments and investment strategy. Though for product companies, this usually comes a bit more naturally and is necessary to market their products, later-stage investor communications for individual deals often tend to be more guarded and high-level. This is usually not because the information is unavailable. Sometimes this can be hard as they may be attempting to protect sensitive information, or the move may be to protect potential market share and not lead other players on to the same strategy (particularly if they worked hard to open a new market). The richer information transfer usually happens privately during deal execution (e.g., as part of due diligence) or during project- or fund-level capital raises. 

In newer spaces, however, progress itself is often catalytic (rising tides floating all boats). The easiest way to persuade a risk committee to invest is to show precedents and comparables. An underwriter can stand up with greater confidence when they can show that someone else has done it before.  It can be even more validating when that ‘someone else’ is a competitor. Project investors should endeavor to share more about how they got comfortable with the deals, market, and/or technologies involved, as appropriate. This is not out of altruism. Especially in emerging sectors, rapidly expanding the market and creating a foundational flywheel can be commercially more beneficial for the firm versus purely protecting market share. Getting more investors comfortable makes the pie bigger and encourages other investors to pursue their own projects. This then sends actionable signals to ecosystem stakeholders (e.g. supply chains) to invest and create production and delivery efficiencies. The efficiencies improve unit economics, reduce risk, and increase returns both down the line and potentially even on the early projects (e.g. operating expense and replacement parts scarcity reduction). These scale efficiencies and flywheel creation should help investors generate more deal flow and revenue, building on the expertise they have built and leadership position they have established. The advantages can be extended where significant public funds were allocated to the project, perhaps in exchange for preferable financing terms from the public funding institution. 

Similar ideas apply to public sector funding programs. Making announcements about projects and ribbon cuttings, though important, are  shorter-term and quick-hitting communications strategies that tend to be more formulaic. Instead, policymakers should take a page from commercial product marketing. Policymakers should view their deployment policy efforts as their products. As such, they should create consistent, thematic narratives to which individual initiatives, projects, legislation, and rules, can all be framed. Even though they may be exhausted after delivering the policy itself, government officials and program officers should not undervalue the uplift phase. It is crucial to plan to spend ample time and resources to explain and repeat the micro- and macro significance of each product to investors and community stakeholders, especially in today’s competitive information environment. Building greater public buy-in both nationally and with communities, is crucial, especially to longer-term, transformational projects. Government funders should work hard to bring along additional local governments, nonprofits, and investors along to collaborate, celebrate, and replicate the successes. 

Akin to what was mentioned in the valuation section about common information infrastructure, working closely with investors, industry, and other stakeholders to collate and amplify key investment theses, lessons learned, and others will be key to building investor confidence and creating more of a flywheel effect for follow-on investments. 

Conclusion. “The Next Episode”

Taking a step back, we have laid out many ideas and concepts in this paper: harmonization, collaboration, acceleration, synchronization, valuation, and amplification, to name a few. It may seem daunting to look at policymaking across so many vectors, particularly in a manner where many of those puzzle pieces have to align and move in sync in order to unlock significant and consistent investment. That said, the power of a strong and well-intentioned administrative state, at both national and local levels, lies in its very ability to wrap its arms around big challenges, partner with private industry, and leverage its resources to create high-value solutions with outsized benefits. This has repeatedly been proven in the US and globally across time and multiple sectors: whether it’s going to the moon or inventing life-saving medical treatments; building massive infrastructure, or delivering nanoscale electronics. States and towns should roll up their sleeves, find creative ways to collaborate, develop foundational information tools, and remove unnecessary market barriers. Investors should take an even more active role, making their needs known to early-stage companies and policymakers, building consortia to pull new opportunities forward, and creating an actionable set of commercial opportunities that they would find attractive. What’s more, acting now to design and implement new, actionable administrative structures, especially at the state and local level, will not only create more high-value pathways for progress now, but if it is well-coordinated, it can also lay a foundation for federal actions that can be taken, nearer and longer term. Though the challenges and journey are complex, the opportunity before us is massive, the imperatives are clear, the transformations are tractable, and success is achievable. This can be done, so let’s get busy!

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)

FAS Launches New “Center for Regulatory Ingenuity” to Modernize American Governance, Drive Durable Climate Progress

WASHINGTON, D.C. — February 12, 2026 — The Federation of American Scientists (FAS) today announced the launch of the Center for Regulatory Ingenuity, a new hub designed to reimagine how the government tackles “wicked” modern problems while delivering everyday benefits for Americans.

“We can’t manage today’s problems with yesterday’s laws,” said Dr. Jedidah Isler, FAS Chief Science Officer. “The Center for Regulatory Ingenuity will bridge the gap between high-level policy design and on-the-ground implementation, ensuring that government promises translate into real-world results that Americans experience.”

FAS is launching the Center for Regulatory Ingenuity (CRI) to build a new, transpartisan vision of government that works – that has the capacity to achieve ambitious goals while adeptly responding to people’s basic needs. CRI does this by (1) creating high-trust environments to brainstorm and refine the big ideas that will breathe new life into government, and (2) building a “network of networks” that supports policymakers and practitioners in implementing those ideas at scale.

“The administrative state has delivered extraordinary achievements in the past, but today’s operating model is a complete mismatch for the complexity we face. As a result, trust in government has been in the basement for decades,” said Loren DeJonge Schulman, Director of Government Capacity at FAS. “Strengthening government capacity is an investment in democracy and deeply intertwined with climate progress. It requires thinking creatively about how to build the government we need, not endlessly pointing fingers at the government we have–CRI aims to do just that.”

CRI is launching with a focus on climate: a space where there’s an increasingly evident mismatch between the functions the government needs to provide and the tools it has to deliver. FAS is pleased to welcome Climate Group North America, ICLEI USA, and the Environmental Law Institute as core partners in this initial work.

“Today’s rollback of the endangerment finding underscores that we are in a new era for U.S. climate policy,” said Dr. Hannah Safford, Associate Director of Climate and Environment at FAS. “To be clear: there’s no credible scientific basis for that rollback, which FAS strongly opposes. At the same time, it’s worth recognizing that while foundational environmental laws like the Clean Air Act worked to curb industrial pollution, they weren’t designed to guide the economy-wide transition to clean technologies that’s currently underway. There’s tremendous opportunity for innovation on how we design and deliver climate policies that are equitable, efficient, effective, and durable. With EPA stepping back on this front, it’s time for others to step forward.“

With the support of contributors from across the ideological spectrum, CRI is already charting paths for a renewed administrative state, a more responsive government, and ambitious climate policy that lasts. These paths are explored in CRI’s inaugural essay collection, Bureaucracy as Social Hope: An Argument for Renewing the Administrative State. The first two of these essays, “Rebuilding Environmental Governance: Understanding the Foundations”, by Jordan Diamond and collaborators at the Environmental Law Institute, and “Costs Come First in a Reset Climate Agenda”, by Devin Hartman (R Street Institute) and Neel Brown (Progressive Policy Institute) are available now; the remainder will be released in coming weeks. Other authors featured in the collection include:

In addition, CRI is today releasing “From Ambition to Action: Shovel-Ready Policy Solutions for Climate Leaders”. This policy primer, crowd-sourced from dozens of experts and policy entrepreneurs, outlines how motivated public leaders – especially at the state and local level – can turn big ideas into reality, cutting emissions while delivering cheaper electricity, ensuring affordable housing, and improving transportation for all of America.

Moving forward, CRI intends to deliver more detailed playbooks illustrating how an approach grounded in regulatory ingenuity can improve outcomes and achieve goals in these key sectors, which collectively account for two-thirds of U.S. emissions and contribute at least 25% of U.S GDP. 

More information about CRI is available here. For updates, and to stay connected, click here. 



ABOUT FAS

The Federation of American Scientists (FAS) works to advance progress on a broad suite of contemporary issues where science, technology, and innovation policy can deliver transformative impact, and seeks to ensure that scientific and technical expertise have a seat at the policymaking table. Established in 1945 by scientists in response to the atomic bomb, FAS continues to bring scientific rigor and analysis to address national challenges. More information about FAS work at fas.org.

Media Contact: Katie McCaskey, kmccaskey@fas.org, (202) 933-8857

From Ambition to Action: A Policy Primer

How public leaders can boost climate progress, restore trust in government, and make lives better…starting today.

People across the nation are clamoring for solutions that make their lives better. And they’re frustrated by the responses they’re getting. Confronting massive inequality, Americans watch leaders finger-point on the price of eggs; yearning for security and stability, Americans watch politics lurch between radically different agendas. No wonder, then, that public trust in the U.S. government has been in the basement for decades. Americans are facing both everyday challenges and a deep, growing sense of discontent. But they’ve lost faith in government to resolve either.

That sense of stuckness doesn’t need to last. But change means focusing on outcomes, eliminating bottlenecks, and prioritizing delivery. It means embracing tools and talent that better connect big ideas to real-world results. It means resisting the temptation to chase buzzwords – from “abundance” to “dominance” to “affordability” – and focusing on the method over the message.

One place to start is with the shift to clean technologies, a place where there is powerful momentum. One in five cars globally are already electric, while heat pumps have outsold gas furnaces in the United States for four consecutive years. The vast bulk of new energy generation is renewable: globally, clean energy investment is now double the amount spent on all fossil fuels combined.

While the transition to clean technologies is unstoppably underway, it is also in its messy middle. Rival technologies and energy systems (and the economic and political systems on which they depend) are now colliding. Many counties and cities depend heavily on fossil fuel revenues; meanwhile, job quality and union density in the renewable energy industry leaves much to be desired. And core parts of our infrastructure – from the power grid to gas stations – are complex and expensive to convert to serve renewable and clean industries, even if those industries will ultimately boost affordability.

Put simply, remaining globally competitive on critical clean technologies requires far more than pointing out that individual electric cars and rooftop solar panels might produce consumer savings. But we also can’t afford to cede the space. Internationally, clean energy spending is booming. China’s clean energy industry by itself would be the world’s eighth largest economy if it were a country, and Europe’s investments have almost doubled over the last decade. Even if current estimates hold, fossil fuel demand will peak mid-century. If the U.S. continues to hold fast to existing policies until then, we’ll be 30 years behind the rest of the world’s energy economy, and it will be impossible to catch up. The bottom line? Good climate policy is good economic policy, and vice versa.

Good climate policy is also good politics. Climate-induced disasters are increasing by the day, and are impacting both safety and affordability. Americans generally see climate and energy policy as important as immigration. Most Americans, on both sides of the political aisle, support environmental regulations and clean energy development. Many say electricity costs are just as stressful as grocery bills, and they worry about higher insurance rates and local market problems. And they’re tired of entrenched corporate interests calling the shots.

What’s needed are creative, clever strategies that boost climate progress while delivering everyday benefits. The Federation of American Scientists (FAS), as part of our new Center for Regulatory Ingenuity (CRI), developed this primer to put a bunch of those strategies in one place. Our goal is for this primer to serve as a resource for public-sector leaders at the federal, state, and local levels who believe that government can do great things for our communities and our planet.

The strategies herein are open-sourced from a diverse network of contributors and collaborators, and are shovel-ready. Many of these strategies are already being deployed across the country. They’re designed to make energy, housing, and transportation better this year.

Indeed, we hope that readers see the actionability of these solutions not just as a benefit, but as an imperative. Americans aren’t looking for the magic message or the magic moment. They’re looking to government for leadership. Every day that government is paralyzed by gridlock, indecisiveness, or fear of failure is another day that it fails to realize the potential of the good that it can achieve, and that public trust in government further erodes. That’s a downwards spiral that we’ve got to stop.

Finally, we emphasize that this primer is a starting place. We’re at the precipice of a new era for climate and energy policy in the United States, and the strategies that will form the backbone of this new era – by adeptly fitting together government capacity, private innovation, and democratic decision-making – are just starting to come into view. As they do, CRI and its partners are committed to working hand-in-glove with bold doers and thinkers, sharpening our collective focus, and realizing the vision of a more responsive government, more optimistic society, and more resilient nation.

Getting to Work: Opportunities in Energy, Transportation, and Housing

Solving problems requires framing them accurately. As observed above, the truth is that clean technologies are increasingly dominant, and that the United States is rapidly falling behind. A response predicated on propping up the 20th-century fossil economy is doomed to fail. So too, we’ve learned, is a response that relies on the U.S. federal government to muscle the clean-technology transition forward single-handedly.

Fortunately, because so many clean technologies are now commercial, the opportunity for leadership on multiple levels, and multiple fronts, has never been more available – or more crucial. For example, simple economics will do much to propel wind, solar, and battery technologies if needed supporting infrastructure is in place and clean technologies are given the chance to compete on fair terms. Policymakers can worry less about expending political capital on expensive public subsidies for clean power, and focus instead on transpartisan policies enabling broad market access, streamlined interconnection processes, and swift power grid build-out. In the transportation sector, policies that ensure transparent vehicle pricing or increase market competition for legacy car companies may matter more than traditional regulatory standards.

This new reality also makes thoughtful economic, industrial, and social policy indispensable. The advent of new technology often comes with the promise of broad societal benefits, but making good on that promise is hardly a guarantee (witness the emergent effects of AI). It’s incumbent on government to ensure that the clean-technology transition reduces inequality and improves quality of life at scale, and that the transition doesn’t abandon workers in fossil-dependent regions and industries to the vagaries of the market. And it’s government, working across multiple scales, that can assess regional comparative advantages and figure out where the United States can still compete – as well as where it must innovate and diversify.

Government leaders, in short, have the unique ability to see all the way from the kitchen table to the commanding heights of the global economy, and to mediate between them.

We illustrate below the types of approaches that entrepreneurial policymakers can adopt to secure U.S. leadership on critical clean technologies, in ways that benefit all Americans. We focus on energy, transportation, and housing, which are collectively the largest sources of climate pollution and key elements of household and regional economies nationwide. The list below is not exhaustive, or comprehensive, but exemplary – a demonstration that there are real opportunities for change.

Unleashing Modern Energy

There’s massive untapped potential for clean energy in the United States. To realize it, we’ve got to make room for new energy to move.

This isn’t primarily a project of continued renewable energy subsidies: there’s good evidence that renewable energy can compete on a level playing field when it’s given the chance. Rather, the project is one of clearing away barriers to financing and building projects, fixing broken market incentives that favor existing players over new entrants and distort energy pricing, and accelerating construction of major grid infrastructure. 

This project looks a lot like the successful national push towards rural electrification that the United States led a century ago: a serious effort that aligns private and public investments to rethink how and where we deliver energy. In executing this effort, we must grapple with the full set of barriers to building – not just cost and permitting, but also thorny local siting processes, misaligned incentives for electric utilities, and lengthy wait times to connect projects to the grid. 

Today, of course, we’ve also got to reckon with the growing threats of cyberattacks and extreme weather to energy infrastructure, as well as the unprecedented, unpredictable energy demands of hyperscalers. Such challenges can only be managed by a mix of climate stabilization policies, economic risk-sharing strategies, and investments in infrastructure modernization. That’s not a cheap or easy proposition, but it is one with major lasting benefits.

At the consumer level, building more clean energy can help stabilize residential electricity prices (though many other factors also contribute to electricity prices and price volatility). More broadly, clean energy could unlock billions of dollars in potential efficiencies, such as by reducing costs associated with redundant natural gas transmission infrastructure. Expanding clean energy, especially distributed energy resources and virtual power plants, can also upgrade outdated grid infrastructure and secure it against cyber threats. But getting to these benefits requires government leadership.

Energy ingenuity could look like:

Making Transportation Cleaner and Cheaper

People just want to get to where they’re going safely, efficiently, and affordably. Yet despite record levels of federal transportation spending, traffic, emissions, and pedestrian deaths keep rising. And as the Cato Institute observes, “U.S. policy contributes to an inefficient and costly transportation system that reduces workers’ time and incomes.”

We can do better. This starts by recognizing that in much of the United States, cars are both essential and increasingly unaffordable. There’s opportunity for a suite of policies that break market strangleholds while expanding consumer choice, moving us away from involuntary dependence on expensive cars and towards a future with transit that people actually want to ride – as well as affordable yet excellent, and often zero-emission, personal transportation. Core federal clean transportation programs have supported $4.6 billion in domestic investments and created at least 14,000 jobs in manufacturing, demonstrating the large-scale benefits of such programs and the economic case for continued federal support. Because the tools involved are nearly all within the authorities of state and local governments, and independent of ongoing federal regulatory disputes, they also can go into effect quickly.

On the vehicle side, this agenda includes governmental efforts to address legacy company market power. Incentives and protections for domestic manufacturing are sensible so long as they boost local economies, support American workers, and drive American innovation – but they’ve got to be coupled with policies ensuring price transparency and other oversight mechanisms, to ensure that benefits flow to consumers rather than pad company profits. Unlocking a more affordable, competitive, zero-emission vehicle (ZEV) market – with more options for buyers at lower prices – is also a key political foundation to the next round of vehicle regulatory mandates, by creating a larger constituency for further progress.

On the system side, states and cities can significantly build up regional budgets with savvy transportation investments. The data are clear that transit and walkability investments bring more valuable housing into cities and connect people with jobs, raising economic activity and raising property values. Investments in electric-vehicle charging similarly boost local business revenue and spurs economic vitality. Communities thrive when their members have transportation options (that all work well), instead of being steered towards legacy vehicle technology and wrestling with creaky 20th-century infrastructure.

On the vehicle side, transportation ingenuity could look like:

On the system side, transportation ingenuity could look like:

Building Affordable, Abundant Housing

Housing shouldn’t be a luxury: it’s a prerequisite for a stable, healthy life. Yet Americans – facing prohibitively high (and increasing) rental costs as well as unrealistic down payments and pathways to ownership – are struggling to meet this basic need. And with extreme weather on the rise, renters and owners alike are facing concerns about physical safety and skyrocketing insurance as well as price hurdles. The emissions that the housing sector produces only worsen these problems.

Delivering more affordable, resilient, and climate-friendly housing means making it easier to build housing of all shapes and sizes; tailoring solutions to rural communities, urban communities, and different geographies generally; and striking a better balance between development for housing and development for other purposes. These strategies need to be paired with deep investments in government capacity to facilitate permitting and approval of new housing construction, as well as to facilitate more complex projects – like retrofits, infill development, and office-to-residential conversion – at scale. Also critical is reimagining community and stakeholder engagement on housing questions, aiming to maintain trust, democratic process, and local buy-in without overvaluing the perspectives of existing homeowners, developers, or any other particular constituency. at the expense of the rest of the community.

Housing ingenuity could look like:

Making Solutions Stick: The Cross-Cutting Benefits of Government Capacity, Pro-Democracy Design, and Innovative Financing

Each of the policy solutions above offers a way to boost climate progress while delivering everyday benefits across energy, transportation, and/or housing. But how do we make those solutions stick? With trust in government at historic lows, public-sector leaders must quickly follow ambition with action, investing in both ideas and the building blocks that turn ideas into reality. Below, we outline how public leaders can use three of these core building blocks – government capacity, financing, and pro-democracy design – to get on the scoreboard early…and stay there for the long term.

Government Capacity

Government capacity refers to the ability of government to get things done, whether through efficient processes, effective talent, or fit-for-purpose tools. Americans are frustrated by the slow pace of government, but they don’t want the functions that keep them safe and supported dismantled: they want them improved. Accomplishing this requires more than new programs or new funding streams or new inventions. It requires leaders to seriously (and systematically – not via a “wrecking ball” approach) consider which government functions are working, which need to be overhauled, and which should be retired.

Rebuilding government capacity is inseparable from strengthening democracy itself. Both of these goals are wholly intertwined with climate progress. When government acts competently, transparently, and in partnership across levels, it restores public faith that collective action is possible and worthwhile. When it can’t, even well-designed policies stall under the weight of fragmented authority, procedural burden, risk aversion, and institutional inertia. Treating government capacity as a core investment is therefore much more than administrative housekeeping. It’s a prerequisite for durable climate progress.

To boost government capacity, public leaders can:

Finance

Capital is a powerful tool for policymakers and others working in the public interest to shape the forward course of the economy in a fair and effective way. Very often, the capital needed to achieve major societal goals comes from a blend of sources; this is certainly true with respect to climate action and facilitating the transition to clean technologies.

States, cities, banks, community-driven financial institutions (CDFIs), impact investors, and philanthropies have long worked in partnership with the federal government on clean-technology projects – and are stepping up in a new way now that federal support for such projects has been scaled back. These entities are developing bond-backed financing, joint procurement schemes, and revolving loan funds – not just to fill gaps, but to reimagine what the clean technology economy can look like.

In the near term, opportunities for subnational investments are ripe because the now partially paused boom in potential firms and projects generated by recent U.S. industrial policy has generated a rich set of already underwritten, due-diligenced projects for re-investment. In the longer term, the success of redesigned regulatory approaches will almost certainly depend on creating profitable firms that can carry forward the clean-technology transition. Public sector leaders can assume an entrepreneurial role in ensuring these new entities, to the degree they benefit from public support, advance the public interest: connecting economic growth to shared prosperity.

To be sure, subnational actors generally cannot fund at the scale of the federal government. But they can have a truly catalytic impact on financing availability and capital flows nevertheless. 

To boost finance, public leaders can:

Public Participation

Public participation in climate action is often treated as a procedural requirement to be satisfied late in the process, rather than as a core function of governing well. The result is familiar: performative town halls, notice-and-comment processes that invite frustration rather than insight, and transparency tools that are easily weaponized by organized interests. This dynamic erodes trust, slows projects, and fuels the perception that government is both unresponsive and incapable. Yet participation, when designed well and tailored to the moment, is not an obstacle to effective governance:  it is how government discovers what will work, where friction will arise, and how to build solutions that communities will defend rather than resist. Treating participation as a functional component of state capacity means seeing it as an input to smarter design, faster implementation, and more durable outcomes.

Upgrading how government listens and engages is vital to upgrading how government delivers. When residents see clearly how their input shapes decisions, participation builds legitimacy and reduces the incentives for obstruction and litigation later in the process. When agencies invest in the infrastructure, tools, roles, and expectations that make participation meaningful, they create a feedback loop that improves policy design and strengthens democratic trust at the same time. And when climate leaders meet the public where they are in terms of how they experience and make consumer choices in the the climate transition, we can strengthen the connective tissue between government action and public trust.The recommendations below are aimed at helping public leaders move beyond compliance-driven engagement toward participation models that are relational, deliberative, and integrated into the machinery of experience and delivery. This approach ensures that climate solutions are not only technically sound, but socially resilient and democratically grounded. These take time, but we encourage recognition that they enable enormous time, risk and failure saved. 

To boost public participation, public leaders can:

About The Primer

Ambition to Action was authored by Angela Barranco, Zoë Brouns, Megan Husted, Kristi Kimball, Arjun Krishnaswami, Hannah Safford, Loren Schulman, Craig Segall, and Addy Smith.

Many individuals contributed ideas and input to this primer. The authors are grateful to the following individuals and organizations for their time, expertise, and constructive feedback: Patrick Bigger, Laurel Blatchford, Heather Clark, Ted Fertik, Danielle Gagne, Kate Gordon, Betony Jones, Nuin-Tara Key, Alex McDonough, Sara Meyers, Shara Mohtadi, Saharnaz Mirzazad, Beth Osborne, Alexis Pelosi, Sam Ricketts, Bridget Sanderson, Lotte Schlegel, Igor Tregub, Louise White, and Clinton Britt. The content of this primer does not necessarily reflect the views of individuals or organizations acknowledged. Any errors are the sole fault of the authors.

Beyond Binary Debates: How an “Abundance” Framing Can Restore Public Trust and Guide Climate Solutions

Public trust in U.S. government has ebbed and flowed over the decades, but it’s been stuck in the basement for a while. Not since 2005 have more than a third of Americans trusted the institution that underpins so much of American life.

We shouldn’t be surprised. Along with much progress, over the past two decades the U.S. became more unequal, saw stagnation or decline in many rural counties, stumbled into a housing crisis, and experienced worsening health outcomes. When the government can’t deliver (especially in core areas like health, housing, and economic vitality), trust in it wanes while the false promises of autocrats grow more appealing.

The strength of American democracy, in other words, hinges in large part on how well our government functions. This urgency helps explain why, at a moment when the United States is flirting with autocracy ever more vigorously, a book on precisely this topic became a #1 bestseller and prompted a debate around the “abundance agenda” that has turned quasi-existential for many in the policy world.

The abundance agenda, as described by Jonathan Chait, is “a collection of policy reforms designed to make it easier to build housing and infrastructure and for government bureaucracy to work”, such as by streamlining regulations that constrain infrastructure buildout while scaling up major government programs and investments that can deliver public goods. 

Unfortunately, popular discourse often flattens the conversation around abundance into a polarized binary around whether or not regulations are good. That frame is overly reductionist. Of course badly designed or out-dated regulatory approaches can block progress or (as in the case of the housing policies that the book Abundance centers on) dry up the supply of public goods. But a theory of the whole regulatory world can’t be neatly extrapolated from urban zoning errors. In an era of accelerating corporate capture, both private and public power structures act to block change and capture profits and power. We need a savvier understanding of what happens at the intersections between the government and the economy, and of how policy translates to communities at local scales.

We should therefore regard “abundance” less as a prescriptive policy agenda than as a frame from which to ask and answer questions at the heart of rebuilding public trust in government. Questions like: “Why is it so hard to build?” “Why are bureaucratic processes so badly matched to societal challenges?” “Why, for heaven’s sake, does nothing work?”

These questions can push us in a direction distinct from the usual big vs. small government debates, or squabbles about the welfare state versus the market. Instead, they may help us ask about interactions within and between government and the economy – the network of relationships, complex causation, and historical choices – that often seem to have left us with a government that feels ill-suited to its times.

At the Federation of American Scientists (FAS), we, along with colleagues in the broader government capacity movement, are exploring these questions, with a particular focus on agendas for renewal and advancing a new paradigm of regulatory ingenuity. One emerging insight is that at its core, abundance is largely about the dynamics of incumbency, that is, about the persistence of broken systems and legacy power structures even as society evolves. A second, related, insight is that the debate around abundance isn’t really about de-regulation or the regulatory state (every government has regulations), but rather about how multi-pronged and polycentric strategies can break through the inertia of incumbent systems, enabling government to better deliver the goods, services, and functions it is tasked with while also driving big and necessary societal changes. And a third is that the abundance discourse must center distributive justice in order to deliver shared prosperity and restore public trust.

Moving the Boulder: Inertia, Climate Change, and the Mission State

The above insights are particularly helpful in guiding new and more durable solutions to climate change – a challenge that touches every aspect of our society, that involves complex questions of market and government design, and that is rooted in the challenges of changing incumbent systems.

Consider the following. It’s now been almost 16 years since the U.S. Environmental Protection Agency (EPA) issued its 2009 finding that greenhouse gas (GHG) emissions are a public danger and began trying to regulate them. To simplify a complex history, what happened on the regulatory front was this: the Obama administration tried to push regulations forward, the Trump administration worked to undo them, and then the cycle repeated through Biden and Trump II, culminating in the EPA’s recent move to revoke the endangerment finding.

We can certainly see the power of incumbency and inertia within this history. Over a decade and a half, the EPA regulated greenhouse gases from new power plants (though never very stringently), new cars and trucks (quite effectively cutting pollution, though never with mandates to actually electrify the fleet), and…that’s about it. The agency never implemented standards for the existing power plants and existing vehicles that emit the lion’s share of U.S. GHGs. It never regulated GHGs from industry or buildings. And thanks to the efforts of entrenched fossil-fuel actors and their political allies, the climate regulations EPA managed to get over the finish line were largely rolled back. 

None of this should be read as a knock on the dedicated civil servants at EPA and partner federal agencies who worked to produce GHG regulations that were scientifically grounded, legally defensible, technically feasible, and cost effective, even while grappling with the monumental challenges of outdated statutes and internal systems. But it certainly speaks to the challenge of securing lasting change.

The work of economist Mariana Mazzucato offers clues to how we might tackle this challenge; she paints a portrait of a “mission state” that integrates all of government’s levers to define and execute a particular objective, such as an effective, equitable, and durable clean energy transition. This theory isn’t a case for simplistic deregulation, nor is it a claim that regulations somehow “don’t work”. Rather, it suggests that (especially in a post-Chevron world) another round of battles over EPA authority won’t ultimately get us where we need to go on climate, nor will it help us productively reshape our institutions in ways that engender public trust.

The shift from one energy system foundation to another is messy – and it is inherently about power. As giant investment firms hustle to buy public utilities, enormous truck companies side with the Trump administration to dismantle state clean freight programs, and subsidies for clean energy are decried as unfair and market-distorting even though subsidies for fossil energy have persisted for nearly a century, it’s clear that corporate incumbents can capture public investments or capture government power to throttle change. Delivering change means thinking through the many ways incumbency creates systems of dependencies throughout society, and what options – from regulations to monetary policy to the ability to shape the rule of law – we have to respond. To disrupt energy incumbents and achieve energy abundance, in other words, we must couple regulatory and non-regulatory tools.

After all, the past 16 years haven’t just been a story of regulatory back-and-forth. They are also a story of how U.S. emissions have fallen relatively steadily in part due to federal policies, in part to state and local leadership, and in part to ongoing technological progress. Emissions will likely keep falling (though not fast enough) despite Trump-era rollbacks. That’s evidence that there’s not a one-to-one connection between regulatory policy and results.

We also have evidence of how potent it can be when economic and regulatory efforts pull in tandem. The Inflation Reduction Act (IRA) was the first time the United States strongly invested in an economic pivot towards clean energy at scale and in a mission-oriented way. The results were immediate and transformative: U.S. clean energy and manufacturing investments took off in ways that far surpassed most expectations. And while the IRA has certainly come under attack during this Administration, it is nevertheless striking that today’s Republican trifecta retained large parts of the entirely Democratically-passed IRA, demonstrating the sticking power of a mission-oriented approach.

Conducting the Orchestra: The Need for an Expanded Playing Field

Thinking beyond regulatory levers (i.e., a multi-pronged approach) is necessary but not sufficient to chart the path forward for climate strategy. In a highly diverse and federalist nation like the United States, we must also think beyond federal government entirely.

That’s because, as Nobel-winning economist Dr. Elinor Ostrom put it, climate change is inherently a “polycentric” problem. The incumbent fossil systems at the root of the climate crisis are entrenched and cut across geographies as well as across public/private divisions. Therefore the federal government cannot effectively disrupt these systems alone. Many components of the fundamental economic and societal shifts that we need to realize the vision of clean energy abundance lie substantially outside sole federal control – and are best driven by the sustained investments and clear and consistent policies that our polarized politics aren’t delivering.  

For example, states, counties, and cities have long had primary oversight of their own economic development plans, their transportation plans, their building and zoning policies, and the make-up of their power mix. That means they have primary power both over most sources of climate pollution (two-thirds of the world’s climate emissions come from cities) and over how their economies and built environments change in response. These powers are fundamentally different from, and generally much broader than, powers held by federal regulatory agencies. Subnational governments also often have a greater ability to move funds, shape new complex policies across silos, and come up with creative responses that are inherently place-based. (The indispensable functions of subnational governments are also a reason why decades of cuts to subnational government budgets are a worryingly overlooked problem – austerity inhibits bottom-up climate progress.)

The private sector has similar ability to either constrain or drive forward new economic pathways. Indeed, with the private sector accounting for about half of funding for climate solutions, it is impossible to imagine a successful clean-energy transition that isn’t heavily predicated on private capabilities – particularly in the United States. While China’s clean-tech boom is largely the product of massive top-down subsidies and market interventions, a non-communist regime must rely on the private sector as a core partner rather than a mere executor of climate strategy. Fortunately, avenues for effectively engaging and leveraging the private sector in climate action are rapidly developing, including partnering public enterprise with private equity to sustain clean energy policies despite federal cutbacks.

An orchestra is an apt analogy. Just as many instruments and players come together in a symphony, so too can private and public actors across sectors and governance levels come together to achieve clean energy abundance. This analogy extends Mazzucato’s conception of a mission state into a “mission society”, envisioning a network that spans from cities to nation states, from private firms to civil actors, working in concert to overcome what Ben Rhodes calls a “crisis of short termism” and deliver a “coherent vision” of a better future.

Building Towards Shared Prosperity

For the vision to be coherent, it must resonate across socioeconomic and ideological boundaries, and it must recognize that the structures of racial, class, and gender disparity that have marked the American project from the beginning are emphatically still there. Such factors shape available pathways for progress and affect their justice and durability. For instance: electric vehicle adoption can only grow so quickly until we make it much easier for those living in rented or multifamily housing to charge. Cheaper renewables only mean so much when prevailing policies limit the financial benefits that are passed on to lower-income Americans.

To borrow, and complicate, a metaphor from Abundance: distributive justice questions are fundamentally not “everything bagel” seasonings to be disregarded as secondary to delivery goals. They are meaningful constraints on delivery as well as critical potentialities for better systems, and are hence central to policy and politics. No mission state or mission nation, addressing the polycentric landscape of networked change needed to shift big incumbent systems, can afford to dismiss or ignore them. Displacing those systems requires wrestling with inequality and striving to create shared prosperity through new approaches that are distributively fair.

That’s an approach rooted in orchestration, one that asks why some instruments drown out others, and how to alter relationships between players to produce better results. It understands that we can’t solve scarcity without centering distributive justice, because as long as deep structural disparities and structural power exist there is strong potential for the benefits of rapid energy or housing buildout to be channeled towards those who need them least. And it is capable of restabilizing the center of American society and restoring trust in U.S. government because it realistically grapples with the interests of incumbents while paying more than lip service to the interests of a dazzlingly diverse American public.

This re-fashioned abundance agenda can provide actual principles for administrative state reform because it knows what it is asking regulators, and the larger intersecting layers of government and civil society, to do: Systematically remove points of inertia to accelerate shared prosperity in a safe climate, while anticipating and solving for distributive risks of change.

Because again, the abundance debate isn’t really about whether or not regulations are good. It’s about unfreezing our politics by being clear and courageous about our goals for a society that works better and is capable of big things.

This is not the first time Americans have envisioned a better future in the midst of national crisis, or the first time we have collectively disrupted failed incumbent systems. From our messy foundation, to the beginnings of Reconstruction during the Civil War, to the architects of the New Deal envisioning an active and effective government in the midst of the Dust Bowl and Depression, the history of our nation is full of evidence that a compelling vision of truly democratic government can pull Americans back together despite deep and real problems. Each time, these debates have scrambled existing binaries, and driven realignment. We are on the verge of realignment again as the systems built up over the fossil era break down and our neoliberal order fragments. This is the right time to engage, together, in orchestrating what comes next.

Too Hot not to Handle

Every region in the U.S. is experiencing year after year of record-breaking heat. More households now require home cooling solutions to maintain safe and liveable indoor temperatures. Over the last two decades, U.S. consumers and the private sector have leaned heavily into purchasing and marketing conventional air conditioning (AC) systems, such as central air conditioning, window units and portable ACs, to cool down overheating homes. 

While AC can offer immediate relief, the rapid scaling of AC has created dangerous vulnerabilities: rising energy bills are straining people’s wallets and increasing utility debt, while surging electricity demand increases reliance on high-polluting power infrastructure and mounts pressure on an aging power grid increasingly prone to blackouts. There is also an increasing risk of elevated demand for electricity during a heat wave, overloading the grid and triggering prolonged blackouts, causing whole regions to lose their sole cooling strategy. This disruption could escalate into a public health emergency as homes and people overheat, leading to hundreds of deaths. 

What Americans need to be prepared for more extreme temperatures is a resilient cooling strategy. Resilient cooling is an approach that works across three interdependent systems — buildings, communities, and the electric grid — to affordably maintain safe indoor temperatures during extreme heat events and reduce power outage risks. 

Read the full report
Too Hot not to handle
Resilient Cooling Policy and Strategy Toolkit

This toolkit introduces a set of Policy Principles for Resilient Cooling and outlines a set of actionable policy options and levers for state and local governments to foster broader access to resilient cooling technologies and strategies.

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This toolkit introduces a set of Policy Principles for Resilient Cooling and outlines a set of actionable policy options and levers for state and local governments to foster broader access to resilient cooling technologies and strategies. For example, states are the primary regulators of public utility commissions, architects of energy and building codes, and distributors of federal and state taxpayer dollars. Local governments are responsible for implementing building standards and zoning codes, enforcing housing and health codes, and operating public housing and retrofit programs that directly shape access to cooling. 

The Policy Principles for Resilient Cooling for a robust resilient cooling strategy are:

By adopting a resilient cooling strategy, state and local policymakers can address today’s overlapping energy, health, and affordability crises, advance American-made innovation, and ensure their communities are prepared for the hotter decades ahead.

Hello Big Beautiful Bill, Goodbye Commonsense Energy Policy

Now that the One Big Beautiful Bill has been signed into law, the elimination of clean energy tax credits will cause a nation of higher energy bills – even for consumers and states that aren’t using clean energy. 

Despite the “Day One” Declaration of an Energy Emergency, Congress just passed a bill that will do the opposite of addressing the real needs that the U.S. has to meet energy demand and decrease electricity costs for consumers. The bill will make it harder to connect the cheapest forms of power available to the grid, solar and wind. It also takes away the existing incentives to speed up the production of clean power.

Do you want more energy on the grid faster? To provide reliable power to your homes during storms or to support the buildout of AI data centers? The Clean Energy Investment and Production Tax Credits (45Y, 48E, and 45X), a technology-neutral tax credit, made this possible by subsidizing the production of zero-emission sources like solar, wind, nuclear, hydropower, and geothermal – not dissimilar to the subsidies fossil fuels receive like 45I. This helped with the upfront cost of these projects, and since these sources of energy are cheaper than fossil fuels, they lowered consumer energy bills and increased grid reliability by providing more clean energy, quicker. Surprise, surprise, they have been eliminated, meaning the types of projects that are going to move forward will be coal and natural gas, which are more expensive. Oil and gas won big, especially since the OBBB established accelerated National Environmental Policy Act (NEPA) reviews for oil and gas projects in exchange for a fee of up to 125% of project costs and by prioritizing fossil fuel development on public lands. 

Say Goodbye to All of This

Are you a homeowner whose house is too hot in the summer or too cold in the winter? The Energy Efficient Home Improvement Credit (25C) made it possible for you to receive $1,200 to weatherize or insulate your home, making it safer and more comfortable during extreme temperatures while lowering your energy bills. This is now eliminated, making it more expensive and less feasible to make these types of home improvements. 

Do you have an interest in installing solar panels or a geothermal system to one day achieve a $0 electricity bill? The Residential Clean Energy Credit (25D), made this a reality by providing a 30% tax credit for rooftop solar, wind power, geothermal heating systems, and battery systems. This is now eliminated, making it more expensive to purchase renewable systems for your home and reducing consumer choice. This tax credit also created jobs in the residential renewables industry, so you can expect to see some significant job losses as a result. 

Do you own an EV or hope to own one someday to save money on gas and to lower carbon emissions? The Electric Vehicle Credits (45W, 30D, 30C, 25E) made this possible by allowing up to $7,500 for a new EV purchase, and up to $4,000 for the purchase of a used EV. These tax credits also provided a boost to the automotive industry and created thousands of jobs. Now that these credits are being eliminated, buying an EV just got more expensive and job losses and business closures are bound to happen. 

The bottom line? Energy prices will go up, the job market will suffer as will clean energy investment, especially in red districts – since a total of 60% of this spending has gone to Republican-held suburban and rural districts across the U.S. 

The true breadth and severity of these eliminations will reveal themselves sooner than you think.

De-Risking the Clean Energy Transition: Opportunities and Principles for Subnational Actors

Executive Summary

The clean energy transition is not just about technology — it is about trust, timing, and transaction models. As federal uncertainty grows and climate goals face political headwinds, a new coalition of subnational actors is rising to stabilize markets, accelerate permitting, and finance a more inclusive green economy. This white paper, developed by the Federation of American Scientists (FAS) in collaboration with Climate Group and the Center for Public Enterprise (CPE), outlines a bold vision: one in which state and local governments – working hand-in-hand with mission-aligned investors and other stakeholders – lead a new wave of public-private clean energy deployment.

Drawing on insights from the closed-door session “De-Risking the Clean Energy Transition” and subsequent permitting discussions at the 2025 U.S. Leaders Forum, this paper offers strategic principles and practical pathways to scale subnational climate finance, break down permitting barriers, and protect high-potential projects from political volatility. This paper presents both a roadmap and an invitation for continued collaboration. FAS and its partners will facilitate further development and implementation of approaches and ideas described herein, with the goals of (1) directing bridge funding towards valuable and investable, yet at-risk, clean energy projects, and (2) building and demonstrating the capacity of subnational actors to drive continued growth of an equitable clean economy in the United States.

We invite government agencies, green banks and other financial institutions, philanthropic entities, project developers, and others to formally express interest in learning more and joining this work. To do so, contact Zoe Brouns (zbrouns@fas.org).

The Moment: Opportunity Meets Urgency

We are in the complex middle of a global energy transition. Clean energy and technology are growing around the world, and geopolitical competition to consolidate advantage in these sectors is intensifying. The United States has the potential to lead, but that leadership is being tested by erratic federal environmental policies and economic signals. Meanwhile, efforts to chart a lasting domestic clean energy path that resonates with the full American public have fallen short. Demand is rising — fueled by AI, electrification, and industrial onshoring – yet opposition to clean energy buildout is growing, permitting systems are gridlocked, and legacy regulatory frameworks are failing to keep up. This moment calls for new leadership rooted in local and regional capacity and needs. Subnational governments, green and infrastructure banks, and other funders have a critical opportunity to stabilize clean energy investment and sustain progress amid federal uncertainty. Thanks to underlying market trends favoring clean energy and clean technology, and to concerted efforts over the past several years to spur U.S. growth in these sectors, there is now a pipeline of clean projects across the country that are shovel-ready, relatively de-risked and developed, and investable (Box 1). Subnational actors can work together to identify these projects, and to mobilize capital and policy to sustain them in the near term.

Box 1. Streamlining administrative procedure to unleash clean energy in New York.

The New York Power Authority used a simple, quick Request for Information (RFI) to identify readily investible clean energy projects in New York, and was then able to financially back many of the identified projects thanks to its strong bond rating and ability to access capital. As Paul Williams, CEO of the Center for Public Enterprise, noted, this powerful approach allowed the Authority to “essentially [pull] a 3.5-gigawatt pipeline out of thin air in less than a year.”

States, cities, and financial institutions are already beginning to provide the support and sustained leadership that federal agencies can no longer guarantee. They’re developing bond-backed financing, joint procurement schemes, rapid permitting pilot zones, and revolving loan funds — not just to fill gaps, but to reimagine what clean energy governance looks like in an era of fragmentation. One compelling example is the Connecticut Green Bank, which has successfully blended public and private capital to deploy over $2 billion in clean energy investments since its founding. Through programs like its Commercial Property Assessed Clean Energy (C-PACE) financing and Solar for All initiative, the bank has reduced emissions, created jobs, and delivered energy savings to underserved communities.

Indeed, this kind of mission-oriented strategy – one that harnesses finance and policy towards societally beneficial outcomes, and that entrepreneurially blends public and private capacities – is in the best American tradition. Key infrastructure and permitting decisions are made at the state and local levels, after all. And state and local governments have always been central to creating and shaping markets and underwriting innovation that ultimately powers new economic engines. The upshot is clear and striking: subnational climate finance isn’t just a workaround. It may be the most politically durable and economically inclusive way to future-proof the clean energy transition.

The Role of Subnational Finance in the Clean Energy Transition

Recent years saw heavy reliance on technocratic federal rules to spur a clean energy transition. But a new political climate has forced a reevaluation of where and how federal regulation works best. While some level of regulation is important for creating certainty, demand, and market and investment structures, it is undeniable that the efficacy and durability of traditional environmental regulatory approaches has waned. There is an acute need to articulate and test new strategies for actually delivering clean energy progress (and a renewed economic paradigm for the country) in an ever-more complex society and dynamic energy landscape.

Affirmatively wedding finance with larger public goals will be a key component of this more expansive, holistic approach. Finance is a powerful tool for policymakers and others working in the public interest to shape the forward course of the green economy in a fair and effective way. In the near term, opportunities for subnational investments are ripe because the now partially paused boom in potential firms and projects generated by recent U.S. industrial policy has generated a rich set of already underwritten, due-diligenced projects for re-investment. In the longer term, the success of redesigned regulatory schema will almost certainly depend on creating profitable firms that can carry forward the energy transition. Public entities can assume an entrepreneurial role in ensuring these new economic entities, to the degree they benefit from public support, advance the public interest. Indeed, financial strategies that connect economic growth to shared prosperity will be important guardrails for an “abundance” approach to environmental policy – an approach that holds significant promise to accelerate necessary societal shifts, but also presents risk that those shifts further enrich and empower concentrated economic interests.

To be sure, subnational actors generally cannot fund at the scale of the federal government. However, they can mobilize existing revenue and debt resources, including via state green and infrastructure banks, bonding tools, and direct investment financing strategies, to seed capital for key projects and to provide a basis for larger capital stacks for key endeavors. They are also particularly well suited to provide “pre-development” support to help projects move through start-up phases and reach construction and development. Subnational entities can engage sectorally and in coalition to scale up financing, to draw in private actors, and to support projects along the whole supply and value chain (including, for instance, multi-state transmission and grid projects, multi-state freight and transportation network improvements, and multi-state industrial hubs for key technologies).

A wide range of financing strategies for clean energy projects already exist. For instance:

Strategies like these empower states and other subnational actors to de-risk and drive the clean energy transition. The expanding green banking industry in the United States, and similar institutions globally, further augment subnational capacity. What is needed is rapid scaling and ready capitalization.

There is presently tremendous need and opportunity to deploy flexible financing strategies across projects that are shovel-ready or in progress but may need bridge funding or other investments in the wake of federal cuts. The critical path involves quickly identifying valuable, vetted projects in need of support, followed by targeted provision of financing that leverages the superior capital access of public institutions.

Projects could be identified through simple, quick Requests for Information (RFIs) like the one recently used to great effect by the New York Power Authority to build a multi-gigawatt clean energy pipeline (see Box 1, above). This model, which requires no new legislation, could be adopted by other public entities with bonding authority. Projects could also be identified through existing databases, e.g., of projects funded by, or proposed for funding under, the Inflation Reduction Act (IRA) or Infrastructure Investment and Jobs Act (IIJA). 

There is even the possibility of establishing a matchmaking platform that connects projects in need of financing with entities prepared to supply it. Projects could be grouped sectorally (e.g., freight or power sector projects) or by potential to address cross-cutting issues (e.g., cutting pollution burdens or managing increasing power grid load and its potential to electrify new economic areas). As economic mobilization around clean energy gains steam and familiarity with flexible financing strategies grows, such strategies can be extended to new projects in ways that are tailored to community interests, capacity, and needs.

Principles for Effective, Equitable Investment

The path outlined above is open now but will substantially narrow in the coming months without concerted, coordinated action. The following principles can help subnational actors capitalize on the moment effectively and equitably. It is worth emphasizing that equitable investment is not only a moral imperative – it is a strategic necessity for maintaining political legitimacy, ensuring community buy-in, and delivering long-term economic resilience across regions.

Funders must clearly state goals and be proactive in pursuing them – starting now to address near-term instability. Rather than waiting for projects to come to them, subnational governments, financial institutions, and other funders should use their platforms and convening power to lay out a “mission” for their investments – with goals like electrifying the industrial sector, modernizing freight terminals and ports, and accelerating transmission infrastructure with storage for renewables. Funders should then use tools like simple RFIs to actively seek out potential participants in that mission.

Public equity is a key part of the capital stack, and targeted investments are needed now. With significant federal climate investments under litigation and Congressional debates on the Inflation Reduction Act ongoing, other participants in the domestic funding ecosystem must step up. Though not all federal capital can (or should) be replaced, targeted near-term investments coupled with multi-year policy and funding roadmaps by these actors can help stabilize projects that might not otherwise proceed and provide reassurance on the long-term direction of travel.

Information is a surprisingly powerful tool. Deep, shared, information architectures and clarity on policy goals are key for institutional investors and patient capital. Shared information on costs, barriers, and rates of return would substantially help facilitate the clean energy transition – and could be gathered and released by current investors in compiled form. Sharing transparent goals, needs, and financial targets will be especially critical in the coming months. Simple RFIs targeted at businesses and developers can also function as dual-purpose information-gathering and outreach tools for these investors. By asking basic questions through these RFIs (which need not be more than a page!), investors can build the knowledge base for shaping their clean technology and energy plans while simultaneously drawing more potential participants into their investment networks.

States should invest to grow long-term businesses. The clean energy transition can only be self-sustaining if it is profitable and generates firms that can stand on their own. Designing state incentive and investment projects for long-term business growth, and aligning complementary policy, is critical – including by designing incentive programs to partner well with other financing tools, and to produce long-term affordability and deployment gains, especially for entities which may otherwise lack capital access. State strategies, like the one New Mexico recently published, that outline energy-transition and economic plans and timelines are crucial to build certainty and align action across the investment and development ecosystem. Metrics for green programs should assess prospects for long-term business sustainability as well as tons of emissions reduced.

States can finance the clean energy transition while securing long-term returns and other benefits. Many clean technology projects may have higher upfront costs balanced by long-term savings. Debt equity, provided through revolving loan funds, can play a large role in accelerating deployment of these technologies by buying down entry costs and paying back the public investor over time. Moreover, the superior bond ratings of state institutions substantially reduce borrowing costs; sharing these benefits is an important role for public finance. State financial institutions can explore taking equity stakes in some projects they fund that provide substantial public benefits (e.g., mega-charging stations, large-scale battery storage, etc.) and securing a rate of return over time in exchange for buying down upfront risk. Diversified subnational institutions can use cash flows from higher-return portions of their portfolios to de-risk lower-return or higher-risk projects that are ultimately in the public interest. Finally, states with operating carbon market programs can consider expanding their funding abilities by bonding against some portion of carbon market revenues, converting immediate returns to long-term collateral for the green economy.

Financing policy can be usefully combined with procurement policy. As electrification reaches individual communities and smaller businesses, many face capital-access problems. Subnational actors should consider packaging similar businesses together to provide financing for multiple projects at once, and can also consider complementary public procurement policies to pull forward market demand for projects and products (Box 2).

Explore contract mechanisms to protect public benefits. Distributive equity is as important as large-scale investment to ensure a durable economic transition. The Biden-Harris Administration substantially conditioned some investments on the existence of binding community benefit plans to ensure that project benefits were broadly shared and possible harms to communities mitigated. Subnational investors could develop parallel contractual agreements. There may also be potential to use contracts to enable revenue sharing between private and public institutions, partially addressing any impacts of changes to the IRA’s current elective pay and transferability provisions by shifting realized income to the public entities that currently use those programs from the private entities that realize revenue from projects.

Box 2. Combining financing and procurement policy to electrify bus systems.

Joint procurements, whereby two or more purchasers enter into a single contract with a vendor, can bring down prices of emerging clean technologies by increasing purchase volume, and can streamline technology acquisition by sharing contracting workload across partners. Joint procurement and other innovative procurement policies have been used successfully to drive deployment of zero-emission buses in Europe and, more recently, the United States. Procurement strategies can be coupled with public financing. For instance, the Federal Transit Agency’s Low or No Emission Grant Program for clean buses preferences applications that utilize joint procurement, thereby helping public grant dollars go further.

The rising importance of the electrical grid across sectors creates new financial product opportunities. As the economy decarbonizes, more previously independent sectors are being linked to the electric grid, with load increasing (AI developments exacerbate this trend). That means that project developers in the green economy can offer a broader set of services, such as providing battery storage for renewables at vehicle charging points, distributed generation of power to supply new demand, and potential access to utility rate-making. Financial institutions should closely track rate-making and grid policy and explore avenues to accelerate beneficial electrification. There is a surprising but potent opportunity to market and finance clean energy and grid upgrades as a national security imperative, in response to the growing threat of foreign cyberattacks that are exploiting “seams” in fragile legacy energy systems.

Global markets can provide ballast against domestic volatility. The United States has an innovative financial services sector. Even though federal institutions may retreat from clean energy finance globally over the next few years, there remains a substantial opportunity for U.S. companies to provide financing and investment to projects globally, generate trade credit, and to bring some of those revenues back into the U.S. economy.

Financial products and strategies for adaptation and resilience must not be overlooked. Growing climate-linked disasters, and associated adaptation costs, impose substantial revenue burdens on state and local governments as well as on insurers and businesses. Competition for funds between adaptation and mitigation (not to mention other government services) may increase with proposed federal cuts. Financial institutions that design products that reduce risk and strengthen resilience (e.g., by helping relocate or strengthen vulnerable buildings and infrastructure) can help reduce these revenue competitions and provide long-term benefits by tapping into the $1.4 trillion market for adaptation and resilience solutions. Improved cost-benefit estimates and valuation frameworks for these interacting systems are critical priorities.

Conclusion: A Defining Window for Subnational Leadership

Leaders from across the country agree: clean energy and clean technology are investable, profitable, and vital to community prosperity. And there is a compelling lane for innovative subnational finance as not just a stopgap or replacement for federal action, but as a central area of policy in its own right.

The federal regulatory state is, increasingly, just a component of a larger economic transition that subnational actors can help drive, and shape for public benefit. Designing financial strategies for the United States to deftly navigate that transition can buffer against regulatory uncertainty and create a conducive environment for improved regulatory designs going forward. Immediate responses to stabilize climate finance, moreover, can build a foundation for a more engaged, and innovative, coalition of subnational financial actors working jointly for the public good.

Active state and private planning is the key to moving down these paths, with governments setting a clear direction of travel and marshaling their convening powers, capital access, and complementary policy tools to rapidly stabilize key projects and de-risk future capital choices.

There is much to do and no time to lose as governments and investors across the country seek to maintain clean technology progress. The Federation of American Scientists (FAS) and its partners will facilitate further development and implementation of approaches and ideas described above, with the goals of (1) directing bridge funding towards valuable and investable, yet at-risk, clean energy projects, and (2) building and demonstrating the capacity of subnational actors to drive continued growth of an equitable clean economy in the United States.

We invite government agencies, green banks and other financial institutions, philanthropic entities, project developers, and others to formally express interest in learning more and joining this work. To do so, contact Zoe Brouns (zbrouns@fas.org).

Acknowledgements 

Thank you to the many partners who contributed to this report, including: Dr. Jedidah Isler and Zoë Brouns at the Federation of American Scientists, Sydney Snow at Climate Group, Yakov Feigin, Chirag Lala, and Advait Arun at the Center for Public Enterprise, and Jayni Hein at Covington and Burling LLP.