Rebuilding Environmental Governance: Understanding the Foundations

Today we are facing persistent, complex, and accelerating environmental challenges that require adding new approaches to existing environmental governance frameworks. The scale of some of them, such as climate change, require rethinking our regulatory tools, while diffuse sources of pollutants present additional difficulties. At the same time, effective governance systems must accommodate the addition of new infrastructure, housing, and energy delivery to support communities. Our legal framework must be sufficiently stable to enable regulation, investment, and innovation to proceed without the discontinuities and gridlock of the past few decades. 

In an increasingly divided atmosphere, it will take candid, multiperspective dialogue to identify paths toward such a framework. This discussion paper explores the baseline that we’re building on and some key dynamics to consider as we think about the durable systems, approaches, and capacity needed to achieve today’s multiple societal goals.

The early 20th Century saw the emergence of our first national laws regulating public resources— the Federal Power Act in the 1930s, the precursor to the Clean Water Act in the 1940s, and the first version of the Clean Air Act in the 1950s. Then, in a concentrated decade of new laws and massive amendments to existing ones, the 1970s saw a focus on assessing, controlling, and reducing pollution, while setting ambitious goals for human and ecosystem health. These statutes generally were constructed around specific resources—airsheds, watersheds, public lands, and wildlife habitat—and articulated specific roles for federal agencies and other levels of government. State efforts were incorporated into a nationwide system of cooperative federalism, while many states undertook their own initiatives to address environmental problems.

For half a century these laws—enacted with overwhelming, bipartisan congressional support— produced a great deal of success, with conventional pollution decreasing across many resources and regions and some species and habitats recovering. But we have plateaued in terms of broad improvements, and meanwhile novel pollutants and more diffuse, global threats have emerged. Political shifts, legacy economic interests, and a changing information landscape have played an important role, as amply recounted elsewhere. 

The bipartisan legislation of the 1970s arose from both idealism and necessity, during an Earth Day moment that embraced ecological thinking in response to tangible harms to humans and the environment. The laws enjoyed massive public support and got many things right. Some were aspirational and holistic, such as the Clean Water Act’s “zero-discharge” target or NEPA’s vision “to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans.” The latter Act established the Council on Environmental Quality to coordinate this policy across the entire federal government.

Other advances came piecemeal, focused on specific resources. The U.S. Environmental Protection Agency (EPA) was cobbled together by an executive plan to reorganize several existing agencies and offices, then granted authority in a series of media-specific statutes that began with the Clean Air Act, Clean Water Act, and Safe Drinking Water Act, and later the Toxic Substances Control Act and Federal Insecticide, Fungicide, and Rodenticide Act. The Resource Conservation and Recovery Act, Superfund, and Oil Pollution Act addressed hazardous substances affecting the nation’s health and ecosystems. Implementation of all these laws required the Agency to develop in-house scientific expertise and detailed regulations that fleshed out statutory standards and applied them to specific sectors—an approach upheld for decades by the Supreme Court.

These laws made unquestionable progress on conventional pollution and waste, the visible, toxic byproducts of industrial production and consumer culture that had spurred the environmental movement and drawn a generation of lawyers to the new profession. But with specialization came fragmentation of environmental law into a plethora of subtopics, and a managerial, permit-centric legal culture that risked losing sight of ecological goals. Nor were the benefits distributed equally by race or class, as demonstrated by pioneering studies in the field of environmental justice.

As the field matured, it slowed, with congressional interventions becoming less frequent and more technical. Some of the last major amendments to a bedrock environmental statute were the Clean Air Act Amendments of 1990, enacted by a bipartisan Congress and signed by President George H.W. Bush. (The other prominent example is the Frank R. Lautenberg Chemical Safety for the 21st Century Act (Lautenberg Chemical Safety Act), a major amendment to TSCA in 2016.) Absent updated legislation, EPA regulations became paramount, but these had to run a gauntlet of shifting policy priorities, complex rulemaking procedures, litigation, and a transformed and often skeptical Supreme Court. 

Critiques of this system date back almost as far as the statutes themselves. One ELI study listed 34 major “rethinking” efforts emanating from academia, blue-ribbon commissions, and NGOs between 1985 and 2014, across the political spectrum and ranging from incremental reforms to radical reinvention. One highly touted initiative, led by sitting Vice President Al Gore, resulted in some modest administrative streamlining. Most remained paper exercises, appealing to good-government advocates but lacking political support.

The stakes grew higher with increasing awareness of climate change. In June 1988, NASA and book-length treatments followed, sparking broad discussion of what was then a fully bipartisan issue. Vice President Bush campaigned on addressing it, and as President in 1992, he traveled to Rio de Janeiro to sign the U.N. Framework Convention on Climate Change. With successes like the 1987 Montreal Protocol on the ozone layer or EPA’s 1990 Acid Rain Program doubtless in mind, the Senate ratified the Framework Convention 92-0.

But climate change implicates much larger portions of the U.S. economy—energy, transportation, agriculture—at individual as well as industrial scales. While NEPA embodied the 1960s slogan that “everything is connected,” the lesson of climate change is that many things emit greenhouse gases, and all things will be affected by global warming. The need for systemic change proved to be an uneasy fit with existing site-specific, media-specific environmental laws.

Growing awareness of climate change and the scale of action needed to address it also generated a backlash from entrenched economic interests. By the mid-2000s, the Bush/Cheney administration had reversed course on federal climate commitments. It contested and lost Massachusetts v. EPA, a landmark ruling in which a narrowly divided Supreme Court held that the Clean Air Act applies to greenhouse gas emissions that affect the climate. 

The Administration’s argument was captured by Justice Antonin Scalia’s flippant remark in dissent that “everything airborne, from Frisbees to flatulence, [would] qualif[y] as an ‘air pollutant.’” In Scalia’s opinion, real pollution must be visible, earthbound, toxic, inhaled, not a matter of colorless molecules interacting in the stratosphere. Even in dissent, this view set the stage for subsequent legal battles, right up to the present effort to revoke EPA’s 2009 “endangerment finding” that is now the underpinning of federal greenhouse gas regulation. 

Climate change likewise laid bare the long-standing divide between environmental law, which historically regulated the power sector in terms of its fuel inputs and combustion byproducts, and energy and utility law, which focused more on transmission and distribution of the resulting power. (Both fields are further divided among federal, state, and local authorities, as discussed below.) Vehicle emissions similarly are regulated via both EPA tailpipe standards and National Highway Transportation and Safety Administration mileage standards, with California authorized to propose more stringent ones. When coordinated, this multi-headed structure produces steady advances, but in deregulatory moments it has become fertile ground for opportunism, retrenchment, and delay. 

At the federal level, these questions have been exacerbated by massive shifts in administrative law, long the building block of environmental law and climate action, and in federal court rulings on the separation of powers, implicating the authority of federal agencies to issue and enforce rules. Successive administrations have run afoul of the current Supreme Court majority, whose “major questions doctrine” casts a shadow both on attempts to fit new problems into once-expansive environmental statutes, and on “whole of government” approaches that attempt to address climate change’s sources and impacts across the entire economy. 

Tentative attempts by presidents to leverage executive power and emergency authority have been curtailed when invoked for regulatory purposes, but are running strong in deregulatory efforts and executive actions in the service of “energy dominance.” Whether the Supreme Court will articulate some principled limits, and whether those will be even-handedly applied to future administrations, remains to be seen. Meanwhile, the past year has seen a large-scale push to reduce environmental regulation, in parallel with abrupt reorganizations and steep reductions in the federal workforce and agency budgets. These actions were joined by sharp declines in environmental enforcement and U.S. withdrawal from environmental and climate-related international instruments and bodies.

In this uncertain atmosphere, attention has turned to new technologies and building the necessary infrastructure to effect growth in low- and zero-carbon energy. As clean energy alternatives have matured and become economically competitive, the climate imperative is pushing against long-standing environmental review and permitting procedures. That may well include NEPA, which is now attracting attention from all three branches of government and a robust debate about whether, or how much, its procedures might be slowing energy deployment. 

Environmental issues were federalized for a reason: to counter pollution that crosses state borders and to prevent a race to the bottom. But decades of implementation have seen the blunting of some tools, expansion of others, and identification of gaps. Moving forward requires reaffirming that the environment is inseparable from societal health and well-being, economic stability, and energy systems. Any serious response must orient governance toward decarbonization, while embedding accountability, equity, and justice from the outset rather than inconsistently and often inadequately after the fact. Doing all this without sacrificing hard-won environmental gains will not be easy.

To meet the challenge of the worldwide crises of biodiversity loss, pollution overload, and climate change, creation of any new structure must be rooted in understanding the existing baseline for environmental governance. 

Cross-Cutting Objectives

Inseparable: Environment, Energy, Economy, and Society

The past half-century has demonstrated the impossibility of severing the environment from the economy, energy production, and social well-being. We must ensure the false dichotomy between environmental protection and economic development, characterized by an oversimplified idea that the two are in a zero-sum competition, also fades. The decades-old concept of sustainability (or triple bottom line) has not yet made its way into many of our foundational laws and governance structures.

Ignoring the complex relationships among environment, energy, the economy, and society favors short-term decisions that externalize impacts. This underlies the longstanding debate over the accuracy and efficacy of cost-benefit analyses, throughout their 40-plus year federal history, including questions about scope and how they handle uncertainty. For any project or program, system designers that consider an integrated suite of factors that move beyond basic environmental parameters or economic indicators (from public health to workforce development, from the supply chain to community well-being) have a greater chance of cross-sector success. 

These governance challenges are also inseparable from shifts in how finance flows. Public and private financial tools—from subsidies and tax credits to loans, grants, and community-based financing—are increasingly shaping market behavior and determining whether policy objectives translate into real-world outcomes. Who controls these tools, how they are deployed, and when capital is made available all play a central role in driving or constraining environmental progress.

Bridging these gaps is, of course, easier said than done. But widening the aperture of considerations can connect decisionmaking to holistic industrial policies that account for a wider range of economic, social, and environmental factors. Accounting for this wider range isn’t just a nice-to-have, but essential to shared prosperity. 

Foundational: Trust and Participation 

A process, project, or program will move at the speed of trust—no faster and no slower. This refers to trust in institutions, in science, and in process. 

Trust is earned through consistent transparency, clear accountability, and demonstrated responsiveness. For governance systems to function at the scale and pace required today, these principles must be embedded in decisionmaking in ways that are coherent and durable, rather than fragmented across a series of disparate steps and entities. Our traditional frameworks contain mechanisms to solicit and incorporate public input. But those mechanisms have limitations for all involved, both those trying to make their voice heard and those proposing the action and receiving input. (These range from when and how often participation occurs in the decisionmaking process to how the input is incorporated and decisions communicated.) Participation is foundational to our regulatory democracy and must occur early enough and in meaningful ways to improve decisions.

Effective participation also depends on clarity. People must be able to understand how decisions are made, what tradeoffs are being weighed, and where and how engagement can influence outcomes. But our frameworks still reflect reliance on elite and professional representation rather than widespread engagement. Trust—and the durability of outcomes—will increase when our processes have clearly articulated principles, transparently and rapidly weigh tradeoffs, and come to decisions through open and informed consideration. 

The Concurrent Risk and Promise of Technology 

Mechanization and industrialization created both unprecedented wealth and the pollutants that were the target of the 1970s wave of environmental laws. Emerging technologies likewise offer great promise, but also place familiar stresses—greenhouse gas emissions, water consumption, land use, waste—on the ecosystem and on human health and well-being. Our existing laws will need to respond and adapt to these problems as data centers and other novel demands reach greater scale, even as we evolve new ways of balancing those technologies’ potential against their up-front impacts and opportunity costs. 

Technology also offers a potential path through the climate crisis, as solar and wind energy have become scalable and cost-competitive with traditional fossil fuels. Other clean technologies on the horizon, such as geothermal or fusion energy, retain bipartisan support and will require legal and regulatory guardrails if they mature and are integrated into the system. Battery storage and energy efficiency advances will help manage and reduce energy demand, and carbon removal and sequestration technologies may also play a role in curbing emissions. And at the outer limits of our knowledge, various geoengineering concepts are raising difficult questions about feasibility, decisionmaking procedures, unintended consequences, and accountability. 

New technologies are also helping shape the implementation of environmental law in important ways. Existing tools such as satellite imaging, GPS location and geographic information systems, remote monitoring and sensing, and drones have fundamentally altered the way we view and record data from the physical world, in close to real time. Computer modeling and simulations have been a mainstay of climate science and policy, and other software innovations may improve environmental governance, including addressing long-standing issues of government transparency and public participation.

Sample Topics for Multi-Perspective Discussions
Communicating environmental challenges, conditions, and risks

 Effective messaging is essential to enhancing public understanding of interconnected issues and support for responses. It should be tailored to specific jurisdictions and informed by advances in research (e.g., behavioral science), learn from those thriving in today’s information ecosystem, and embrace strategies for reducing polarization.

Advancing the beneficial use of technologies while establishing reasonable guardrails

How can we identify and address barriers to the development and equitable deployment of technologies that advance environmental protection while limiting their negative impacts.

Democracy, Expertise, and Regulatory Certainty

In a healthy democracy, public policy is guided by evidence, and truth is the shared foundation for collective decisionmaking, whatever the chosen outcome. When facts and scientific expertise are dismissed or minimized in favor of ideology, however, it becomes harder for citizens to deliberate, solve problems, and hold leaders accountable. The diminution and marginalization of science contribute to the erosion of democracy itself.

In the United States, our ability to build necessary infrastructure and take action has been slowed by the long timelines and sometimes overlapping requirements of our regulatory processes. This is exacerbated by the increasingly extreme policy swings we have been experiencing between administrations. The result is the twin challenge of how to increase the pace of our processes without lessening their protections, while also making our decisions more stable and durable.

Aligning Regulatory Certainty and Timelines 

Regulatory certainty is not the same thing as rigidity. When done correctly, it can be the backdrop against which communities are able to plan for the future and companies can make informed decisions about where and how to invest. Regulation that is sufficiently clear on stable objectives does not have as much space in which to swing. 

Long horizons with clear milestones matter: think of a national clean electricity standard, or the emissions-based equivalent, set on a 15- to 20-year glidepath. Confidence in long-term decisions, however, stems from effective inclusion, holistic analysis, and transparent decisions. The perspectives of subject-matter experts (in-house and external), and of those who manage and care about the resources or land in question, should be considered essential and actively pursued by policymakers. 

Program-level thinking can help inform decisions at the project level. The energy transition will be remembered for feats of engineering—the thousands of miles of transmission lines, the buildout of battery storage—but its success will be determined by whether our framework listens, incorporates needed expertise, and produces rules that last long enough for people to plan their lives.

Evidence-Based Decisionmaking

For decades, the principle that good decisions require a good evidence base has been axiomatic. Dating back to 1945, the federal government has invested in science as a discipline and an idea, with government supporting the research to be conducted by public institutions and delivered as socially useful goods by the private sector.

Incorporating meaningful, often complex, evidence—including scientific data, traditional knowledge, and the needs, concerns, and priorities of potentially affected individuals—into decisionmaking is increasingly fraught. Climate change illustrates these challenges: despite decades of understanding by government officials and private sector decisionmakers about its causes and the need to act, economic and social interests have prevented effective policy and legislative response. Decisions are as good as the information they are based on. Emissions reductions ultimately depend not just on technical knowledge, but on institutions and governments capable of acting on that knowledge independently, transparently, and free from corruption and clientelism.

In a study assessing the effectiveness of the federal government’s efforts to improve evidence-based decisionmaking, the U.S. Government Accountability Office found mixed progress in: (1) developing relevant and high-quality evidence; (2) employing it in decisionmaking; and (3) ensuring adequate capacity to undertake those activities. These are foundational problems.

Compounding our challenges in making legislative and policy decisions based on accurate and pertinent evidence is the siren song of AI. Artificial intelligence promises many tools, ranging in complexity and autonomy from providing clerical tasks to generating substantive recommendations. (AI Clerical Assistive Systems automate certain administrative and procedural tasks, such as document classification and automatic transcription, and AI Recommendation Systems can contribute to judicial decision-making, for example, by analyzing legal codes and case precedents. Paul Grimm et al.)

 AI is already being used across jurisdictions and agencies for environmental regulation, including planning, reviewing proposals, drafting environmental reviews, public participation and engagement, monitoring compliance, and enforcement. Recent federal policy has fueled the AI flame, with a 2025 AI action plan and multiple Executive Orders that offer the power to expedite permitting processes.

Enormous governance questions around AI have yet to be resolved. Technologies built by people reflect the values and assumptions of those who built them, and their use shifts power in decisionmaking processes. If a judge were called upon to review a decision made by such a tool, how could she determine the finding was reasonable under existing standards of administrative law? Can machine-generated analysis satisfy NEPA’s “hard look” review? These types of governance concerns dog AI tools wherever they are deployed but become particularly critical when they have the potential to become the decisionmaker in our legal and regulatory system.

The importance of having rigorous systems for identifying and considering trusted information to ground collective and democratic decisionmaking cannot be overstated. Until recently, dozens of scientific advisory committees routinely advised federal agencies to help bridge information gaps. Staggering recent losses of federal research funding and government programs and scrubbing of essential data sets means any path forward will likely require significant investments of both financial and human capital. When we rebuild, priority should be placed on ensuring all participants in decisionmaking have access to the same evidence, supported by the same systems. 

Frontloading Regulatory Decisionmaking 

Even as we work to improve how evidence informs decisionmaking, we face growing risks, uncertainties, and tradeoffs. The challenge is not simply to generate more information, but to make better use of what we already know through regulatory systems that reflect the integrated nature of the problems we face—without mistaking uncertainty for an absence of evidence.

Many conflicts arise because decisions are fragmented across regulatory silos and institutions.  Consider a proposed electrical transmission line crossing a wetland. Decisionmakers must balance the imperatives of the energy transition, the conservation of biodiversity, the protection of water resources, and local economic opportunities. Yet these factors may be evaluated at different times, at different scales, and by different agencies. As a result, environmental permitting decisions can be made in isolation, long after foundational choices about the project’s purpose and design have already been locked in.

By the time site-specific questions arise, such as whether a particular wetland falls within the narrowed jurisdiction of the Clean Water Act, many broader tradeoffs have already been foreclosed. 

A holistic approach would entail identifying the priority of certain projects and a system for weighing their impacts. For example, infrastructure decisions could happen at a systemic scale such as nationwide grid needs, providing context for decisions about individual projects and resources. Our decisionmaking processes need systems for weighing tradeoffs, and making them transparent, to enable systems-level planning and prioritization and effective engagement. 

Hard decisions will have to be made regarding prioritized (and thus deprioritized) objectives. But frontloading data gathering, assessment, and decisionmaking on a national scale—through meaningful scenario planning, for example—could reduce the number of decisions made much further down the line in a project lifecycle and temper the uncertainty that can stem from permitting officials’ discretion. 

We will be facing these types of tradeoffs with increasing frequency as needs mount to build infrastructure and housing, retreat from our coasts, manage and conserve species and ecosystems, and respond to and prepare for increasingly frequent and severe emergencies. In addition to an integrated approach for assessing impacts and making tradeoffs transparent, the system will need certain decisions to be made earlier in the decisionmaking processes and with a broader scope. 

Acting (and Adapting) Amidst Uncertainty 

Core tenets of administrative law structure decisionmaking with up front analysis and assume that we have full—or at least sufficient—information about circumstances and potential impacts to support a decision. But this is not always the case. When there are substantial uncertainties about conditions or the possible impacts of an action or rulemaking, adaptive management can improve outcomes by taking an iterative, systematic approach. 

The uncertainties brought on by changing conditions due to climate impacts and unknowns about the consequences of proposed actions may call for an adaptive approach. And there are other situations where establishing sufficient evidence before taking irreversible action is appropriate. For example, we currently have limited understanding of the potential local and global impacts of geoengineering proposals to release aerosols into the atmosphere to block the sun’s rays, nor are there governing mechanisms in place to address them. 

There are also situations where it is important to ensure that we do not indefinitely postpone action due to a desire to have all the answers before acting, such as infrastructure for transitioning away from fossil fuel combustion. When appropriate, effective adaptive management plans include procedural and substantive safeguards such as clear goals to set an agenda and provide transparency, an accurate assessment of baseline conditions to compare future monitoring data against, an outline of the thresholds at which management actions should be taken to promote certainty and assist with judicial enforcement, and is linked to response action.

Learning as we go and making appropriate adjustments may be justified in some contexts, and even essential when we do not have the luxury of time and must move ahead without critical information. Adaptive management can increase an agency’s ability to make decisions and allow managers to experiment, learn, and adjust based on data. But adaptive management’s flexibility comes at the cost of more resources and less certainty, which may also invite controversy. The sweet spot for adaptive management may be when managing a dynamic system for which uncertainty and controllability are high and risk is low. While uncertainties are proliferating, situations that meet those conditions are not the norm. 

It would be beneficial for our environmental governance systems to explicitly identify conditions under which adaptive management may and may not be used, and to provide clear accountability mechanisms. The approach must fit with the practical realities of the working environment. For example, even if uncertainty and controllability are high and risk is relatively low, tinkering with large-scale energy infrastructure is not practical. Adaptive management may not be suited to regulatory contexts (1) in which long-term stability of decisions is important; (2) where decisions simply can’t easily be adjusted once implemented; or (3) where it is essential that an agency retain firm authority to say “yes” or “no” and leave it at that.  It is a valuable tool to be invoked when truly necessary.

Sample Topics for Multi-Perspective Discussions
Realigning to reflect today’s challenges

The interconnectedness of today’s global environmental challenges is in tension with the accreted framework of media-specific, site-specific laws and siloed agencies. Adjustments that help to align objectives, processes, and structures could scale impact. 

Evidence-based decisionmaking is foundational to U.S. governance and essential to progress towards today’s environmental imperatives

Our framework should reflect commitment to and investment in gathering and analyzing information, from intricate science to the concerns of impacted communities; and be designed to incorporate and respond to changing information, such as through judicial review or other checks. 

Designing effective certainty

In part because of impacts already set in motion, we must consider when we cannot wait for more information before taking action on environmental and climate challenges. By their nature, some of those actions can be adapted on an ongoing basis, while others cannot. Clear parameters for differentiating will help ensure clear timelines and appropriate, effective processes.

Building a Structure Fit for Purpose

The triple planetary crises, a term coined by the UN Environment Programme, refers to the challenges of biodiversity loss, pollution overload, and climate change. They require large-scale mobilization and societal level adjustments. This magnitude of action requires a multifaceted system that can support and move myriad levers in a coordinated and balanced manner. The year she received the Nobel Prize in Economics, Elinor Ostrom published a paper capturing the tension but also necessity of this layered system, calling for a “polycentric approach” to addressing climate change.

The following discussion focuses largely on federal and state government action. In addition, Tribal Nations are vital sovereign authorities, partners, and voices in governance, including natural resource management, and their needs and knowledge are critical to effective, sustainable, just results. And as Ostrom recognized, private entities will also be instrumental in addressing climate change and other complex challenges; this includes not only corporations, as discussed below, but philanthropic organizations and a variety of other nongovernmental actors.

The Scale Challenge 

Environmental regulation occurs at multiple levels: local ordinances, state laws and policies, interstate agreements, tribal laws, federal regulations, and international laws and norms. It also works at different resource scales, from managing a subspecies to protecting regional drinking water to setting nationwide air standards.

Jurisdictional nesting can provide comparative benefits at various levels for specific resources or pollutants. For example, working at the local level may allow for tailoring to specific circumstances to maximize benefits and the building of trust, while working at the state level can allow for the cumulative benefits of collective local action while also allowing for the testing of different approaches to federal implementation. Meanwhile, working at the federal and larger scale allows, among other things, the balancing of voices, and the establishment of shared objectives, standards, or requirements. 

However, tiered systems can also be subject to gaps in implementation, such as when there is no mechanism to trigger enforcement of an international mandate at a national level. This may inadvertently impede interoperability and shared learning, such as by using different data standards, tools, or systems, and slow action due to competing or otherwise unaligned priorities. In addition, rarely do jurisdictional boundaries align with resource definitions, whether it be a hydrogeographic basin, extent of an air pollutant, or natural hazard vulnerability zone. Further complexity is added by questions around preemption, with changes occurring in longstanding understandings of federal versus state authorities under key statutes and regulatory structures. 

Federal, tribal, state, and local governments must navigate these challenging dynamics as they work to effectively implement existing environmental laws and creatively address new environmental problems. 

Cooperative Federalism

Federalism—whereby the federal government and states share power and responsibilities—is a central tenet of the U.S. governance system. A particular form, cooperative federalism, is embodied in most of the major U.S. environmental laws, including the Clean Air Act and the Clean Water Act. These laws establish a legal framework in which minimum standards are established at the federal level and individual states implement the programs. Today, over 90 percent of the delegable federal environmental programs are run by states. As a general matter, states are responsible for ensuring that federal standards are met but have the flexibility to impose standards that are more stringent than the federal standards. 

In practice, the Congressional Research Service observes that the “precise relationship and balance of power between federal and state authorities in cooperative federalism systems is the subject of debate.” This debate has manifested in a variety of ways over the decades, including differences over the appropriate scope of federal oversight and levels of federal funding for state-delegated programs. 

Environmental protection has advanced in many respects over time with cooperative federalism as its foundation, but few would argue there is no room for improvement. For example, a 2018 memorandum by the Environmental Council of the States (ECOS) captured a consensus among states that the “current relationship between U.S. EPA and state environmental agencies doesn’t consistently and effectively engage nor fully leverage the capacity and expertise of the implementing state environmental agencies or the U.S. EPA.”

In addition to the leeway that cooperative federalism provides to the states in implementing federal environmental laws, states are free to regulate or otherwise address environmental problems that are not covered by federal laws. As a result, states are often referred to as (in Justice Brandeis’ phrase) “laboratories of democracy” for testing innovative policies. Historically, states have served as testing grounds for environmental policies later adopted by the federal government. Given the current federal governance landscape, discussed below, what happens in the states may stay in the states (at least for quite some time)—making state laboratories one of the few promising options for advancing environmental protection. 

Barriers to Optimal Functioning of Cooperative Federalism 

In addition to the inherent systemic challenges outlined above with respect to multi-tiered jurisdiction and resource scale, there are broad societal barriers to maximizing the efficacy of cooperative federalism. The numerous overarching problems contributing to democratic dysfunction (e.g., channelized communication, primaries that yield extreme candidates who foster dramatic pendulum swings, lack of public trust) will contribute to impeding the optimal functioning of cooperative federalism for the foreseeable future. 

The multitude of environmental governance-specific challenges identified earlier also significantly affect the functioning of cooperative federalism. These include, for example, long-standing congressional gridlock; new and emerging environmental harms that cannot be easily addressed within the existing, siloed framework; a Supreme Court changing its review of regulation; and regulatory pendulum swings that make consistency and stability difficult and hinder continuous improvement.

In addition, several additional barriers arguably weaken the foundations of cooperative federalism. These include: ineffective federal oversight of state programs (possibly both too stringent and too lenient in some respects); insufficient collection and dissemination of data (e.g., on environmental conditions, performance, pollution impacts), as well as inconsistent tracking of key environmental indicators; lack of state-specific effective risk communication and messaging; limited state resources for filling federal regulatory gaps or experimenting with innovative ways of implementing federal and state regulations; and insufficient federal funding for state programs. Recent critiques also point to the need to build out state administrative law to improve the functioning of cooperative federalism.

Opportunities for Renewing Cooperative Federalism

Recent developments in federal programs are disrupting many aspects of the country’s environmental protection efforts. These developments include drastic regulatory rollbacks, multiplied industry influence, curtailed input from scientists and other experts, rollback of federal grant funds to states and local governments, and sweeping staffing cuts resulting in loss of critical expertise. 

Cooperative federalism has been particularly undermined by federal funding cuts (e.g., withdrawal of federal grants, reductions in revolving loan funds) and cuts to the federal programs that collect and analyze environmental data. Moreover, federal interference with independent or “more stringent than” state initiatives is taking a toll (e.g., response to California’s electric vehicle requirements ).

Given the barriers outlined above that make major statutory change infeasible, building an entirely new structure to replace cooperative federalism will be a nonstarter for the foreseeable future. However, ample opportunities exist to strengthen the existing structure in a manner that yields more effective and innovative approaches to environmental protection. 

Front and center is building state and local governmental capacity to fill the gaps created by federal inaction and rollbacks as well as to lead on regulatory innovation. In so doing, states and local governments can serve as more effective laboratories of democracy and foster innovative federal action. And because states and local governments are on the frontlines of managing environmental and climate impacts such as floods and wildfires, as well as aging water infrastructure and other environment-related challenges, they are motivated to address the cause and effects of these harms, despite the intensely politicized nature of environmental issues such as climate change. 

To be sure, renewing the existing structure is complicated by an uneven political landscape. For example, the level of political and popular support for environmental protection measures in the 26 states led by Republican governors differs from the levels of support in the 24 states led by Democratic governors, and the relative dominance of a particular party (e.g., trifectas or triplexes) is also a factor. These dynamics likewise influence environmental action by local governments when, for example, the potential for state preemption of local authority is a factor. 

Nevertheless, the practical reality of increased extreme weather events, aging water infrastructure, and other environment-related challenges provides a strong incentive for all states and local governments to act. State and local efforts, however, are hindered by limited capacity in the form of staffing, funding, expertise, data, and other factors. For example, virtually all states could benefit in their decisionmaking from more robust data on local environmental conditions, and many states lack adequate funding, staff, and other resources.

Private Sector Synergies and Opportunities

Private environmental governance (PEG)—which can take a range of forms including collective standard-setting, certification and labeling systems, corporate carbon commitments, investor and lender initiatives, and supply chain requirements—is already making its mark across industries as diverse as electronics, forestry, apparel, and AI. For example, roughly 20 percent of the fish caught for human consumption worldwide and 15 percent of all temperate forests are subject to private certification standards. In addition, 80 percent of the largest companies in key sectors impose environmental supply chain contract requirements on their suppliers. And investors are increasingly taking environmental, social, and governance (ESG) into account, including risks related to climate change. A 2022 study estimated, for example, that assets invested in U.S. ESG products could double from 2021 to 2026 and reach $10.5 trillion. 

As professors Vandenbergh, Light, and Salzman explain in their book Private Environmental Governance: “If you want to understand the future of environmental policy in the 21st century, you need to understand the actors, strategies, and challenges central to private environmental governance.” 

Given the scope of PEG activities, it is not surprising that a range of regulatory regimes are implicated, including corporate governance, contract, antitrust, and consumer protection laws. In some cases, these legal regimes place constraints on the forms and scope of PEG initiatives. Many contend, however, that these constraints are inadequate, as reflected in recent efforts to severely curtail ESG initiatives. 

Further, some scholars and advocates have criticized PEG from an entirely different perspective, citing concerns that PEG measures constitute greenwashing—that is, that they do not actually change corporate behavior and environmental conditions. Among other concerns is that PEG may undermine support for public governance measures in certain contexts. 

Yet federal legislative gridlock, a dramatically swinging environmental regulatory pendulum, unregulated new technologies, and other factors point to needing a better understanding of how PEG can be leveraged to advance environmental protection efforts—including the improved functioning of cooperative federalism.

Sample Topics for Multi-Perspective Discussions
Building a robust and widely disseminated information base

How can we use innovative approaches for preserving existing data and collecting new data on environmental conditions, regulated entity performance, and pollution impacts to enhance interoperability of local, state, and federal systems, foster consistency among assessments of risk, and help align priorities and approaches?

Leveraging traditional state and local powers

Problems such as climate change require a whole of government approach to address and could benefit from leveraging adjacent state and local regulatory authorities in areas such as land use (e.g., zoning), infrastructure, and public health.

Enhancing connectivity within jurisdictional nesting and fostering networks of state-level and local-level regulators to align priorities

Bolstering state and local officials’ networks for sharing data, best practices, and regulatory innovations may help align priorities and produce further progress on cross-jurisdictional problems as well as new challenges such as permitting reforms.

Examining how PEG can be leveraged to advance environmental protection

For example, asking—what are the effects of PEG (e.g., emissions reductions); what are the drivers of PEG (e.g., brand reputation, shareholder actions, employees, and corporate customers); are there ways to reduce greenwashing and greenhushing; and how can we ensure that PEG complements public governance.

Leveraging new technologies for capacity-building

For example, AI and advanced monitoring technologies—if thoughtfully leveraged—could lessen the burden on state and local governments, particularly those that are under-resourced, in their efforts to assess climate risk, develop resilience plans, and monitor regulatory compliance.

Conclusion

The environmental gains of the last half-century demonstrate that governance choices matter. The United States built a system capable of addressing the urgent environmental crises of its time by combining scientific expertise, democratic accountability, and enforceable legal standards. 

Today’s urgent challenges—climate change, biodiversity loss, and pervasive pollution—demand a similar alignment under far more complex conditions. The challenge is not merely to regulate more, faster, or differently, but to recommit to decisionmaking that is credible and durable: by restoring confidence that evidence matters, that participation is meaningful, that tradeoffs get confronted honestly, and that rules will persist long enough to justify investment and collective effort.

The path forward lies neither in abandoning the foundations of environmental law, nor in relying solely on technological or private solutions. It will be found by strengthening and adapting existing governance structures—integrating cross-cutting objectives across domains, clarifying roles across jurisdictions, and rebuilding the shared evidentiary base and institutional capacity needed to act amid uncertainty, rather than deferring action in pursuit of unattainable certainty. And it requires clear communication about today’s complex, dispersed challenges that enhances understanding and reduces polarization. 

At its core, the triple planetary crisis is a democratic and governance challenge: how societies decide, together, to protect people and places while sharing costs and benefits fairly. Meeting that challenge will require systems capable of carrying both technical complexity and public trust, as well as a sustained commitment to invest in institutions that can decide, act, and endure. 

Costs Come First in a Reset Climate Agenda

Key Takeaways

Introduction

Public policy involves tradeoffs. The primary tradeoff for climate change mitigation is economic cost. Secondary tradeoffs include commercial freedom, consumer choice, and the quality or reliability of goods and services. Political movements seeking to address a collective action problem, such as climate change, are prone to overlook the consequences of tradeoffs on other parties, like consumers and taxpayers. This paper posits that the cost tradeoffs of climate change mitigation have been underappreciated in the formation of public policy. This has resulted in an overselection of high cost policies that are not politically durable and may erode social welfare. It also results in overlooking low or negative-cost policies that are durable and hold deep abatement potential. These policies can have broad political appeal because they align with the self-interest of the United States, however they typically require dispersed beneficiaries to overcome the concentrated lobby of entrenched interests. 

A core, normative objective of public policy is to improve social welfare, which “encourages broadminded attentiveness to all positive and negative effects of policy choices”. Environmental economics determines the welfare effects of climate change mitigation policy by the net of its abatement benefits less the costs. The conventional technique to determine abatement benefits is the social cost of carbon (SCC). The barometer for whether climate policy benefits society is to determine whether abatement benefits exceed costs. Accounting for full social welfare effects requires consideration of co-benefits as well, granted these tend to be conventional air emissions with existing mitigation mechanisms covered under the Clean Air Act. Nevertheless, accounting for costs is essential to ensure climate policy benefits society. 

Abatement costs also have a discernable bearing on the likelihood and durability of policy reforms. Climate policies exhibit patterns of passage, mid-course adjustments, and political resilience across election cycles based on the constituency support levels linked to benefit-allocation and cost imposition. This paper develops four policy classifications as a function of their abatement benefit-cost profile, and uses this framework to examine the political economy, abatement effectiveness, and economic performance of select past and potential policy instruments. 

Political Economy and Policy Taxonomy 

The translation of climate policy concepts into legitimate policy options in the eyes of policymakers can be viewed through the Overton Window. That is, politicians tend to support policies when they do not unduly risk their electoral support. The Overton Window for climate policy is constantly shifting within and across political movements with the foremost factor being cost. 

In a 2024 survey of voters, the most valued characteristics of energy consumption were 37% for energy cost, 36% for power availability, 19% for climate effect, 6% for U.S. energy security effect, and 1% for something else. Democrats slightly valued energy cost and power availability more than climate effects. Independents and Republicans heavily valued energy cost and power availability more than climate effect. 

Figure 1. Voters’ Energy Values

Progressives have long exhibited greater prioritization of climate change policy, but cost concerns are driving an overhaul of the progressive Overton Window on climate change. In California, which contains perhaps the most climate-concerned electorate in the U.S., progressives have begun a “climate retreat” to recalibrate policy as “[e]lected officials are warning that ambitious laws and mandates are driving up the state’s onerous cost of living”. Nationally, a new progressive thought leadership think tank is encouraging Democrats to downplay climate change for electoral benefit. Importantly, they find that 61% of battleground voters acknowledge that “climate change is at least a very serious problem,” but that “it is far less important than issues like affordability.” 

Similarly, veteran progressive thought leaders, such as the Progressive Policy Institute, now stress that “energy costs come first” in a new approach to environmental justice. While emphasising the continued importance of GHG emissions reductions, those policy leaders are making energy affordability the top priority, amid a broader Democratic messaging pivot from climate to the “cheap energy” agenda. The rise of cost-conscious progressives is particularly notable because the progressive electorate has expressed a higher willingness to pay to mitigate climate change than moderate and conservative electoral segments. 

Economic tradeoffs, namely costs and more government control, has long been the central concern on climate policy for the conservative movement. The conventional climate movement messaged on fear and the need for economic sacrifice, which is the antithesis of the conservative electoral mantra: economic opportunity. Yet the conservative climate Overton Window emerged with a series of state and federal policy reforms when climate change mitigation aligned with expanded economic opportunity. However, pro-climate conservative thought leaders remain opposed to high cost policies, such as calling to phase out Inflation Reduction Act (IRA) subsidies for mature technologies. 

Many leading conservative thought leaders continue to challenge the climate agenda writ large because of its association with high cost policies. For example, President Trump’s 2025 Climate Working Group report was expressly motivated by concerns over “access to reliable, affordable energy” while acknowledging that climate change is a real challenge. Similarly, a 2025 American Enterprise Institute report finds that the public is most interested in energy cost and reliability and unwilling to sacrifice much financially to address climate change. Meanwhile, climate-conscious conservative thought leaders like the Conservative Coalition for Climate Solutions and the R Street Institute continue to emphasize a market-driven, innovation-focused policy agenda that prioritizes American economic interests and drives a cleaner, more prosperous future. Altogether, it indicates a conservative Overton Window on negative and low-cost climate change mitigation. 

While cost is driving the Overton Window within each political movement, it also buoys the potential for alignment across political movements. Political movements are not monoliths, but rather exhibit major subsets within each movement. The progressive movement has seen gains in popularity among its populist left flank, often identified as the “democratic socialist” wing, which contributes to ongoing debate about Democrats’ ideological direction. Climate policy initiated by this wing, however, is associated with high economic tradeoffs (e.g., degrowth) and has prompted a backlash within the progressive movement. By contrast, a subset of the progressive movement, sometimes labelled “abundance progressives,” has emerged to support a more pro-market, pro-development posture. This movement is especially responsive to energy cost concerns, and is an emerging substitute for the anti-development traditions of the progressive environmental movement. Overall, variances in the progressive movement are fairly straightforward to categorize linearly on the economic policy spectrum. 

The Republican electorate views capitalism far more favorably than Democrats, but with modest decline in recent years. Republicans have trended away from consistently conservative positions associated with limited government, which historically emphasized the rule of law and a strict cost-benefit justification for government intervention in the market economy. They have migrated towards right-wing populism associated with the Make America Great Again (MAGA) movement. Right-wing populism is hard to operationalize for economic policy because it is not a standalone ideology, but a movement vaguely attached to conservative ideology. Generally, the “America First” orientation of MAGA implies positions based on the self-interest of the U.S., with the Trump administration prioritizing cost reductions in energy policy. 

MAGA is further to the right of conventional conservatives on environmental regulation and general government reform. For example, conservatives have noted the contrast between conservative “limited, effective government” and the Department of Government Efficiency’s “gutted, ineffective government” reform approach. On the other hand, MAGA will occasionally back leftist policy instruments, such as coal subsidies, wind restrictions, executive orders to override state policies, and emergency authorities for fossil power plants. These are often justified to counteract the leftist policies passed by progressives (e.g., renewables subsidies, fossil restrictions, emergency authorities for renewables), resulting in dueling versions of industrial policy. In other words, ostensible overlap between MAGA and progressives on policy instrument choice actually reflects the use of similar tools used for conflicting purposes (e.g., restrictive permitting or subsidies for opposing resources; i.e. picking different “winners and losers”). Nevertheless, the disciplinary agent for right-wing energy populism has been cost concerns, which have influenced the Trump administration to pursue more traditionally conservative energy policies like permitting reform and lowering electric transmission costs. 

This political economy identifies the broadest cross-movement Overton Window between moderate or “abundance progressives” and traditional conservatives. Regardless, both broad movements exhibit cost sensitivity and growing prioritization of U.S. self–interest. Distinguishing the domestic SCC from global SCC is essential to determine what policies are consistent with the self-interest of the U.S. versus the world as a whole. Traditionally, the U.S. government only considers domestic effects in cost-benefit analysis, yet the vast majority of domestic climate change abatement benefits accrue globally. 

The first SCC, developed under the Obama administration, relied solely on a global SCC. Leading conservative scholars, including the former regulatory leads for President George W. Bush, criticized the use of the global SCC only to set federal regulations. They argued for a “domestic duty” to refocus regulatory analysis on domestic costs and benefits. Similarly, the first Trump administration used a domestic SCC. Although the second Trump administration moved to discard the SCC outright, this appears to be part of a regulatory containment strategy, not a reflection of the conservative movement’s dismissal of the negative effects of climate change. In other words, even if the SCC is not the explicit basis for policymaking, it is a useful heuristic for policymakers.

The proper value of the SCC is the subject of intense scholarly and political debate. It has fluctuated between $42/ton under President Obama, $1-$8/ton under President Trump, and $190/ton under the Biden administration (all values for 2020). The main methodological disagreement has been over whether to use a domestic or global SCC, with the Trump administration position guided by “domestic self-interest.” This suggests the original domestic and global SCC values may approximate the Overton Window parameters the best. This underscores the following policy taxonomy that characterizes climate abatement policies by cost relative to domestic and global SCC levels:

Policy Applications

There are myriad policies across the abatement cost spectrum. This analysis applies to particularly popular domestic policies already pursued or readily considered. This includes policies targeting the environmental market failure via direct abatement (GHG regulation) and indirect abatement (public spending, clean technology mandates, and fuel bans). It also includes policies targeting non-climate market failure, yet hold deep climate co-benefits (innovation policy). The analysis also examines policies that correct government failure and have major climate co-benefits (permitting, siting, and electric regulation reform). 

Fuel Mandates and Bans

For the last two decades, the most prevalent climate policy type in the U.S. has been state level fuel mandates and bans. Last decade, the environmental movement came to prefer policies that explicitly promote or remove fuels or technologies, not emissions. This is despite ample evidence in the economics literature that market-based policies are more effective and carry far lower abatement costs. Nevertheless, the most common domestic climate policy instrument this century has been state renewable portfolio standards (RPS). The literature notes several key findings from RPS:

Micro-mandates have also sprung up, primarily in progressive states. These have often targeted the promotion of nascent or symbolic energy sources that the market would not otherwise provide, with the costs obscured from public view (e.g., rolled into non-bypassable electric customer charges). A good example is offshore wind requirements in the Northeast, which carries a high abatement cost (over $100/ton). 

Fuel bans have become increasingly popular climate policy in progressive states and municipalities. Beginning in 2016, a handful of progressive states began banning coal. However, this does not appear to have created much cost or abatement benefit, as evidenced by a lack of commercial interest in coal expansion in areas without such restrictions. In fact, neither federal nor state regulation was responsible for steep emissions declines from coal retirements. Coal retirements were mostly driven by market forces, especially breakthroughs in low-cost natural gas production and high efficiency power plants. Policy factors, like the Mercury and Air Toxics Rule, were secondary drivers of coal plant retirement. 

Around 2020, California, New York, and most New England states began adopting partial natural gas bans or de facto bans on new gas infrastructure through highly restrictive permitting and siting practices. Unlike coal restrictions, these laws have markedly decreased commercial activity, namely gas pipeline and power plant development, and in some cases caused economically premature retirements. This has caused “pronounced economic costs and reliability risk.” Resulting pipeline constraints drive steep gas price premiums in these states, which translate into a core driver of elevated electricity prices. 

Insufficient pipeline service in the Northeast is especially problematic, as demonstrated by a December 2022 winter storm event that nearly led to an unprecedented loss of the Con Edison gas system in New York City that would have taken weeks or months to restore. Further, preventing gas infrastructure development does not provide a clear abatement benefit, because more infrastructure is needed to meet peak conditions even if gas burn declines. A prominent study found a 130 gigawatt increase in gas generation capacity by 2050 was compatible with a 95% decarbonization scenario. 

Progressive states and municipalities have also pursued natural gas consumption bans. This policy may carry exceptional cost, especially for existing buildings, with potentially well over $1 trillion in investment cost to replace gas with electric infrastructure. One estimate put the cost of natural gas bans at over $25,600 per New York City household. A Stanford study projected a 56% electric residential rate increase in California from a natural gas appliance ban. Generally, conservative thought leaders and elected officials have opposed natural gas bans for cost as well as non-pecuniary reasons, including security concerns and the erosion of consumer choice. This applies even for prominent members of the Conservative Climate Caucus. Altogether, gas bans are considered class IV policy with virtually no Overton Window alignment. 

GHG Transparency 

GHG regulation takes various forms. The least stringent is GHG transparency, which addresses an information deficiency and lowers transaction costs in voluntary markets. This begins with reporting and accounting requirements on emitters (Scope 1 emissions). Public policy can help resolve measurement and verification problems that have eroded confidence in voluntary carbon markets. GHG transparency policy can also standardize terminology and provide indirect emissions platforms. For example, making locational marginal emissions rates on power systems publicly available lets market participants identify the indirect power emissions of power consumption (Scope 2 emissions). Progressives have consistently favored GHG transparency policy, while conservatives have typically supported light-touch versions of it like the Growing Climate Solutions Act. 

The second Trump administration recently pursued removal of basic GHG reporting requirements on ideological grounds, specifically repeal of the GHG Reporting Program (GHGRP). This appears to reflect an optical deregulatory agenda over an effective one. Conservative groups have warned of the downsides of GHGRP repeal. Pressure to course correct may prove fruitful, given that the industry the Trump administration aims to assist – oil and natural gas – maintain that the U.S. Environmental Protection Agency (EPA) should retain the GHGRP. A recent analysis found that if states replace the GHGRP, new programs will be more expensive (Figure 2). 

Figure 2. Cost Comparison of Federal and California Reporting Programs

Many regulated industry and conservative groups instead support a low compliance cost GHG reporting regime with durability across future administrations. This not only applies to direct emissions reporting but indirect emissions reporting, as in the absence of federal policy industry faces a patchwork of compliance requirements across states and foreign governments. The same economic self-interest rationale justifies a role for limited government in emissions accounting, with an emphasis on the capital market appeal of showcasing the “carbon advantage” of the U.S. in emissions-intensive industries. An example is liquified natural gas, whose export market is enhanced by showcasing its lifecycle emissions advantage over foreign gas and coal. 

The abatement effectiveness of GHG transparency has grown appreciably in the 2020s, as voluntary industry initiatives have sharply increased. This policy set enables an efficient “greening of the invisible hand” with staying power, as corporate environmental sustainability efforts appear resilient regardless of political sentiment, unlike corporate social endeavors. In fact, the aggregate willingness to pay for voluntary abatement from producers, consumers, and investors suggests that well-informed domestic markets go a long way towards self-correcting the externality of GHGs (e.g., convergence of the private and social cost curves). Certain voluntary corporate behaviors may even exceed the global SCC, especially commitments to nuclear, carbon capture, and other higher cost abatement generation financed by the largest sources of power demand growth. Well-functioning voluntary carbon markets could yield roughly one billion metric tons of domestic carbon dioxide abatement by 2030. Providing locational marginal emissions data can slash abatement costs from $19-$47/ton down to $8-$9/ton while doubling abatement levels from some power generation sources. 

Overall, efficient GHG transparency policy described above is a low-cost mitigation strategy consistent with class II designation. Basic, federal GHG transparency policy may even constitute class I policy, because it avoids the higher compliance cost alternative of a patchwork of state and international standards that would manifest in the absence of federal policy. However, stringent GHG transparency policy may constitute class III or IV policy. Prominent examples include a recent California climate disclosure law and a former Securities and Exchange Commission proposed rule to require emissions disclosure related to assets a firm does not own or control (Scope 3). Such efforts may obfuscate material information on climate-related risk and worsen private-sector led emission mitigation efforts.

Direct GHG Regulation 

Classic environmental regulation takes the form of a command-and-control approach. These instruments include applying emissions performance standards or technology-forcing mechanisms, typically for power plants or mobile sources. These policies vary widely in stringency and cost. Overall, command-and-control is widely considered in the economics literature to be an unnecessarily costly approach to reducing GHGs relative to market-based alternatives. It can also result in freezing innovation, by discouraging adoption of new technologies. 

Federal command-and-control GHG programs have not been particularly environmentally effective, cost-effective, or demonstrated legal or political durability. The first power plant program was the Clean Power Plan, which was struck down in court, and yet its emissions target was achieved a decade early from favorable market forces and subnational climate policy. The most recent federal command-and-control approaches for GHG regulation were 2024 EPA rules for vehicles and power plants. A 2025 review of these and other federal climate regulations over the last two decades of federal climate regulations found:

The 2025 review study implies that past federal command-and-control had very high cost – well into class IV range. It has also been a top priority of conservatives to undercut. However, it is possible for modest command-and-control policy with class II or III costs. 

Some conservatives, noting EPA’s legal obligation to regulate GHGs and the cost of regulatory uncertainty from decades of EPA policy oscillations between administrations, suggested modest requirements as a better option to replace high cost rules in order to mitigate legal risk and provide industry a predictable, low-cost compliance pathway. For example, conservatives argued that replacing high cost requirements for power plants to adopt carbon capture and storage (CCS) with low cost requirements for heat rate improvements may lower compliance costs more than attempting to repeal the Biden era rule for CCS outright. Similarly, the oil and gas industry opposed stringent GHG regulations on power plants and mobile sources, but often validated alternative low cost compliance requirements. 

The first Trump administration pursued modest replace-and-repeal GHG regulation. The second Trump administration has opted for repeal policies and to eliminate the endangerment finding via executive rulemaking. However, regulated industry and many conservative thought leaders believe this is a strategic blunder, given the low odds of legal success, resulting in the perpetuation of “regulatory ping-pong that has plagued Washington, D.C., for decades.” If the courts uphold Massachusetts v. EPA and the associated endangerment finding, this implies that modest command-and-control policy may have durable political alignment potential. Yet this does not hold much abatement potential. In the absence of a legal requirement to regulate GHGs, there is unlikely to be broad political alignment for even modest command-and-control policy. Conservatives tend to view this as a gateway to more costly policies that will probably not meaningfully affect global GHG trajectories. 

The 2025 review study understates the full cost of U.S. climate regulations because they exclude state and local levels. Although no comprehensive study of state climate regulation is known, command-and-control state regulations often raise major cost concerns as well. The cost and environmental performance of such state programs varies immensely, often owing to differences in the accuracy of abatement technology costs that regulatory decisions are based upon (e.g., the failure of California’s zero-emission vehicle program compared to success with its low-emission vehicle program). A recent example is California’s rail locomotive mandate, which projected to impose tens of billions of dollars in costs before being withdrawn. State command-and-control regulation is commonplace in progressive states, but not beyond, implying meager Overton Window alignment. 

A more economical version of GHG regulation is a system of marketable allowances, or cap-and-trade (C&T). Over three decades of experience with C&T programs reveals two things. First, C&T is environmentally effective and economically cost effective relative to command-and-control policy. Second, C&T performance depends on its design quality and interaction with other policies. Abatement costs depend on stringency and other design features, but C&T in a backstop role is generally close to the domestic SCC, rendering it class II policy. Robust C&T generally falls in the class III policy range. C&T is an example of abatement policy that can be cost-effective on a per unit basis, but given the breadth of its coverage its total costs can be substantial. Recent developments in Pennsylvania indicate a possible preference for policies with higher per-unit abatement costs than C&T, which may reflect a political preference for policies with less cost transparency and lower aggregate costs. 

Some environmental C&T complaints are valid, such as emissions leakage, but C&T effectiveness concerns are generally readily fixable design flaws. C&T effectiveness complaints are often the result of interference from other government interventions like fuel mandates, relegating C&T to a backstop role and suppressing allowance prices. Such state interventions triggered anti-competitive concerns in wholesale power markets overseen by the Federal Energy Regulatory Commission (FERC). This prompted conservative state electric regulators to call for a conference to validate mechanisms like C&T as a market-compatible alternative to high cost interventions. Conservative expert testimony at that conference, invited by conservative FERC leadership, explained that interventions layered on top of C&T merely reallocate emissions reduction under a binding cap, which raises costs, creates no additional abatement, and undermines innovation. This implies that such states might increase abatement and lower aggregate costs by upgrading the role of C&T and downgrading the role of costlier interventions. 

In the 2000s, bipartisan interest in federal C&T policy arose, but it failed and has not resurfaced. In its absence, states have supplanted federal policy with subnational C&T programs. However, the durability of C&T beyond progressive states is unclear. Moderate states have sometimes joined a regional C&T program under Democratic leadership, but sometimes departed them under Republican leadership. Conservative state groups typically challenge C&T adoption and seek repeal of C&T programs like the Regional Greenhouse Gas Initiative. This suggests that C&T is at the fringe, but typically outside, an Overton Window across political movements. 

Permitting and Siting 

Permitting policy can base decisions explicitly on GHG criteria, or they can be based on non-GHG factors but hold indirect GHG consequences. Generally, only progressive states and presidents have pursued the former. Federally, these include the Obama administration’s “coal study” and Biden administration’s “pause” on liquified natural gas (LNG). The LNG pause did not provide any apparent emissions benefit, yet carried substantial foregone economic opportunity and strategic value to U.S. allies. Pragmatic progressive thought leaders expressed concern with the pause, noting the creation of economic and security risks, and suggested lifting the pause in exchange for companies to commit to strict, third-party verified methane emissions standards. Relatedly, some conservative thought leaders have supported policy that enables voluntary participation in certified programs that provide market clarity and confidence to harness private willingness to pay for lower GHG products. This has been buttressed by support from an industry-led effort to advance a market for environmentally differentiated natural gas based on a standard, secure certification process. 

Permitting constraints on clean technology supply chains can have perverse economic and emissions effects. A prime example is critical minerals, which are essential components to clean energy technologies. A net-zero emission energy transition, relative to current consumption, would increase U.S. annual mineral demand by 121% for copper, 504% for nickel, 2,007% for cobalt, and 13,267% for lithium. Market forces, unsubsidized, are poised to produce a sufficient amount of domestic copper and lithium supply to satiate a large share of domestic demand, but face undue barriers to entry that restrict production far below its potential. To meet net-zero objectives, permitting reform allowing all currently proposed projects to enter the market would lower U.S. import reliance for copper from 74% to 41%, while dropping lithium import reliance from 100% to 51%. 

Expanding domestic mining no doubt carries local environmental tradeoffs. However, the U.S. has some of the most stringent and comprehensive mining safeguards in the world. Thus, foregoing development domestically is likely to push mining toward foreign countries with inferior environmental, safety, and child labor protections. It is therefore critical that domestic permitting decisions account for the unintended effects of denying permits, not merely the direct consequences of approving a project. 

Permitting and siting constraints on energy infrastructure also impose major costs and foregone abatement. These entry barriers largely exist as environmental safeguards, yet almost always inhibit projects with a superior emissions profile to the legacy resources they replace. In fact, 90% of planned and in progress energy projects on the federal dashboard were clean energy related as of July 2023. In 2023, the ratio of clean energy to fossil projects requiring an environmental impact statement to comply with the National Environmental Policy Act (NEPA) was 2:1 for the Department of Energy and nearly 4:1 for the Bureau of Land Management. A 2025 study estimated that bringing down permitting timelines from 60 months to 24 months would reduce 13% of U.S. electric power emissions. 

Permitting has proven to be a litmus test for the progressive environmental movement, as the movement bifurcates between anti-development symbolists and pragmatic pro-abundance progressives. While a minority of mainstream environmental groups have become amenable to permitting reform, such as The Nature Conservancy and Audubon Society, the core of progressive environmental groups have not. Instead, new progressive groups like Clean Tomorrow and the Institute for Progress filled the pro-abundance void alongside traditional market-friendly progressive groups like the Progressive Policy Institute. This progressive subset has helped influence moderate Democrats to support permitting reform in a collaborative way with conservatives. 

Permitting reform has long been championed by conservatives for its economic benefits, with climate considerations typically a secondary-at-best rationale. Yet permitting reform has become a priority for the newer climate-minded conservative movement. However, permitting has also proven to be a differentiator between conservatives and right-wing populists. The latter engages in forms of government intervention that sometimes contradict conservative principles. For example, the Trump administration enacted an offshore wind energy pause that followed the same problematic blueprint as the Biden administration’s LNG pause. This elevates the importance of technology-neutral permitting reforms with an emphasis on permitting permanence safeguards. 

In recent years, a coalition of Republicans, centrist Democrats, and clean energy and abundance advocates have pressed for reform to NEPA. A broad suite of federal permitting reforms with bipartisan appeal was identified in a 2024 report by the Bipartisan Policy Center. Bipartisan alignment led to the passage of the Fiscal Responsibility Act of 2023 into law and the Senate passage of the Energy Permitting Reform Act of 2024 (EPRA). Although a 2025 Supreme Court decision suggests executive actions alone may substantially reduce NEPA obstacles, plenty of NEPA and other federal statutory reforms remain of high value and hold considerable bipartisan potential. 

The positions of leading progressive, conservative, and centrist thought leadership organizations highlight alignment on various federal permitting and siting reforms. These include statutory changes to NEPA, the Endangered Species Act, the Clean Water Act, the Clean Air Act and the National Historic Preservation Act. Substantive alignment includes reforms that reduce litigation risk (e.g., judicial review reform), limit executive power to stop project approvals and undermine permitting permanence, maintain technology neutrality, strengthen federal backstop siting authority for interstate infrastructure, codify the Seven County decision, and streamline agency practices while ensuring sufficient state capacity. 

Despite considerable positive momentum at the federal level, the greatest permitting and siting barriers generally reside at the state and local levels and trending sharply in a more restrictive direction. Wind and solar ordinances have grown by over 1,500% since the late 2000s. Oil and gas pipelines and power plants face mounting permitting and siting restrictions in progressive states, which not only raise costs but do not necessarily reduce emissions. In fact, the New England Independent System Operator said that a lack of natural gas infrastructure in the region has raised prices and pollution by forcing reliance on higher-cost resources like oil-fired power plants. The only major power generation resource with a less restrictive trend is nuclear, as six states recently modified or repealed nuclear moratoria to ease siting. 

Motivation for opposing energy infrastructure permitting has included the well-known “not in my backyard” concerns, such as noise, construction disruptions, or land use conflicts. Interestingly, much opposition appears to come from perception, as much as substantiated negative effects. Relatedly, permitting resistance rationales increasingly appear to result from ideological opposition to particular energy sources. Finally, much opposition and most litigation of energy projects comes from non-governmental organizations, not the land owners directly affected. Altogether, this underscores the importance of permitting and siting reform that improves the quality of information to agencies and parties, ties decisionmaking to specific harms not speculative claims, limits standing to affected parties, and creates appeals processes for landowners to challenge obstructive local government laws and decisions. A key tension to overcome is that technology-agnostic legislation has been more likely to advance in states with one or more Republican chamber, yet environmental advocates resist “all-of-the-above” reforms.

Policies that reduce permitting and siting burdens are class I: they boost economic output and are increasingly key to emissions reductions. Permitting and siting policies that are restrictive on fossil development are not particularly effective at reducing emissions and often add considerable cost, granted costs vary widely depending on the nature of the policies and implementation. Effective fossil restrictions can range from class II to class IV policy, while ineffective ones actually increase emissions. The political economy of permitting and siting must overcome the lobby of entrenched suppliers, who seek to maintain competitive moats. An ironic example was incumbent asset owners funding environmental groups to oppose transmission infrastructure in the Northeast that would import emissions-free hydropower. 

Electric Regulation

The power industry is at the forefront of energy cost concerns and decarbonization objectives. In the early 2020s, electric rates have risen most in Democratic states. These concerns reoriented progressives towards cost containment, even at the expense of climate objectives. In the 2024 election, cost of living concerns propelled Republicans to widespread victories as President Trump vowed to halve electricity prices. A year later, voter concerns over rising electricity rates in Georgia, New Jersey, and Virginia boosted Democrats in gubernatorial and public service commission (PSC) elections. 

At the same time, electricity is arguably the most important sector for climate abatement given its emissions share and the indirect effects of electrifying other sectors, namely transportation and manufacturing. Ample pathways exist to reduce electric costs and emissions simultaneously, primarily by fixing profound government failure embedded in legacy regulation. Electric industrial organization shapes economic and climate outcomes, with market liberalization an advantage for both. 

Electric regulation falls into two basic formats. The first is cost-of-service (CoS) regulation, where the role of government is to substitute for the role of competition in overseeing a monopoly utility. The alternative is for regulation to facilitate competition by using the “visible hand” of market rules to enable the “invisible hand” to go to work. 

CoS regulation historically applied to power generation, though about a third of states enacted restructuring to introduce competition into power generation and retail services, in response to rising rates and the recognition that these are not natural monopoly services. Nearly all transmission and distribution (T&D) historically and today remains under CoS regulation. Importantly, CoS regulation motivates a utility to expand the regulated rate base upon which it earns a state-approved return. Generally, the main sources of cost discipline problems in the power industry stem from its CoS regulation segments: transmission, distribution, and the portion of generation that remains on CoS rates. 

Generally, restructured jurisdictions see greater innovation and downward pressure on the supply portion of customer bills. The economic performance of restructuring is highly sensitive to the quality of implementation. This includes the quality of wholesale energy price formation and capacity market design. It also includes various elements of retail choice implementation. They have also seen improved governance, whereas CoS utilities are prone to cronyism and corruption given the inherent incentives of their business model. Competitive wholesale and retail power markets hold cost and emissions advantages through several mechanisms:

Electric cost increases are multifaceted, prompting many misdiagnoses that blame markets for non-market problems. Utilities have begun pushing campaigns in restructured states to revert back to CoS regulation, whereas the growing consumer segment – namely data centers and industrials – are organizing campaigns to expand consumer choice. Independent economic assessments warn against a return to CoS regulation, and instead encourage state regulators to implement restructuring better. This includes better market design, consumer exposure to wholesale prices, and effective coordination with transmission investment. 

T&D costs, generally, are the core driver of electricity cost pressures nationwide. Over the last two decades, utility capital spending on distribution has increased 2.5 times while nearly tripling for transmission. This reflects profound flaws in CoS regulation of T&D, resulting in overinvestment in inefficient infrastructure and underinvestment in cost-effective infrastructure. This projects to worsen, given T&D expansion needed to meet grid reliability criteria as a result of aging infrastructure, turnover in the generation fleet, and load growth. 

T&D expansion is also central to abatement. Even partial transmission reforms can reduce carbon dioxide emissions by hundreds of million of tons per year. This explains why progressives have made reforms that expand transmission a top priority. This needs to be reconciled with the cost concerns of consumers and conservatives to result in durable policy. Consumers and conservatives have a budding transmission agenda rooted in upgrading the existing system, removing barriers to voluntary transmission development, using sound economic practices for mandatorily planned transmission, streamlined permitting and siting, and improved governance. A particularly promising frontier is reforms to enhance the existing system, given the expedience of their cost relief and consistency with a Trump administration directive. 

Recent federal regulatory actions have demonstrated bipartisan willingness to improve transmission policy and the related issue of interconnection, which has emerged as a major cost and emissions issue. In 2023, FERC passed Order 2023 on a bipartisan basis to reduce barriers to new power plants trying to interconnect to regional transmission systems. Subsequent reforms were motivated by a coalition of consumer groups and the center-right R Street Institute. In 2024, FERC passed Order 1920-A on a bipartisan basis to improve economic practices in regional transmission development. EPRA, a gamechanger for interregional transmission development, passed the Senate with bipartisan support in 2024. 

Demand growth has sparked reliability concerns over tight supply margins and recently put upward pressure on wholesale market prices. However, states with the greatest price decreases typically had increasing demand from 2019 to 2024 (Figure 3). This shows the importance of infrastructure utilization on electric rate pressures, as many areas had supply slack previously. The past may not be prologue. Emerging conditions show supply-constrained scenarios where marginal generation and T&D costs increase steeply to meet new load increase. The Energy Information Administration observes steady retail price increases and projects further rises to exceed inflation. 

Figure 3. Relationship Between Load Growth and Changes in Retail Electricity Prices (2019-2024)

Source: Wiser et al., 2025.

In an era of resurgent power demand growth, the states poised to keep rates and emissions down have wholesale competition, retail competition, efficient generator interconnection processes, economical T&D practices, and low permitting and siting barriers. The only state that reasonably accomplishes all of these is Texas, which is experiencing the most commercial interest among competitive suppliers and growing power consumers. Texas has experienced industry-leading clean energy investment and earned the distinction of Newsweek’s “greenest state” in 2024. 

All aforementioned electric reforms are considered class I policy. Despite cost-reduction appeal, power industry reforms have proven challenging for two reasons. First, reforms are highly technical in nature and face limited state capacity among legislative advisors and technocratic agencies, namely PSCs and FERC. For example, recent FERC and PSC activities reveal that these entities do not have the bandwidth or expertise to properly implement existing transmission policy, much less reform it. Secondly, reforms face strong resistance from incumbent utilities who hold concentrated interests in the status quo, creating a strong lobbying incentive. By contrast, the beneficiaries of reform, especially consumers, are dispersed interests that do not organize as effectively as a lobbying force. 

Although the Texas electricity experiment and associated federal power market reforms under President George W. Bush is a conservative legacy, most restructured states are progressive. This reflects significant bipartisan historic appeal. However, traditional conservatives have sometimes conflated pro-utility positions as the “pro-business” position, while it is unclear whether right-wing populist influences will catalyze pro-market reforms by challenging the status quo or retrench monopoly utility interests based on technocratic market skepticism (e.g., Project 2025). CoS utilities also commonly oppose cost-effective T&D reform, especially vertically-integrated utilities, which is consistent with their financial incentives to expand rate base and deter lower-cost imports from third parties. Nonetheless, the political economy of bipartisan electric regulatory reform remains promising, given voters’ prioritization of reducing electricity costs. 

Public Spending 

Government spending occurs through direct spending outlays or indirect spending through tax expenditures. Spending takes the form of industrial policy or innovation policy. The economics literature is historically critical of industrial policy, while positive literature on industrial policy usually conflates it with innovation policy. A distinguishing element is that innovation policy selects policy instruments suited to specific market failures, namely the positive externalities of knowledge spillovers and learning-by-doing. These generally apply to research and development (R&D) and early stage technologies, including those in demonstration stage and infant industries that have not achieved economies of scale. 

Predictably, progressives have been consistent backers of robust innovation policy, while conservatives typically scrutinize such expenses closely. Although differences of opinion exist on optimal funding levels, historically conservatives and progressives have agreed on a role for the government in supporting R&D. There is also a history of good governance agreement, such as a joint project between the Center for American Progress and the Heritage Foundation in 2013 on improving the performance of the national lab system. Improving outcomes-based Department of Energy program performance may have broad appeal, including better performance metrics, stronger linkages to private sector needs, and program reevaluation to determine government investment phase-out. Improvements to state capacity are paramount in this regard. 

Conservatives are often critical of public spending on infant industry, where government failure can outweigh market failure. For example, policymakers often struggle to identify when to end industry support, while industry engages in rent-maintenance behavior even after it has achieved maturity. Historic evidence indicates that direct subsidies and tax exemptions for infant energy industry continue well after the targeted technologies mature. Conservative and progressive scholars have historically framed the merits over subsidies for infant industry as a debate over government versus market failure. 

Since innovation policy targets non-climate market failures (e.g., knowledge spillovers) it may have a high static abatement cost. However, it is an inexpensive abatement policy when accounting for dynamic effects, because of induced innovation and learning-by-doing. Importantly, innovation policy holds massive climate benefits, because achieving abatement cost parity between clean and emitting resources is central to clean technology market adoption. Efficient R&D policy can be classified as class I policy, because the upfront cost of the policy is outweighed by long-term cost savings. Demonstration and infant industry support falls into class II-III range, depending on its implementation, and often exhibits substantial durability. 

In recent years, climate-minded conservatives have shown stronger inclinations of public spending for innovation policy. However, there is a stark difference between conservatives and right-wing populism on innovation policy. Conservatives note that the adverse consequences of Department of Government Efficiency’s “gutted, ineffective government” approach to the Department of Energy is inconsistent with limited, effective government practice. The economic self-interest benefits of innovation policy may induce a course-correction with MAGA, which has not deliberately targeted innovation policy insomuch as sacrificing it amid a rash government downsizing exercise. 

In contrast to innovation policy, industrial policy aims to directly promote a given industry, typically using mature technology, with interventions untethered to any underlying market failure (e.g., negative emissions externality). This generally takes the form of public spending on mature industries. For decades, traditional conservatives and climate-minded conservative scholars have been critical of green industrial policy for carrying high costs with modest emissions reductions. 

The most relevant case study in climate industrial policy versus innovation policy is the Inflation Reduction Act (IRA) of 2022. IRA represented the “largest federal response to climate change to date.” It consisted mostly of subsidies for mature technologies, especially wind, solar, and electric vehicles (EVs). It also contained subsidies for infant industry. IRA was passed exclusively by Democrats, with Republicans voicing concerns over its cost. Republicans then passed the One Big Beautiful Big Act (OBBBA) in 2025, which phased-out subsidies for mature technologies, but generally retained those for infant industry. This underscores the political durability of innovation policy and the fragility of industrial policy. 

A broader debrief on IRA and OBBBA reveals:

The takeaway from IRA and OBBBA is that subsidies for mature technologies are high cost, likely to erode social welfare, and not politically durable. Efficient public spending for RD&D, however, enhances social welfare and falls in the Overton Window due to its value for economic self-interest. Late-stage infant industry is at the fringe of the Overton Window. It is the area where conservative and progressive scholars have historically had contrasting views on whether market failure outweighs government failure, yet political outcomes have largely supported infant industry. 

Generally, the literature finds strong evidence of opportunity cost neglect in public policy, which “creates artificially high demand for public spending.” The IRA was a case-in-point. Meanwhile, the opportunity cost of public spending is rapidly rising given the dire fiscal trajectory of the United States. In 2025, moderate experts emphasized a pivot away from unsustainable and ineffective “Green New Deal thinking” for clean technology subsidies in favor of an innovation-driven strategy. 

Takeaways 

This analysis finds chronic flaws of cost considerations in ex ante policy analysis. Many medium and high-cost policies have passed without any robust accounting of costs at all (e.g., IRA, fuel bans). Interventions with cost-benefit analysis have had a tendency to underestimate costs (e.g., regulation). These flaws contribute to public misconception and play into political economy dynamics that tend to incent policies with hidden costs over those with transparent ones. 

High-cost policies have typically only been enacted by progressive governments and have come under greater scrutiny as energy costs escalate. This calls their social welfare effects and durability into question. It has cast climate action in the public eye as requiring deep economic sacrifice. 

Conservatives have been hesitant to engage on climate policy outright, largely over dire economic tradeoff perceptions. Such concerns have instigated a conservative backlash to climate policy, including to policies that are compatible with U.S. economic interests. This has been exacerbated by right-wing populism, which often strays from limited government conservatism in pursuit of cultural identity objectives. For example, in a 2024 piece promoting energy affordability, the Heritage Foundation correctly attributed cost increases to renewable energy mandates, but incorrectly presumed that a broad shift towards renewable energy and away from fossil fuels would always increase costs. 

High abatement cost policies not only risk reducing aggregate social welfare, but they create distributional concerns. Policies that raise energy costs tend to be regressive. This has challenged the social justice narrative of progressives, prompting a rethink by progressive leaders to take a “cost-first approach to [the] clean energy transition.” Although subsidies are a common response to lower burdens on low-income households, the most popular green subsidies pursued have exacerbated distributional concerns. Specifically, renewables subsidies favored by progressives have been challenged by conservatives as “green corporate welfare.” Progressives have also faced criticism for EV tax credits for disproportionately benefiting wealthy households. 

Encouragingly, negative- and low-cost policies comprise a rising share of the abatement curve. The Overton Window for pursuing such policies has grown remarkably for “abundance progressives” and conventional conservatives. However, populist subsets within both movements challenge the potential for political alignment. Enacting negative-cost policies also faces the collection active problem of dispersed beneficiaries versus a concentrated incumbent supplier lobby favoring the status quo. Mobilizing consumer and taxpayer groups is an underappreciated strategy to enact these policies. 

Abatement cost categoryOverton Window StrengthSocial Welfare EffectPolicy Examples
Class I. negativeStrongVery positiveLiberalized permitting and siting; Liberalized power markets; Streamlined generator interconnection; Economical transmission expansion; Efficient R&D policy
Class II. lowSubstantialPositiveEfficient GHG transparency; Efficient demonstration policy; Modest RPS; Backstop cap-and-trade; Modest command-and-control regulation
Class III. mediumInconsistentGlobally positive, often domestically negativeModerate RPS; Robust cap-and-trade; Moderate command-and-control regulation; Infant industry support
Class IV. highPoorOften negativeStringent RPS; Stringent command-and-control regulation; Onerous GHG transparency; Mature technology subsidies

This analysis is far from comprehensive. A notable omission from this paper is transportation policy, the largest GHG sector in the U.S. A scan of the transportation literature underscores major abatement potential for negative and low-cost policies, including reducing government barriers to efficient heavy-duty transportation like railways, shipping, and heavier trucking. Further, the electrification of transportation requires extensive fixes to government failure, such as liberalizing markets to enable competitive charging infrastructure, which lowers costs. The merits of innovation and GHG transparency policy, previously discussed, also appear to hold promise for transportation applications such as aviation fuel. The transportation sector has also been the target of GHG regulation, mostly in progressive states, which warrants close assessment of costs. For example, one study identified a vast abatement cost range for fuel standards ($60-$2,272/tonne). 

A shortcoming of this analysis is that it only characterizes costs by their efficiency (i.e., $/ton). Political decisions are highly sensitive to aggregate cost and its visibility to the public, which our taxonomy does not characterize. It is possible that efficient, transparent, and higher aggregate cost policies (e.g., C&T) fare less favorably in some political settings than inefficient, opaque, and sometimes lower aggregate cost policies (e.g., RPS solar carveouts). 

Despite the limitations of this analysis, the sample of policies evaluated is sufficient to support the thesis. That is, a retooled climate policy agenda that prioritizes cost considerations should elevate social welfare and achieve greater abatement by selecting more durable policies. 

Conclusion 

Abatement costs have huge bearing on whether climate policies benefit society, their likelihood of passage, and whether they prove politically durable. Most abatement need not come from dedicated climate policy, per se, but rather sound economic policy that carries deep climate co-benefits. Chronic disregard for cost considerations has led to an overselection of high-cost policies and underpursuit of low- and negative-cost policies. This has undermined policy durability and exacerbated political polarization over climate change abatement. 

This paper finds extensive abatement opportunities within negative-cost policies. These largely constitute fixes to government failure and include permitting, siting, and power regulation reforms. This analysis also finds considerable low-cost policies that are compatible with U.S. economic self-interests. These policies primarily spur voluntary private sector abatement through efficient innovation policy and GHG transparency. 

We offer three sets of recommendations moving forward for influencers of the climate policy agenda:

  1. Focus on results. Climate change abatement is a function of global GHG concentrations. Too much attention pursues symbolic objectives, like preventing fossil fuel infrastructure. This tends to undermine abatement goals and impose high costs.
  2. Emphasize cost considerations in policy agenda setting, formulation, and maintenance. Negative abatement cost policies should take top priority, with an emphasis on mobilizing beneficiaries. Robust cost-benefit analyses should precede all cost-additive policies and be reconducted periodically to guide policy adjustments.
  3. Prioritize quality state capacity. The net benefits of abatement policies are sensitive to government capacity and performance. Public management is in great jeopardy in an era of institutional decay. Negative-cost policies are often highly technocratic and require sufficient staffing expertise and accountable management at public institutions like DOE, FERC, PSCs, and permitting and siting agencies. 

In an era of energy affordability precedence, a reset climate agenda should anchor itself in good policy basics. That is, a sober-minded return to results-driven, net-benefits prioritized policy. This should improve the durability of climate policy and ensure it enhances social welfare. Executing reforms well requires a recommitment to improving the quality of institutions as much as the policy itself. 

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

Bureaucracy as Social Hope: An Argument for Renewing the Administrative State

I. Why Isn’t Government Working?

The “administrative state” is an unlovely bureaucratic term for a bureaucracy that has grown increasingly unloved: the network of government agencies that implements and enforces laws. In the United States, critiques of the administrative state abound. The nativist right pushes back against a purportedly dangerously powerful “deep state” while the left sees a meek state beholden to big corporations and incumbent interests. Libertarians bemoan bureaucratic inefficiency and hubris, while the newer “Abundance” movement describes a state choking on its own procedures. Though different narrators are telling different stories, they are arriving at the same moral that the core mechanics of the world’s greatest democracy just don’t work. From there, it is not too big a jump towards casting a nihilistic eye on democracy itself, and towards reckless deconstruction.

Erosion of faith in government is manifesting acutely in the climate movement. The Inflation Reduction Act (IRA) was by far the largest climate investment the world has ever seen. Biden-era regulations were intended to further spur rapid decarbonization of the world’s largest economy. And yet. If we had a dollar for every word written about the administrative state’s failure to effectively implement the IRA, we’d be shaving truffles on our eggs. Meanwhile, the current administration’s regulatory rollbacks are the latest play in what seems to be a never-ending game of political football around federal climate policy. If the administrative state can’t effectively address challenges it deems an “existential threat”, one might ask, what good is it?

Our answer: the American administrative state, since its modern creation out of the New Deal and the post-WWII order, has proven that it can do great things. Vast bureaucracies now successfully care for the elderly, the sick, the poor. Many communicable diseases are close to elimination. The administrative state, by directing tremendous amounts of public and private effort, built the power grid, the internet, the interstates. Nor are our glory days behind us: The American administrative state played the primary role in ending the Covid pandemic, saving millions of lives.

Even when it comes to climate change, the record simply isn’t one of failure. American bureaucratic regulation, including from the Environmental Protection Agency (EPA) and from the states, and from air pollution standards for cars to carbon trading systems for entire economies, combined with significant incentive investments, has brought us technological transformation. Renewable energy is the dominant source of new energy globally. Electric cars now comprise 20% of sales globally and will replace internal combustion by mid-century. Whole industries are decarbonizing and emissions will shortly be beginning to fall. For all the many dubiously legal rollbacks of the second Trump administration, the United States continues to decarbonize.

And so, we argue, it’s hardly time to abandon the administrative state. But it is time to reinvent it. Our core supposition is that the sense of malaise and stasis characterizing current views of the bureaucracy has a substantial amount to do with mismatches between tools that produced current successes and the next set of tools that will be required to sustain and grow them. In the same way that nations might have a first or a second Republic, with constitutional reforms intervening, it is likely time for the next American administrative state.

Again, grounding in climate illustrates the point. Significant administrative pushes have commercialized the technologies needed to address the climate crisis and substantially pushed them into use. The Inflation Reduction Act supercharged this process in the United States, while China – which has sought to dominate clean energy supply chains via its own administrative state and invested accordingly – did so globally. As we enter 2026, there is no real doubt that many clean technologies are available, profitable, and better than fossil technologies. Every nation, including those that do not substantially produce these clean technologies, benefits from their adoption. 

But we are now running into a “mid-transition” moment, in which rival technologies, energy systems, and the economic and political systems on which they depend, are in collision. Consider electric vehicles (EVs). It is one thing to call EVs into being by imposing traditional “supply-side” regulations on manufacturers. It is quite another, as gasoline demand begins to sharply decline, to manage knock-on consequences for the entirety of the fossil economy, from refineries to pipelines to gas stations – much less the local and state budgets and jobs that the fossil economy underpins. Though regulatory strategies can be designed to address these economy-wide consequences, we won’t get there by running the same plays harder and faster. We’ve got to seriously interrogate where the most significant bottlenecks are, who is equipped to address them, and what tools they have or will need to deploy.

Now add two further wrinkles. 

First, procedural tangles that were created for all the right reasons, but that now hamper problem solving. In the environmental space, laws and processes were put in place decades ago to carefully scrutinize the impacts of potentially polluting infrastructure and factories. These measures have, in many instances, succeeded in preventing harm and protecting communities. But they are also indisputably making it harder to rapidly, massively scale up green technologies. This “Greens’ Dilemma” playing itself out in debates over the national environmental regulatory regime nationally is, in fact, a specific manifestation of broader dynamics. Incumbent systems, and those invested in them, do not particularly like to change. Indeed, the American administrative state generally was designed to move deliberately and deliberatively, including multiple veto points to avoid capture by industry or any particular interests. A worthy goal, but distinct from moving with speed towards the public good. When system inertia makes it too easy to grind the gears, the result, unsurprisingly, is painfully slow progress on building new public infrastructure and harnessing new innovations. If we zoom back in on the environmental space with these broader dynamics in mind, the particular obstacle inhibiting climate progress emerges with startling clarity: a system that was designed to produce cleaner technologies within the fossil economy is simply not set up to replace the fossil economy.

Second, the fact that capacity of the government to navigate these challenging dynamics has been sapped. There are multiple drivers of eroding government capacity. At the state and local level, years of corrosive narrative attacks translated into unwise revenue restrictions that in turn made forward-looking capacity investments all but impossible. At the federal level, a variety of policies and misaligned incentives have led to stasis and overreliance on contractors as opposed to internal expertise. At all levels, well-intentioned good-government and environmental reforms have imposed layers of analytic requirements that, while initially successful, ultimately contributed to “kludgeocracy”, while a highly litigious American society has, unsurprisingly, produced a highly risk-averse American government. Make no mistake: U.S. government at all levels has, and has always had, countless dedicated and talented civil servants who find ways to accomplish great things. But generally, this government is riddled with systems and structures that make it ever-more difficult for even the most effective individual to quickly and creatively deliver, especially when armed with aging legal and regulatory tools. 

The upshot? We need not lose faith in the administrative state itself; we would do better to view it as having functioned with its hands tied tighter and tighter. But we are now starting, particularly in the climate and energy space, to hit real limits.

These aren’t issues we can resolve with one-off budget bills or Band-Aid workarounds. The vision, and the fixes, will have to run much deeper. The second Trump administration’s massive federal shake-ups, if nothing else, have opened the field for reconstruction. There is an opening – and, we believe, transpartisan appetite – for a bold, positive vision of a government that is attuned and responsive to the needs of American people and communities, that people can trust to deliver things like cheap, reliable energy; affordable, abundant housing; and fast, safe transportation even as it adeptly manages complex, higher-order challenges like climate change.

To launch its new Center for Regulatory Ingenuity, the Federation of American Scientists (FAS) engaged an ideologically diverse cohort of experts on government capacity and climate to describe how we might realize that vision. This cohort was asked to consider how to advance a paradigm of “regulatory ingenuity” – that is, creativity and cleverness in service of societal objectives alongside basic democratic values – in one or both of the following ways:

  1. Ingenuity in regulatory design. Looking across the entire regulatory lifecycle – from underlying statutory construction, to rule development, to implementation and (ideally) iterative improvement – to seriously examine how existing regulatory systems in the United States can be improved, and identify where fresh thinking is needed.
  2. Ingenuity in regulatory application. Considering how regulations can be coupled with other tools (e.g., innovative market designs, financial instruments, contracting mechanisms, etc.) to achieve societal goals quickly, equitably, and durably.

“Bureaucracy as Social Hope: An Argument for Renewing the Administrative State” is a collection of essays capturing the cohort’s insights. Essay authors envision new alignments of regulatory and financial power, new tools to enable multiple levels of government to move fast, to address distributional impacts, to channel capital at scale, to finally build infrastructure, and to, most fundamentally, break free from stasis. They are, eminently, not cynics. Though clear-eyed about the failings they seek to remedy, they understand that these failings are largely the shadows cast by past success. 

While these essays are grounded in climate policy, they address cross-cutting themes. They use climate as a lens to evaluate where government is and isn’t working. Indeed, the authors’ commentary with respect to government performance on climate challenges is easily extrapolated to other domains.

In writing, the authors revive an older American tradition of a vital administrative state in service of an equally vital and egalitarian democracy. Our nation used to regularly reorganize its government, and the Congress used to legislate regularly on hard problems. The recent reality of agencies working within aging statutes and confined by outdated structures was not the dominant face of government during the creative ferment of the New Deal or the Great Society or, indeed, of the Reconstruction itself. It is, in fact, deeply odd that we still largely live with the same administrative agencies and processes that we had in the 1970s.

So what should – what could – a modernized administrative state look like? The authors together imagine: 

A government that can deliver. It doesn’t need to take a generation to build a railroad, a power grid, or new housing. We can trade a veto-ocracy for the older progressive tradition of governance that rapidly responds to public needs – and secures us the service and infrastructure we need.

A government that can make decisions. The rules of the economy need to stop changing with every election and every major lawsuit. Re-empowering Congress to make big choices, and administrative agencies to deliver without constant swerves, will allow us to stop re-reading the manual and actually play the game.

A government for a modern economy. The future should be innovative and egalitarian. Realizing this future requires the de-risking and direction-setting powers of government to invite bold bets and spur investment, and the distributive powers of government to ensure that benefits are appropriately shared.

A government that listens and responds. We can replace the prevailing procedural labyrinth with a government that asks focused questions on the key issues, acknowledges and addresses real disagreements, and then moves forward thoughtfully yet confidently. That would involve, in part, staffing government fully and organizing it well – reversing decades of attacks on public servants and putting people to work on the right problems.

A government that works on all levels. Federal, state, and local governments each have unique levers and comparative strengths when it comes to serving our communities and society. A modern administrative state should recognize these, and emphasize frameworks that enable them to work well together.

Americans have spent too long living within a slowly failing version of last century’s government. The resulting civic frustration has largely fueled further attacks on government, spiraling us downwards. But an upwards spiral is possible too, in which structural reforms yield a government better equipped to chip away at tough problems in ways that improve daily life and rebuild civic satisfaction.  Because while the “administrative state” as a term is about as wonky as you can get, a renewed administrative state in practice is just common sense.

II. New Approaches for Climate and Democracy

As you will discover as you read, the authors do not all agree on every particular; our goal in inviting this collection was good-faith debate, not artificial consensus. Yet a survey of the collection’s component essays reveals common themes.

For instance, the authors generally agree that economic and industrial policy will be central to the next chapter of climate action. Incumbents still heavily invested in mature fossil-linked technologies and supply chains, as well as non-transparent pricing and other barriers to market entry, badly constrain the transition to competitive clean technologies in many sectors. And where promising technologies are still earlier-stage (e.g., as is the case for nuclear, geothermal, or green hydrogen), there are compelling arguments for government involvement to help establish U.S. dominance. Pollution regulators do not typically, though, control fiscal and monetary tools that can (i) correct market distortions, (ii) manage the very considerable distributive impacts of a shift away from fossil fuels that profoundly impacts industries and jobs across regions, and (iii) support a comprehensive strategy for incubating high-potential domestic industries. Nor are these regulators, with little ability to affect trade policy, well positioned to act within the complex geopolitical context of a partial energy transition. To put it frankly, it doesn’t make a lot of sense to run a massive societal transition with substantial global implications through the EPA. But in the absence of purpose-built institutions and statutes, that’s pretty much what we’ve been doing – with politically and legally unstable results.

This problem is compounded by the fact that the Supreme Court’s skepticism of sweeping regulatory mandates based on old statutes has left the administrative state with ever fewer tools to respond to economic transition needs. Regulations are regularly reversed, and the ongoing duel between litigators and executive branch agencies increasingly looks like an unproductive stalemate. The authors generally chart a path towards a reinvigorated role for Congress to settle disputes, for agencies to act more inventively, and for disputes to move away from the courts and back into democratic processes. 

The authors further point out that regulatory efforts alone are not sufficient to drive the infrastructure shifts needed to make those efforts last, or to buffer their up-front costs. Big infrastructure projects – including vastly growing the clean power grid, electrifying freight, expanding and upgrading transit systems, building new housing, and dismantling legacy, non-economic fuel systems – are central to regulatory success and stability, as well as to addressing an ongoing cost-of-living crisis and boosting national economic competitiveness. Infrastructure, the authors emphasize, isn’t an afterthought – it’s a core enabler of regulatory policy. Unfortunately, the now decades-long trench warfare over climate and other regulations has been accompanied by attacks on the state itself, stripping away administrative and delivery capacity along with the ability of many subnational governments to collect sufficient revenue to fund even basic services, let alone flagship infrastructure projects. The authors vehemently agree that there is much room to trim bureaucratic bloat, streamline process, and sensibly reorganize agencies. At the same time, they observe that a government that is smaller doesn’t always work better; not infrequently, the opposite is true. The authors therefore favor approaches that fit government agencies with the staffing, structures, and revenue they need to deliver on outcomes. Sometimes, those approaches are tweaks. Other times, they’re radical reforms.

II.A Towards a Shared Affirmative Vision

So how do we tackle these challenges – how do we start the upwards spiral in which effective delivery reinforces faith in democratic governance that in turn unlocks more delivery capacity? The authors develop a shared affirmative vision, one that broadly looks like this:

The collective vision is one in which the administrative state starts moving again, returning to the ethic of ongoing systematic revision that once characterized it. Rather than relying on the best ideas and institutions of a half-century ago, we would work towards structures more aligned with current needs – and do so in a way that reaffirms the creativity and vigor that has long powered America’s economy.

II.B Laying Out The Pieces

Each of the essays in this collection lays out particular pieces of the shared vision. Broadly: the collection starts by proposing fundamentally different ways to think about environmental and administrative law, seeing its task as delivering a clean economy at scale, rather than simply cutting pollution, and doing so with stable rules derived in democratically legitimate and procedurally stable ways. It then explores how these legal and regulatory structures could help guide the far larger private sector into configuration with public goals, removing barriers to competition that have insulated stubborn fossil incumbents and creating opportunities to move capital at scale into communities in ways that build a fairer and cleaner economy. From there, wrestling with the dislocations that nonetheless will accompany these changes, the collection describes ways to link participatory democracy with economic change, sharpening the focus of the regulatory state and its engagement with the public. The collection concludes by bringing these issues home, describing how state and local governments can deliver today – and presenting a “policy primer” of innovative ideas that can start moving from ambition to action this year. Below, we discuss each of these pieces in turn.

Jordan Diamond and co-authors at the Environmental Law Institute lays the foundation for this collection with a careful look at what environmental law can do, what it can’t, and how we might rebuild its powerful tools for modern challenges. They argue that the pollution statutes of the Nixon era, crucial though they are to addressing environmental contamination from fossil fuels, are at best limited tools for a whole-of-economy shift away from fossil fuels entirely. Viewing that new challenge as fundamentally one about driving economic innovation and infrastructure growth, they chart out areas ripe for legal development. At the same time, they explain why the next round of environmental progress is more likely to be led by infrastructure and economic agencies than pollution regulators – emphasizing that while pollution regulation will remain critical, we should stop asking pollution regulators to drive a national economic transition with aging environmental statutes alone. Their vision is of treating the energy transition like the economic problem it is, with tools to match. They would expand state capacity, bringing to bear a much wider set of agencies and approaches, and therefore also expand what we think of as “environmental law” to respond to the modern era.

Still working within legal reforms, Kirti Datla takes a close look at the profound challenges modern administrative law poses to the regulatory state. The Supreme Court’s new doctrines, she writes, are making it very difficult for environmental agencies, and regulators generally, to address new problems (and often even old problems) through existing statutes. And they suggest that the Court will impose its deregulatory views on even new statutes. These ever-changing rules strain government capacity, make it difficult for subnational governments and investors to plan a path forward, and prevent progress on policy goals. After acknowledging the need for new regulatory approaches, judicial system reforms, and new statutes, Datla focuses on how Congress can and should engage in the constitutional politics of asserting its role within our federal system, both to constrain the Court and to build its own capacity to address pressing problems like climate.

These two foundational essays, then, help us see the challenge before us. They explain why a kludged-together administrative state running off old statutes and aging structures keeps sputtering to a halt – and start to focus us on an expanded field of play, well beyond re-litigating the environmental policy disputes that have seesawed between the Obama, Biden, and Trump administrations. It is not that the regulatory state is inevitably a “hollow hope” for the shared challenges of climate, democracy, and fair economic growth – but that it has been asked to tackle enormous challenges without a shared theory of action or structures to match. Shifting the economy from its incumbent fossil foundations to a new electrified base, while managing the many linked distributive impacts of that shift under growing climate pressure, simply requires more than pollution regulations or one-time tax policy. If politics is the “slow boring of hard boards,” it helps to have the right tools to drill deep.

But, as Devin Hartman and Neel Brown posit, new tools need not – for durability’s sake, must not – be expensive tools. Nor will another round of mandates succeed without thinking seriously about how to address accompanying costs. Hartman and Brown argue that traditionally conservative lenses that look skeptically at giant fiscal policies and regulatory mandates do, in fact, bring to bear a canny understanding of the interests of incumbent economic system actors. The authors point out that the stuttering progress of the transition to clean technologies comes from the ways in which fossil fuels are deeply intertwined with the interests of powerful economic incumbents, and of existing government. And, having traced the root of the challenge, they conclude that opening these incumbents up to competitive disruption through appropriate reforms will be a potent strategy. For instance, Hartman and Brown contend that the repeal of the IRA may appropriately shift focus of subsidies from mature energy technologies (including clean technologies like solar as well as most fossil technologies) towards earlier-stage technologies (e.g., geothermal). From permitting reform to addressing market problems that deny Americans access to affordable EVs, Hartman and Brown set out a creative array of solutions that, with government backing, can push forward a modern economy at low, or even negative, cost.

Sometimes aligning with these arguments, sometimes complicating them, and always making them concrete, Beth Bafford describes how a focused set of government investments can further shift the economy onto new foundations by using public capital to leverage far greater private investments in the fundamental infrastructure American needs. She outlines how to wed together Hartman and Brown’s pro-competitive policies with the expanded and stable regulatory mission state described by Diamond and Datla. Regulators have often operated on a model in which government grants help underwrite regulatory mandates. Bafford instead starts to outline a structure in which government investments – including simple and accessible loan products – instead help shift the economy towards profitable and self-reinforcing clean new industries. Her model is one in which capital access builds entire businesses that can electrify and modernize core sectors of the economy, from the freight sector to the power grid. Regulations can and should still set the direction of travel in this model – but its engine is broadly shared profitability. Rather than forcing innovation into new channels with politically-exposed regulatory mandates, agencies in Bafford’s model would help convene and channel the economy towards new system states entirely, with regulations conceived as tools operating in concert with economic investments and planning to help crowd in capital to communities across the country.

Nicole Steele explores the role of capital in renewing the administrative state from a different lens. Steele observes that mission-aligned financial institutions (including values-based banks, green banks, CDFIs, and other purpose-driven funds) are increasingly functioning as essential partners in the administrative state’s delivery capacity. Sitting at the intersection of public policy and private markets, these institutions translate legislative and regulatory goals into bankable, scalable projects by absorbing early risk, standardizing structures, and aggregating demand. In practice, this has included mission-aligned banks working alongside state and local governments to deploy catalytic capital – whether as first-loss reserves, flexible operating support, balance-sheet backstops, or credit enhancement – in support of simple, repeatable lending platforms (such as residential and commercial PACE financing) that allow households, small businesses, and local governments to access clean energy, resilience, and efficiency upgrades without relying on bespoke grants or one-off subsidies.

By deploying catalytic capital, Steele continues, these intermediaries unlock funding that would not otherwise reach underserved markets or emerging project types. Critically, investment into mission-driven institutions does not substitute for private capital; it enables it. Strengthening the balance sheets and operating capacity of green banks and CDFIs allows them to originate, warehouse, and scale lending products that meet market standards, crowding in institutional capital while maintaining public purpose. In a period of federal uncertainty and shifting incentive regimes, expanding the availability of catalytic capital will require a diversified approach: drawing on state and local public balance sheets, philanthropy and quasi-philanthropic capital, and mission-aligned institutional investors willing to deploy flexible funds through intermediaries rather than relying on centralized federal programs alone.

Nana Ayensu builds on Bafford and Steele’s insights. As Ayensu points out, we have a transformational economic opportunity to deploy modern, clean energy infrastructure at scale. 

Federal and subnational governments have a real chance to catalyze significant capital deployment of mature and emerging clean energy technologies that are primed for growth – both directly and via investment into infrastructure. Widespread social benefits are available if governments use their authorities to assemble the puzzle pieces needed to create more actionable investment environments. Ayensu describes the state’s ability to do so: it can synchronize intra- and intergovernmental policy execution, build high-value foundational infrastructure to provide project stakeholders with the information they need, develop deeper risk and reward sharing partnerships with the private sector, and create the market forces that close align with economic & societal benefits. Making this type of consistent, efficient multi-pronged effort will be critical to garner the scale of investment needed to expand and update critical energy infrastructure systems and deliver lasting value to communities and industries across the nation.

Ali Zaidi makes the case for bringing this ingenuity to the arena of critical minerals and materials, what he calls “the atomic foundation for reindustrialization and any shot at lasting prosperity and security.” Zaidi draws moral inspiration from America’s post-oil shock response, a crisis moment that authored a broad policy playbook with a spine for experimentation. New laws and regulatory authorities, institutions and infrastructure, and moonshot moves on research…that moment, he writes, gave life to policy to solve a problem. It was “policy with helmets and pads”: playing offense, not defense. Zaidi urges bringing that same positioning to minerals and materials security policy today. In his conception, that policy should entail three pillars – production, partnership, and a drive for increasing productivity – that together support the shared goal of strengthening American competitiveness.

The third pillar is where Zaidi spends the most time. The oil shock of the 1970s propelled domestic standards designed to achieve greater fuel economy and appliance efficiency. Such standards have been weighed down over time by clunky test procedures, multi-year rulemakings, and heavy hand of government auditors. Zaidi proposes a framework for materials productivity that adopts the same solutions-oriented spirit of the 1970s energy policy environment, but is characterized by standards that bind instead of burden. To unlock minerals and materials security, Zaidi writes, “we should replace red tape with rubber bands, just enough structure to allow us to slingshot forward new production, processing, and partnerships — and increased productivity.” Zaidi details a framework that is digital, dynamic, and data-driven: where enforcement is algorithmic, not bureaucratic; and the work is easily federated and easily staffed. This light, flexible scaffolding will accelerate capital formation and technological innovation. 

Indeed, Jennifer DeCesaro, Jennifer Pahlka and Hannah Safford add, we’d do well to apply a similar mindset to planning: a standard feature, and all-too-common bug, of climate policy. Environmental statutes are rife with planning mandates, from Clean Air Act implementation plans to natural hazard mitigation plans required by the Stafford Act to all things NEPA. Look beyond pure statute and become quickly overwhelmed: climate-related plans are mandated by public utilities commissions, developed by task forces, produced as a precondition for grant eligibility, and on and on. Though plans are easy to ask for, they’re often expensive and time-consuming to develop; moreover, lack of coordination among overlapping plans can lead to duplication or even contradictions. DeCesaro, Pahlka, and Safford therefore ask a simple question: “What are all these plans getting us?” They argue that climate policy too often falls into the trap of “planning primacy”, where planning becomes the end goal instead of an intermediate step towards progress. Put another way, it’s rarely the case that a plan is developed and its directions are then followed to the letter. Rather, the process of thinking through scenarios, understanding constraints, building mental models, and developing relationships with other plan stakeholders is what really matters. DeCesaro, Pahlka, and Safford draw from both the climate space and other domains to illustrate how treating plans as compasses, not maps, can improve efficiency and outcomes. Because to quote Eisenhower: “In preparing for battle I have always found that plans are useless, but planning is indispensable.”

Shifting incumbent systems requires not just low-cost solutions, access to capital, and competent, efficient regulatory capacity. It also requires ways to reconcile or resolve competing interests. Our current regulatory system has gotten bogged down with ineffective procedural approaches to dispute resolution, yielding a litigation-driven collection of process fouls and veto points that no one really likes. Our next set of authors observes that improving this system requires more than a simplistic call for deregulation. Moreover, they argue, the solution can’t be to ignore stakeholder input altogether – that runs the risk of policies that are poorly informed, technically unfeasible, and brittle given lack of buy-in by the businesses, communities, and people they serve. Rather, our authors propose a range of reforms to help administrative bodies effectively collect input from stakeholders, weigh hard trade-offs and disputes, and move forward fairly, but expeditiously: thereby using democratically legitimate decisionmaking to strengthen industrial policy.

The first of these authors is James Goodwin, who argues for an “agonistic” view of the regulatory state in which regulators must actively surface and invite input on genuine disputes. Goodwin proposes replacing today’s box-checking engagement exercises and voluminous stacks of public comments with a focused participation process. In this process, administrators would at each state of a project or regulation, identify the core disputes and disagreements that need resolving, and draw in input specifically on these issues. By targeting engagement – and avoiding consensus – in this way, administrators would be able to efficiently advance dialogues with the public that are both quicker and inherently more resistant to status quo bias.

Loren DeJonge Schulman and Shaibya Dalal pick up on this theme. They argue that treating public engagement as a strategic asset, not a box-checking exercise, leads to smarter, more durable policies that reflect real community needs and build trust in government. Participation is not a distraction from governing – it is how government governs well. They argue that the failure of many engagement processes is not that agencies invite too much input, but that they do so too late, too perfunctorily, and in ways that exclude the communities most affected by public decisions. When participation is treated as compliance rather than governance, it fuels distrust, invites procedural obstruction, and produces policies that are fragile and contested. By reflecting the full range of transactional public participation and relational community engagement options, and by applying clear principles (purposeful design, mutual respect, transparency, accessibility, and iteration) agencies can use engagement to surface lived experience, anticipate conflict, improve policy design, and strengthen the legitimacy and durability of their actions. Done well, participation becomes a form of ingenuity that reduces conflict, eases implementation, and reinforces democratic accountability.

Of course, inviting public participation only works when people are interested in participating. Angela Barranco and Kristi Kimball argue that the American climate movement faces a critical public engagement crisis that threatens to undermine decades of progress on clean energy adoption – and explore how advocates can speak to the public to build interest and support for the shifts that government seeks to deliver and legitimize. Despite nearly 70% of Americans expressing concern about climate change, Barranco and Kimball contend that current advocacy strategies fail to tee up paths for politically durable dispute resolution (and eventual support) because those strategies are unduly rooted in fear-based messaging and technical data. Barranco and Kimball make the case for a shift towards a public conversation that approaches Americans as consumers (who must adopt new technologies and cannot be persuaded through regulatory mandates alone) making lifestyle choices rather than political constituents to be mobilized. Drawing on proven strategies from consumer marketing, behavioral psychology, and community-based social marketing research, Barranco and Kimball observe tremendous opportunities for (i) reframing climate engagement around consumer choice, and (ii) leveraging the unprecedented infrastructure investments necessitated by extreme weather impacts to build lasting climate coalitions while simultaneously strengthening democratic institutions and community trust. 

Ultimately, these changes and debates occur not in the abstract, and not just in Washington, DC. State and local governments are the theaters in which economic and democratic change play out, mediating federal policy and global geopolitical shifts in the lives of real people. Thus both the climate crisis and the economic transition are inherently “polycentric”. Subnational governments have therefore always been at the core of climate and regulatory policy. It is these governments that are most able to set democratically responsive visions for clean economic growth, climate resilience, and infrastructural change that will concretely change lives. If our future is to be shaped more by ordinary people than by technocrats, it is these governments that must have the capacity and creativity to act.

Louise Bedsworth provides a prospectus for local action. As she argues, a rebuilt regulatory state has to position state and local governments for creative action and response. These governments, she writes, are more than subsidiary partners, and more than replacements for federal regulators during deregulatory periods (important though those roles can be). State and local governments are innovators and leaders in their own right. The task is not just to provide ancillary community benefits from federal grants, or to mandate particular state plans, but for state and local democracies to be engines of national and even global change. By expanding their own capacity, aligning capital and economic plans to build regional prosperity and resilience, and engaging in and leveraging networks across geographies, nationally and globally, subnational governments can reshape climate action and the regulatory state.  

Indeed, because of the enormous creativity of subnational governments, and the huge opportunities created by the private sector, in response to past regulatory guidance and government investments, we do not need to wait for a new federal administration to start putting solutions into place. We have already identified a broad network of ideas and actors that can start building these ideas in reality, this year – in a policy primer for that foundational work. The primer, crowd-sourced from leaders across the field, highlights a starting list of policies well within the reach of subnational actors, and focusing strongly on economic and industrial policy interventions that can durably advance clean economic systems while managing real trade-offs with savvy deployment of government capacity. It is a practical point of engagement, allowing for the ideas articulated in these papers to be tested now, not after further electoral cycles.  

III. Conclusion

We do not need more stories of American decline. Critics on the left, center and right have already told us that our government doesn’t work. Americans feel underserved, underrepresented, and ripped off. But Americans also know how to do better. We are always rebuilding our democracy; it is time to do it again.

Collectively, our authors have sketched out the beginnings of an administrative state for this era – grounded in the pressing challenge of climate change and its increasingly evident impacts on American lives. This state would enable governments across scales, and stakeholders across sectors, to realize the vision of a nation where:

This sort of “mission state” – a government that sets a clear vision and brings together public and private sectors to execute it – is actually an old American tradition. What else were the New Deal, the Apollo Program, Operation Warp Speed, and the creation of the internet than missions of this sort? Indeed, when it comes to newer challenges like climate change, we have started, a bit haphazardly, to reach for a mission again. The Inflation Reduction Act’s billions in investments, and the Biden administration’s complementary regulations, were an attempt to bring together the public and private sectors around the vision of a clean and prosperous economy, with good-paying jobs and dominance in the technologies increasingly certain to underpin the 21st-century global order. Yet because of obstacles identified above, that mission was…while not entirely a failure, hardly a resounding success.

But the mission remains necessary. America must not remain mired halfway between the old economy and the new, exposed to climate shocks, with a government unable to satisfyingly respond. Clean technologies are advanced enough that retrenchment and retreat to fossil is a doomed strategy; similarly, we’ve seen that taking a chainsaw to government leaves our whole nation bleeding.

The only logical approach is to tap into the creative, determined spirit that is the essence of American identity. Think of the millions of Americans who, in the midst of the Great Depression, spread out to every part of this country to rebuild it. We still live among the lovely parks, trails, and civic architecture called into being by the Civilian Conservation Corps; our power grid was brought to us by rural electrification, the Federal Power Act, and the Tennessee Valley Authority. We know what it looks like when Americans believe in government and the government is worthy of that belief. 

It looks, to start, like a conversation. As CRI launches, in partnership with a broad network of partners and contributors, we invite debate, dissent, and experimentation. One of our goals is to bring together people and perspectives that are often in tension to identify where there are some threads of common sentiment – and how we can productively move forward despite the tension that remains. We will be gathering thinkers, exchanging ideas, and mapping out pilot projects with growing momentum across the months and years to come, working not just to theorize around solutions but to bring them to life. To adapt the truism about trees: the best time to renew our administrative state was ten years ago. The second-best time is today.

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.

To scale up climate solutions, local governments need to accelerate system changes

When I ran for city council in Boulder, Colorado in 2023, everyone talked about climate change. Forum after forum, all ten candidates spoke up for the climate. 

And cities saying climate change matters is typical. The number of US cities with adopted climate action plans is in the hundreds. 

That’s what we need, since cities drive the bulk of greenhouse gas emissions and are on the front lines of climate havoc. 

More specifically, for large-scale climate solutions to work, cities have to really stretch. That’s according to the Intergovernmental Panel on Climate Change (IPCC), which says cities need to rapidly become compact, efficient, electrified, and nature‑rich urban ecosystems where we take better care of each other and avoid locking in more sprawl and fossil‑fuel dependence. 

Yet, big-picture progress in the United States is critically insufficient. Those are the words of Climate Action Tracker, an independent scientific analysis evaluating climate commitments. The US has pledged to reduce 2030 GHG emissions levels by 50–52% below 2005, yet the latest projections show we are on track to achieve at best only 29–39%—assuming no further backsliding.

And earlier this month, the Trump administration withdrew our federal government from the international climate agreement process.

So when local governments say “we’re on it,” what is a concerned citizen to think?

What local government climate solutions look like 

Climate advocates are used to talking about climate action. But for local governments, the measuring stick for climate progress isn’t simply action. What counts is measurable progress towards specific, substantive transitions.

Transitions to walkable, compact neighborhoods where abundant, space-efficient middle housing near jobs and services let most residents meet daily needs within a short walk or bike ride, reducing trip lengths and housing and transport costs.

To transit-rich, highly bikeable towns where frequent, accessible service and a connected, protected network allow seniors and youth travel independently and where per-capita car dependence falls.

To fully-electrified communities in which homes and transportation run on clean, distributed power, working efficiently, that delivers lower bills, healthier indoor air, and outage resilience, with benefits accruing equitably to residents.

To enhanced landscapes of bioswales, permeable streets, restored wetlands, and drought- and fire-resilient shade trees that cool neighborhoods, absorb stormwater, and buffer heat, flood, and smoke risks.

To resilient local food systems that blend urban agriculture with regional producers, food hubs, cold storage, and compost-to-soil loops to deliver reliable, affordable, nutritious food even during heat, drought, or supply disruptions.

There is good news: The transitions we need, and the solutions and capacity we need to implement them, are showing new signs of life. That’s evident in two trends. 

One trend is local governments playing a bigger role in climate solutions. The number of U.S. cities reporting to the CDP, a global system for disclosing climate progress, has grown to over 150. Now more than 200 US cities have committed to 100 percent clean electricity. And cities’ climate action plans are showing a visible shift from a focus on municipal operations to community‑wide impacts of buildings, transportation, and waste, and more sophisticated thinking about resilience.

As the federal government has retreated, advocates are increasingly realizing cities and counties have tools to lead. Local governments manage streets, land use, buildings, public fleets, transit, and major service contracts. They can strongly influence state-level actors, like energy utilities and air quality programs, and be providers of those services directly.

There is proof of this awakening in the large numbers of people suddenly running for local office on climate. Political organizing coalitions such as Run on Climate and Climate Cabinet helped elect more than 50 local leaders running on climate in 2025. One of the year’s most high-profile candidates, Zohran Mamdani, won with “fast and free” buses–one of the measures IPCC has highlighted as a meaningful mitigation measure that saves more money than it costs–as a centerpiece of his campaign.

The other trend is a greater focus on wellbeing. Research included in the latest IPCC report shows demand-side measures can cut end-use emissions by roughly 40 to 70 percent by 2050 while improving daily life and making communities stronger. And wellbeing is the currency of local governments and local politics. Concrete quality of life issues dominate local elections and policymaking, which is where climate action takes root—or doesn’t.

Climate action prompted by a desire for healthier, happier, and less expensive lives is happening. People are adopting electric cars, e-bikes, heat pumps, and induction stoves because they work better, are cheaper to operate, and healthier. The intersection of climate solutions and wellbeing is central to a 2025 bestseller Abundance  and to the national conversation it kicked off about defining and achieving “abundance.” The topic of wellbeing was a bright spot at the COP30 climate talks via the World Health Organization’s report, “Delivering the Belém Health Action Plan.”

These two trends reinforce each other. Local governments oversee the services where wellbeing, decarbonization, and resilience meet. When those services are designed as a system, investments can compound to create more value for more people, who then have a stake in continuing the transition. And the importance of rallying around local governments to carry climate solutions forward is becoming clearer as U.S. national policy looks structurally less reliable than most experts used to think.

Difficult conditions for change 

But local governments face headwinds. Existing policies and markets, like those that have created widespread car dependence and extensive natural gas systems, create momentum that favors the status quo and encourages continued investments that lock us in further. Simply put, it’s easiest to keep doing it the way we’ve done it before, and then we dig ourselves in deeper.

Local governments purposefully design systems to keep things stable. Most likely, whatever your town or county is doing is based on the direction of long-term plans, from departmental plans to bigger comprehensive plans. Those plans often come up for renewal only every few years or longer, and if you miss that window or fail to follow procedures, making big change is nearly impossible. Related, local governments tend to have policies and practices for conducting community engagement that deliberately create a high bar for making major turns.

On top of all that, local governments in the U.S. are suffering a long-term decline in investment that leaves them with significant and growing cash flow constraints, heavy workloads, limited time to deliberate, and pressure to deliver. The pandemic and recent national political forces reduce their maneuverability even more.

Political will necessary but not sufficient—concrete transitions are needed

In order to drive climate transitions under such tough conditions, political will is necessary but it is not sufficient. For local governments to scale up climate solutions, they need to take tangible, visible steps to change systems, consistent with evidence-based recommendations, outlined by institutions like the IPCC. 

Here is what that can look like – and what advocates can look to encourage:

1. Transition plans  

Climate issues touch everything, so all local governments can point to doing climate things. But the difference between lists of activities and high-reward strategic commitments that make good use of time is everything. The latter requires a clear plan to make transitions happen, with defined outcomes and milestones, and dogged pursuit.

Ambitious climate action at the local government level means being clear about the transition(s) the community is focused on, which could include the previously mentioned examples, along with what successful completions looks like and by when. This involves working on at least two tracks concurrently—both integrating ambitious transformations into long-term planning exercises, for which adopting changes may or may not be available right away, and taking whatever more tactical action is possible now to support such planning and concrete action to the fullest extent possible.

2. User experience  

Cities often add a bike lane in one place or restore a bus line in another. What truly changes behavior is a complete experience that makes the pro-climate option the intuitive choice. Kids can bike around town without parents fearing they could be hit by a driver. You can count on bringing a large electric bike anywhere and park it safely. Buses are within a 10-minute walk of home and arrive every 10 minutes. Utility investments in electrification actually lower monthly bills. To make climate transitions attractive and sticky, we have to confront gaps that get in the way of people’s experience from their vantage point.

A practical opportunity for local governments is to use the tools of user experience (“UX”) and be responsible for how the ecosystem works and feels from the immersive standpoint of users. UX is an interdisciplinary field that uses research, psychology, and design to remove friction and ensure a seamless journey for users.

3. Public service delivery  

One of the core jobs of local government is to provide public services like zoning, safe transportation, building standards, air quality protections, and emergency management. Providing services is also generally the justification for spending public money. And services are where the planning activities that local governments tend to be so careful about materialize in the real world. So if local governments are going to be engines of climate action, then day-to-day service delivery—their core product—is where most of that action will show up. Climate action will appear in what gets approved, funded, built, maintained, enforced, measured, and improved.

Local governments already deliver public services. So the opportunity is to evaluate how core local government services can or should be tuned and/or reorganized to drive climate and resilience outcomes. This includes formal adoption in comprehensive plans, capital improvement programs, and strategic plans, and clear alignment with budget priorities. When leaders routinely report on progress and adjust course publicly, it signals that climate transitions are a core organizational responsibility rather than a side project.

4. High-level ownership 

Plans only come to life when people who have the right level of power and accountability own delivery. Inside local government, that means both the elected body (mayor, city council, and/or their equivalents) and executives (city manager, their deputies, and in the case of a “strong mayor” form of government, the mayor) adopt the initiative as their own. Roles and accountability are defined and gaps are addressed. Resources are allocated through direct investments and through partnerships that expand capacity.

High-level ownership of climate solutions in local government happens when transitions are included in the agency’s highest-level plans and strategies.This includes formal adoption in comprehensive plans, capital improvement programs, and strategic plans, and clear alignment with budget priorities. It also looks like leaders routinely communicating to the public about the transitions under way, the progress against them, and how community members can help support the journey.

5. Playbook of procedures

Local government commitments are heavily shaped and constrained by procedure, like protocols for what gets a hearing and when, annual or biennial work plans, and comprehensive plans that may come around only every few years or longer. Communications between elected officials and staff may be limited by city ordinance, and communications among elected officials may be very limited by state law. There are also often arcane, highly-localized meeting customs. Getting things done requires working through these procedures and often landing decisions in small windows that are easy to miss. 

A playbook for how climate transitions are going to make their way into staff proposals, planning processes,and budgeting is fundamental to turning a good idea into something real. Such a playbook is needed to spell out who does what, when, and through which formal channels, so that key decisions do not depend on heroic one-off efforts. It also helps new staff and elected officials quickly understand how to use existing procedures to advance climate goals, rather than be derailed by them.

Conclusion

To scale up climate solutions through local government, we need at least two things. First, political will, which is familiar to most advocates. Looking into 2026 and beyond, climate advocates have great opportunities to continue increasing the proportions of elected local bodies who are led by politicians serious about climate solutions. Everyone has a role to play: run for local office, support local climate candidates, use whatever powers of creativity and persuasion you have–from writing to speaking to organizing and beyond–to help make climate action a core election issue in your community. 

The second—and where we need greater shared focus—is to make local governments responsible for specific, strategic commitments to systems change. To do that, help build transition plans that commit to providing great user experiences, an approach to public service delivery that is aligned with those objectives, ownership by city council and the city manager or mayor, and a clear playbook for how strategic climate commitments are going to be adopted and rolled out.

Not everything is going right for the climate movement. But there are some fantastic bright spots, and one of those is big new local government innovations that are starting to unfold.  

Looking into 2026, I’m excited to be a part of the movement to help local governments drive the next generation of climate progress. And a big hat tip to FAS with its regulatory rethink and government capacity work as well as ICLEI USA, both partnering with local officials like me to map out how cities can translate ambitious climate goals into durable systems change. 

There are great things ahead, and so much room to work together.

Barriers to Building: A Framework for the Next Era of Electricity Policy

The American power grid in 2025 faces a set of challenges unlike any in recent memory. The United States is deploying clean energy far too slowly to meet load growth, avoid spikes in electricity prices, and combat climate change. To get within striking distance of the Paris climate goals and plan for the lowest electricity costs, we must build 70 to 125 gigawatts of clean energy per year, much higher than the record 50 gigawatts built in 2024. 

Grid upgrades, too, are proceeding far too slowly. To meet growing electricity demand and integrate new clean power at lowest cost, transmission capacity must more than double within regions and increase more than four-fold between regions by 2035. But large transmission projects frequently take 7 to 15 years from initial planning to in-service operation and only 322 miles of new high-voltage transmission lines were completed in 2024—the third slowest year of new construction in the last 15 years.

Even before the One Big Beautiful Bill Act (OBBBA) gutted federal clean energy incentives, non-cost challenges like uncertain and lengthy interconnection and siting processes, local restrictions on development, and supply chain bottlenecks led to lower levels of clean energy deployment than projected and slowed down grid upgrades. Now, clean energy and transmission face additional cost and financing barriers from Congressional rollbacks and permitting restrictions from the Trump Administration.

Past federal and state clean energy policies, including the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL) as well as state renewable portfolio standards, have leaned heavily on financial incentives to drive deployment and incentivize grid upgrades and expansion. These incentives successfully attracted massive investment in clean energy projects, but they largely did not grapple with non-cost challenges—like siting restrictions—to building projects.

Political challenges have made it difficult to pass, implement, and defend clean energy policies. A mismatch between public needs, government programs, and industry incentives has led to unsatisfactory outcomes and degraded public trust in the government. 

Now, policymakers, industry, and the advocacy community are paying more attention to non-financial issues that can impede deployment, like siting and permitting. The abundance movement, for example, has identified two causes of America’s building problem: ineffective government programs and burdensome permitting processes. This diagnosis is incomplete. Getting to a world where we can build things quickly and make government work will require us to identify the full suite of problems, not just these convenient two. 

To maximize clean energy deployment, we must address the project development barriers that slow down investment and construction. And to build more durable and effective energy policies, we must interrogate and address the political barriers that have held us back from smart policymaking and implementation that can withstand political change. Overcoming these challenges is necessary to address the climate crisis, rein in rising utility bills, and ensure that government can deliver on its energy promises to the public it serves. 

In early 2025, the Federation of American Scientists (FAS) set out to identify and categorize these barriers through research and interviews with experts and practitioners. Following this research, at the 2025 Climate Week NYC, FAS convened a group of researchers, advocates, industry leaders, and policymakers to solicit feedback on this framework. 

The outcome of that convening allowed us to ground-truth the following report—which we intend to use as a rubric for state-level electricity policies and efforts to rethink federal energy policy. We should ask: to what extent do new policies under consideration reduce the major barriers to building clean energy and transmission while addressing the shortcomings that have made past policy less durable? 

A future paper will detail the priority solutions that make progress on each of the project development barriers while improving our toolkit to overcome the political barriers that impede durable policy.

Contents

Jump to chapter
Interconnection
Siting & Permitting
Misaligned Incentives
Financing
Grid Planning
Supply Chains
Jump to chapter
Energy Affordability
Incumbent Interests
Delayed Impact
Jump to chapter

Project Development Barriers: Making it Harder to Build

Clean energy technologies are mature and cost competitive, if not least cost, across the country. Yet we are not building clean energy as fast as necessary, and in many places we are building new gas plants instead, raising costs for customers and intensifying the climate crisis. This trend is the result of several barriers that make it more difficult to build clean energy. 

The Barrier

The interconnection process is one of the most significant constraints on clean energy deployment in the United States. At the end of 2023, nearly 2,600 gigawatts (GW) of generation and storage were queued, which is more than double the U.S. installed capacity (~1,280 GW). Today’s grid was built around a small number of large, centralized fossil fuel plants; the grid must now accommodate thousands of diverse, geographically distributed projects. Processes that were designed for a handful of large plants per year are now evaluating orders of magnitude more proposals, each with more complex grid interactions. These processes are not able to adequately handle the current grid, nor have they kept pace with development in grid planning and analysis tools. The result is a massive backlog of projects waiting to interconnect to the grid and a review system that is fundamentally misaligned with the scale and pace of the energy transition. 

Developer experience confirms that interconnection challenges rank among the most decisive barriers to clean energy buildout. In the 2024 Lawrence Berkeley National Laboratory (LBNL) developer survey, respondents ranked interconnection delays and network upgrade costs higher than permitting, supply chain constraints, or workforce shortages as reasons for project cancellations or deferrals. Many projects face cost uncertainty on the order of tens to hundreds of millions of dollars as interconnection studies shift responsibility for broad system upgrades onto single developers. Interconnection costs are rising, and it is difficult for developers to predict what their interconnection bill will be at the end of the process. This unpredictability increases financing risk, reduces developer participation, and leads to large-scale attrition. 

Outdated processes for evaluating and approving new projects have led to enormous project delays, averaging 4-5 years from request to commercial operation. This delay has raised prices and led some grid operators to keep old, expensive coal plants online in lieu of new capacity. Both of these trends benefit incumbent transmission and generation companies, who have significant decision-making power over the entities that control interconnection, making it difficult to update the processes. Clean energy projects also face higher interconnection costs than gas projects because they are more likely to need transmission upgrades to connect to the grid, which increases the chances of project cancellation.

These barriers have direct system-wide consequences. Only about 15 to 20 percent of projects that enter the queue ultimately reach commercial operation, meaning most of the clean energy capacity counted as “planned” will not materialize unless interconnection processes are reformed.  Long queue timelines and uncertainty also make it more difficult to finance projects. The result is slower emissions reductions, delayed IRA-driven investment and job creation, and higher costs for consumers as operators extend the life of aging coal and gas resources to meet growing load. 

The Past Playbook

Federal interconnection policy has largely gone through the Federal Energy Regulatory Commission (FERC). In 2023, FERC issued Order 2023, which made significant changes intended to speed up interconnection and increase certainty for new projects. The rule (1) replaced outdated serial studies, in which operators study projects one by one as their applications come in, with cluster studies, in which operators study projects in batches, (2) required grid operators to speed up study timelines and imposed penalties for failing to meet deadlines, and (3) directed grid operators to update rules to reflect technological advancements, like grid-enhancing technologies and hybrid solar-plus-storage projects. Some grid operators have gone further than Order 2023 to improve interconnection processes, and some states have pushed grid operators for more ambitious reform. In addition to FERC rules, the federal government has also provided limited resources to grid operators to improve interconnection processes. 

To date, federal efforts have largely fallen short of what’s necessary to reform interconnection processes to enable adequate buildout of clean energy, and in most places states have limited tools. For one, FERC rules rely on effective implementation from grid operators, which has been a mixed bag. Order 2023 also strayed from making more fundamental changes to the interconnection process, like fixed entry fees that provide certainty to developers or proactive modeling and transparency of information to allow projects to connect quickly in places with transmission headroom. It fully does not address the fundamental problem that rising, variable interconnection costs are killing projects. The federal government has limited resources to support grid operators through, for example, funding for increased staffing or new technology to automate studies. 

Where Do We Go From Here?

The next era of energy policy must radically transform the way we connect projects to the grid to enable faster, greater deployment of clean energy, including through an expanded role for federal and state governments. Policy must shorten study timelines using automation and other new technology, enable smarter planning with proactive modeling and greater transparency for developers, increase upfront cost certainty, and reduce the amount that projects end up paying for interconnection. And in addition, the next playbook must address governance and decision-making structures that favor incumbents who benefit from a congested grid. 

The Barrier

Siting and permitting processes have become two of the most visible friction points in the clean energy buildout. While federal policy receives the most attention, most clean energy siting and permitting decisions are made at the state and local level, where zoning boards, planning commissions, county supervisors, and community members have significant influence over whether a project proceeds. In many states, local jurisdictions have adopted new ordinances that restrict or outright ban wind, solar, and transmission development. According to recent analyses, roughly one-fifth of U.S. counties now have formal restrictions on clean energy, and many more are considering them. Even in states with strong climate and clean energy targets, municipal-level land use rules can effectively halt projects that align with statewide goals.

These local barriers are often rooted in concerns about landscape change, perceived impacts on property values, agricultural land use, wildlife, or community identity. But they are also a reflection of who benefits and who bears the immediate impacts of clean energy development. Benefits like lower system-wide electricity prices, cleaner air, and national decarbonization progress tend to be distributed widely, while the visual and land-use impacts are concentrated locally. Developers may not readily have the resources to meet community needs to come to agreement on projects, and federal and state governments often do not have adequate resources to support community benefits. Misinformation and disinformation—spread by incumbent interests who stand to lose money with greater clean energy or transmission deployment—also seed opposition in communities.

Permitting requirements add an additional layer of delay and uncertainty. Most clean energy projects, particularly solar and storage projects—which make up the bulk of new planned capacity—rarely trigger major federal environmental statutes and primarily deal with state-level permitting. Developers must navigate state statutes governing clean water, conservation, and environmental impacts, which serve important purposes but are often still implemented through outdated processes (e.g., many states still require paper permits; in Arizona, digitization reduced timelines for one permit process by 91 percent) administered by understaffed agencies. Projects such as transmission lines, offshore wind facilities, pumped storage hydropower, nuclear plants, geothermal projects, and any project on federal land or receiving federal grants generally must also navigate federal permitting processes. When new projects trigger federal review, they must comply with the National Environmental Policy Act (NEPA) and sometimes other federal permitting statutes, like the Marine Mammal Protection Act, the National Historic Preservation Act, and the Endangered Species Act. These reviews can take multiple years, particularly when agencies have limited staffing or when studies must coordinate across several state and federal entities and jurisdictions. 

Delays from local siting and state and federal permitting translate directly into cost escalation and canceled projects. Developers report that siting challenges can add years to development schedules and millions of dollars in carrying costs before a shovel ever hits the ground. For technologies like wind and solar, where the business model depends on tight capital cost margins, extended pre-construction periods can be the difference between a viable project and one that never breaks ground. Transmission development is even more exposed: large lines can spend a decade or more navigating route identification, landowner negotiations, environmental review, and litigation. 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.

Yet, the challenge isn’t so simple. It is not simply “local opposition” or “slow permitting.” It is that the scale of clean energy land use today is fundamentally different from the past century of centralized fossil energy development. We are building more projects, in more places, at a pace that communities have not previously experienced.

The Past Playbook

Siting and permitting reforms have increasingly been part of the federal and state policy agenda. Reforms have largely focused on process changes and improving coordination across agencies, with some focus on building capacity for analysis and review in some federal agencies and states. In general, these reforms are insufficient and not widespread enough to match the urgency and scale of the U.S. energy transition. 

The federal government has pursued a range of reforms over the past few years to improve the permitting process for projects that involve federal land, funding, or regulatory triggers. Key cross-agency initiatives include the Coordinated Interagency Transmission Authorizations and Permits Program, which made the Department of Energy (DOE) the lead agency for coordinating environmental review and permitting for transmission lines, and FAST-41, which aims to align multiple agency reviews and reduce duplicative permitting processes. Agencies have taken additional steps to improve individual permitting processes. For example, the Bureau of Land Management (BLM) designated solar and wind energy zones on public lands to reduce conflicts and expedite approvals, and the Bureau of Ocean Energy Management modernized offshore wind leasing and programmatic NEPA reviews (although the Trump Administration overhauled these reforms by halting all offshore wind leasing). 

Several states have attempted to reduce delays and uncertainty by centralizing siting authority and standardizing permitting rules. For example, New York’s Office of Renewable Siting and Massachusetts’ Energy Facilities Siting Board can override local opposition for large projects, while other states provide model ordinances to guide counties on setbacks, noise, and environmental protection. DOE has also helped states: the agency provided a small amount of technical assistance to states to help local governments with planning, siting, and permitting decisions and a larger tranche of funding for transmission projects to provide benefits to local communities to help with siting and community buy-in. In some places, these reforms have improved consistency across counties and reduced the influence of NIMBY-driven delays.

This playbook, while directionally correct, has fallen short of what is necessary. Local restrictions on clean energy continue to proliferate, siting power plants and large transmission lines remains a major challenge, and many state and federal permitting processes still pose significant barriers. Existing efforts have several gaps: (1) many states have not addressed local restrictions on development, (2) process improvements, especially at the state level, have happened in a piecemeal fashion and have not extended to the full suite of state-level permitting requirements, (3) existing efforts often do not cover the full set of solutions (e.g., broken permitting for customer-owned solar is a huge impediment that keeps U.S. solar costs much higher than other countries), (4) governments and developers have insufficient tools to ensure that local communities get what they want out of projects, and (5) efforts to increase state and federal government capacity (i.e., hiring and training the right staff and increasing analytical capabilities) have fallen far short of what is needed to have a fast, effective, and responsible permitting and siting process. 

Where Do We Go From Here?

The next era of energy policy must wrestle with the fundamental siting and permitting challenges and introduce new frameworks for planning, permitting, and building projects. That means upfront planning to make major decisions about tradeoffs between clean energy, water, conservation, and other goals, expanding the tools and resources necessary to ensure that local communities benefit from projects, dramatically improving government capacity to do siting and permitting well, and taking a holistic approach across federal, state, and local governments to prevent new bottlenecks from emerging. 

The Barrier

Most clean energy and grid upgrade projects are financed by private capital and procured or built by companies, either utilities or independent power producers. The profit motives of those financiers and companies determines the solutions they invest in, within the bounds of policy requirements. Across states and regions, outdated utility regulations and market designs have created flawed incentives that have limited investment in some necessary solutions and resulted in overinvestment in others. Utilities have wielded significant political power, built by lobbying with ratepayer money, to maintain today’s incentive structure. 

For example, in vertically integrated states, utilities are incentivized to prioritize capital expenditures that earn them the highest returns, within the bounds of commission approval. This incentive structure deprioritizes solutions like increasing imports of clean energy through new transmission and leveraging distributed resources like customer-owned solar. 

Most commissions are often not well-equipped or willing to ensure that utilities pursue the full toolkit. In most states, utility planning is driven by the utilities, who conduct detailed analysis and provide proposals on planning and ratemaking to their commissions. Commissions have more limited capacity to conduct analysis and interrogate utility proposals. 

Organized markets also have flawed incentive structures. For example, incentive structures in organized markets were generally designed around an electricity grid made up of a small number of large power plants. As a result, market rules and incentive structures provide limited to no support for distributed energy resources, which makes it harder to finance these projects. Governance structures exacerbate this issue. In some organized markets, incumbent generators have significant decision-making power in important determinants of clean energy deployment, including interconnection and transmission planning. Some organized markets have maintained rules that make it difficult to connect new power plants.

Misaligned incentives reduce the effectiveness of other policy solutions. For example, tax credits to reduce the cost of clean energy projects are most effective if utility companies have a profit incentive to build those projects instead of other generation types. The effectiveness of bulk transmission grant programs is limited by the willingness of utility companies to collaborate on projects. 

The Past Playbook

Federal policy has largely ignored utility incentive structures and instead attempted to influence private-sector behavior by working within existing incentive structures (e.g., by making it easier for utility companies to use tax credits to build clean energy). Federal agencies have attempted to overcome misaligned incentives through regulations (e.g., pollution standards on power plants that require generation owners to make changes). Some efforts to change incentives structures (e.g., the Clean Electricity Payment Program included in the 2021 Build Back Better Bill) have gained momentum but failed to pass. 

Many states have also used tools that operate within existing incentive structures, like renewable portfolio standards that require utilities to procure an increasing share of their electricity from clean sources. States have attempted to change incentive structures to varying extents. More than 15 states have adopted some form of performance-based ratemaking to align utility incentives with desired outcomes. However, these efforts vary in how comprehensively they have changed the dominant incentives for companies. 

Where Do We Go From Here?

The next era of energy policy must reform incentives to realign private sector interests with public benefit, including affordable bills, reliability, and decarbonization. To achieve the scale, speed, and depth of transformation needed to address the challenges facing our grid, policy must address misaligned incentives for distribution utilities, generation owners, and integrated utilities in different regulatory contexts. That requires a greater focus on realigning incentive structures at the state and regional level (through organized market reform) as well as creative federal tools to directly change incentives or help states and organized markets to do so. Increasing regulator scrutiny of utilities and bolstering capacity at commissions must also play a larger role moving forward to ensure that utilities are focusing on the best solutions, not just what is most profitable. Greater use of publicly owned or publicly financed projects can also ensure investment in solutions that are underutilized by private companies. 

The Barrier

The federal government has created new financial barriers for clean energy projects.  OBBBA’s changes to tax incentives and increased regulatory and permitting uncertainty make clean energy projects more expensive and harder to finance. Macroeconomic changes like persistent inflation and other uncertainty, including on tariffs and interest rates, have also affected investment. 

While the clean energy industry has continued to move forward (2025 investment in solar, storage, and wind is similar to 2024 levels, and the industry is benefiting from demand growth, as many projects are able to find offtakers like tech companies willing to pay higher prices), the full effects of federal policy changes are likely delayed, as the tax credits have not fully expired. Moving forward, financing may become a larger barrier. In addition, rising utility bills have opened a conversation about the cost of private finance for grid projects and whether there are alternative approaches that come with lower costs for customers. 

Financing less mature clean energy technologies, like advanced nuclear, enhanced geothermal, and aggregated distributed generation (i.e., virtual power plants), remains a major issue. 

The Past Playbook

Financial support has played a dominant role in the federal energy policy playbook. Tax incentives, which were dramatically expanded by the IRA and pared down by OBBBA, have been central to energy policy for decades. Grant and loan programs, also dramatically expanded by the IRA, have also been a core driver of clean energy deployment, grid upgrades, and large-scale demonstrations and commercialization of advanced energy technologies. States have also used tax incentives, grant programs, and green banks to finance and incentivize clean energy and grid projects. This model has largely been successful at deploying mature technologies like wind, solar, and storage, but it has fallen short when it comes to commercializing some newer clean energy technologies. Gaps also remain in financial support for projects that struggle to get private capital.  

Where Do We Go From Here?

Financing and financial support should continue to be a major pillar of clean energy policy. The next era must incorporate a broader, more diverse set of financing tools in the capital stack, including state-led public financing for more types of projects and state efforts to create demand certainty for clean energy by leveraging procurement and working with corporate buyers. 

The Barrier

Today, the U.S. bulk transmission system faces significant constraints that limit where new clean energy projects can be built and threaten reliability. Congestion already causes curtailment of low-cost low-carbon power, higher consumer electricity prices, and dampened investment in clean energy. 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. 

These challenges stem in large part from fragmented and inadequate planning processes. Coordinated planning is essential to ensure that transmission is expanded in the right places and that new clean energy investments flow to areas with sufficient transmission capacity. Despite the need for coordination, the United States conducts virtually no interregional transmission planning, and regional planning has been lacking in many regions. 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. Planning for these smaller lines is easier as fewer parties are involved. Where we have successfully built larger regional lines, they are the result of transmission providers conducting robust planning processes. And because no unified authority or planning framework exists to shepherd large, high-impact projects across regions, the U.S. has built essentially zero major interregional transmission lines in recent history.

Lack of coordination between transmission and generation planning also creates inefficiencies and prevents smart development. In deregulated markets (and 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. 

Together, these gaps make expanding the transmission system an inefficient process at best, and an unworkable process at worst, at precisely the moment when the need for additional capacity is growing most rapidly. 

The Past Playbook

Policymakers have made progress in addressing transmission planning bottlenecks, but these reforms remain far short of what’s needed. FERC Order 1920 is the most significant recent step: it requires long-term, forward-looking, multi-value regional planning. It was designed to improve transparency in the planning stages and help regions identify beneficial projects earlier. Yet the rule stops at regional borders and thereby doesn’t meaningfully advance interregional planning. 

A patchwork of state and regional efforts has emerged alongside federal reforms. New Mexico created a new entity called the Renewable Energy Transmission Authority to map and finance new lines. Similarly, Colorado created the Colorado Electric Transmission Authority to plan and develop transmission lines to meet power needs, unlock clean energy, and lower costs. California conducts long-term transmission planning intended to incorporate transmission needs to accommodate clean energy deployment required to meet the state’s climate goals. Federal tools like National Interest Electric Transmission Corridors (NIETCs) were designed to accelerate siting of critically important lines, and part of DOE’s Grid Resilience and Innovation Partnerships (GRIP) funding has helped bring utilities, states, and developers together to plan large projects. On the interregional front, DOE has conducted analysis to demonstrate where new capacity would create the greatest benefits and inform planning.

These efforts certainly make progress and will likely result in expansion of local and regional transmission capacity. The magnitude of progress will depend in large part on how transmission providers implement Order 1920—for most regions, compliance filings will be submitted this month (December 2025) or by June 2026. 

However, this playbook had significant gaps and pitfalls. Lack of interregional planning is the most glaring gap, but other tools had limitations, too. GRIP had limited funding and power to solve cost allocation disputes. NIETCs did not translate into built infrastructure. In many places transmission planning will not take into account the long-term clean energy expansion required for deep decarbonization, leaving high-value opportunities—like pairing wind resources with long-distance transmission—unrealized. The result is a set of reforms that move in the right direction but still fall short. 

Where Do We Go From Here?

The next era of energy policy must tackle interregional planning, while following through on Order 1920 with effective implementation. We must require transmission providers to plan decisively for futures with significant load growth and levels of clean energy deployment necessary for deep decarbonization. Future federal policy must also expand the government’s tools to bring parties to the table for smart, effective planning. In parallel, states should continue to use creative policies, like Colorado and New Mexico’s transmission authorities, to strategically plan new transmission lines to maximize benefits. And the next era must also include national, forward-looking land-use planning for clean energy deployment, in sync with transmission planning. 

The Barrier

Grid components, such as electrical steel and transformers, are necessary to increase grid capacity to support additional generation and load. However, grid component supply chains are still suffering from disruptions caused by the COVID-19 pandemic and lack of domestic manufacturing capacity. The rising demand for grid components and battery technology have further stressed supply chains, drawing out lead times and increasing prices. For example, across transmission and distribution equipment, the lead time for components averaged 38 weeks in 2023, nearly double from the year prior, with costs escalating nearly 30 percent year-over-year. Bottlenecks in the supply chains from upstream suppliers to manufacturers among these components risk power system stability, the ability to deploy clean energy, and the ability to build new industrial production and technology facilities at scale. 

The Past Playbook

Federal policy has increasingly focused on building secure supply chains for clean energy technologies. The IRA included tax credits, grant programs, and loan authority to build out domestic supply chains for clean energy and storage technologies. The federal government has also used demand-side pressure to bolster supply chains (e.g., through a bonus tax incentive for clean energy projects that use domestic content and Build America Buy America requirements on federal grant programs). These policies led to major investment in domestic supply chains. 

This playbook was quite successful at building out domestic supply chains for some industries, but it had major gaps. For example, the IRA and BIL included no dedicated support for grid components, and the minimal support that was embedded in larger programs was insufficient. Federal demand-side programs were structured as incentives for downstream industries to use domestic content, but this design had too much uncertainty to sufficiently derisk upstream domestic supply chains.  

Today’s programs have also struggled to respond quickly when conditions change. For example, the federal government had limited tools with which to respond when the utility industry faced a debilitating shortage of large power transformers or when it became clear that incentives were not large enough to drive domestic investment for some clean energy components. 

Where Do We Go From Here?

The next era of energy policy must build on the same financial tools to support secure supply chains that enable clean energy deployment and grid upgrades. The playbook must include policies that more directly create demand for domestic components to provide certainty for manufacturers and derisk new investments. Future policy must also provide more flexible and dynamic tools to rapidly address supply chain shortages as they arise. 

Political Barriers: Making it Harder to Pass, Implement, and Defend Policy

Clean energy advocates have focused on economic competitiveness, climate, and public health benefits as the winning messages to support and defend policies. The BIL and IRA came out of this model, and the architects of those policies hoped that the industry that benefitted from these policies would step up to defend them. While this strategy has enabled passage of significant new policies, it has failed to withstand changing political dynamics. The swift rollback of major parts of BIL and IRA is the prime example. Our ability to successfully implement and defend clean energy policies—and make further progress—has been hampered by several key political barriers. The next era of clean energy policy must address these barriers to be successful. 

The Barrier

Rapidly rising utility bills have become an urgent cost-of-living issue. People pay 13 percent more for electricity in 2025 than they did in 2022, and nearly 40 percent of households sometimes have to choose between paying for food and medicine or keeping the lights on. 

Rising electricity prices are a political barrier to some clean energy policies. For example, states have struggled to follow through on procurement of advanced clean energy technologies like nuclear and offshore wind as prices have risen. New York recently cancelled a planned transmission line, using affordability as a justification. Clean energy opponents are using prices to oppose climate policies, even though deployment of wind and solar has generally reduced rates. Concerns about electricity affordability make it difficult to justify major grid infrastructure investments under current regulatory and ratemaking structures, as additional spending to update the grid will lead to near-term bill increases. High prices also make it difficult to replace direct fossil fuel use in vehicles, buildings, and factories with electricity. 

The Past Playbook

Federal energy policy has largely dealt with affordability in two ways. 

First, the federal government has provided important but limited direct assistance to struggling households through the Low-Income Home Energy Assistance Program, which helps households pay for energy, and the Weatherization Assistance Program, which funds energy- and cost-saving home improvements. However, these programs are significantly underfunded and oversubscribed—many households that need support do not get it.

Second, federal financial support results in long-term savings. IRA incentives for low-cost clean energy were projected to reduce generation costs, which in the long term translates to lower prices. Tax incentives and grant programs for distributed energy resources and home energy improvements save energy and costs for customers that make upgrades. However, this approach falls short in two ways: (1) it does not address the root causes of rising electricity bills, which means bills will continue to rise, and (2) the benefits are long term and do not show up on peoples’ bills on politically relevant timelines. 

Where Do We Go From Here?

The next era of energy policy must provide sufficient and swift relief for customers that are on the edge of catastrophe due to rising costs, make it easier to deploy cheap, clean energy to reduce generation costs, and target the root causes of high and rising bills to unlock a sustainable utility ratemaking regime that allows for major new investments in the grid without harming regular people. The new playbook must also include more effective cross-sector tools to cut total system and household costs, including by transferring planned spending on gas infrastructure to home electrification and grid upgrades where possible. 

The Barrier

Many solutions, including adding new generation in organized markets, relying more on regional and interregional transmission, and deploying distributed and demand-side solutions, threaten the profits of incumbent interests under current market and regulatory structures. For example, utilities make money through a return on qualified capital investments in things like power plants and distribution infrastructure. Increasing bulk transmission capacity to connect the Southeast with other regions would lead to more imports of lower cost clean energy, which would reduce the utilities’ reliance on local generation. That makes it harder for the utilities to justify capital expenditures in new power plants, which is how the utilities make a profit, so new transmission poses a threat to the business model. As a result, Southeastern utilities are opposed to policies that would expand bulk transmission to better connect different regions, even though these policies would reduce costs and increase reliability. These dynamics make it politically difficult to pursue policies that expand transmission capacity.

The Past Playbook

Federal clean energy policy has largely avoided changing incumbent incentive structures or decision-making processes at the state and regional level. Instead, policymakers have used financial incentives to bring incumbents to the table and increase their investment in clean energy and grid upgrades. As a result, the misaligned incentives described above, combined with decision-making structures that reward incumbents over innovation, make it difficult to fully address the barriers to clean energy deployment and grid upgrades at the necessary scale. 

Where Do We Go From Here?

The next era of clean energy policy must address governance issues through reform of regional grid operators and public utility commissions. Strengthening the role of regulators is critical to reining in incumbent interests where they do not align with public benefit. It must also realign industry incentives (e.g., through performance-based ratemaking) where possible with affordability and decarbonization goals. 

The Barrier

Another major political barrier is the lengthy time it takes to get from enactment and implementation to tangible benefits for people. Transforming major sectors of the economy is a time-intensive, multi-stage project, and climate advocates have accordingly focused on long-term goals, such as 100 percent clean electricity by 2035 or net-zero emissions by 2050. The IRA and BIL were made up primarily of multi-year (even some decadal) programs to drive major changes in the economy. As a result, the largest benefits were projected to come in the late 2020s and early 2030s, far outside the window of political memory. That mismatch makes it difficult for the public to understand the point of policies and in turn makes those policies hard to defend. 

Where policies do have near-term benefits, those benefits have often been delayed by the implementation process. Successfully shifting the private sector requires precise policy and new programs, which take time to implement. Implementation of new programs can also run up against the government typically works, and that friction causes delays. Implementation delays make it difficult to connect the dots between policy and tangible improvements to peoples’ lives.

The Past Playbook

Policymakers have used three dominant approaches to overcoming this barrier. First, they tout near-term signs of economic change. For example, the Biden administration consistently cited private-sector investment in clean energy as a key metric to convince the public that the IRA and BIL were driving benefits for people. Second, they rely on the quickest economic changes to demonstrate impact. For example, the IRA and BIL drove a near-term increase in construction jobs. Real and announced job creation was the dominant message to support and defend these policies. Third, they cite projected benefits. For example, the Biden administration frequently cited the 1.5 million jobs and the $27 to $33 billion in energy cost savings that the IRA was projected to drive. 

Attention to long-term impact is important for addressing long-term problems like climate change and load growth. However, politics runs on instant gratification. As of late 2024, only 39 percent of Americans had heard of the IRA. And federal energy policy failed to make a near-term dent in the issue that was most visible for people: utility bills. 

Where Do We Go From Here?

The next era of clean energy policy must tangibly and visibly benefit people in the short term. The playbook must include a better balance of policies geared toward long-term transformation of the economy and policies focused on pressing issues for regular people. That means including programs that are designed for quick implementation and real-world change. 

Conclusion: What’s Next?

The power sector sits at an inflection point. The challenges facing the grid are immediate, interconnected, and solvable but only if we confront the real sources of delay and dysfunction. Accelerating clean energy deployment requires moving beyond our old playbook—dominated by financial incentives and regulations that see-saw based on the political winds—toward a new approach that addresses both project development barriers that slow investment and construction and political barriers that impede durable policymaking. Building durable, effective energy policy demands a clear-eyed assessment of the barriers that have undermined smart policymaking and implementation.

In a forthcoming publication, we will move from diagnosis to action, detailing policy solutions that can unlock faster, more reliable project development while expanding the policy toolkit needed to overcome the political barriers that have prevented durable reform. Together, these solutions aim to strengthen grid reliability, rein in rising utility bills, and put the United States back on a credible path to decarbonization. These stakes could not be higher, and the opportunity to build a more affordable, resilient, and clean energy system has never been more urgent. 

Report: When Ambition Meets Reality — Lessons Learned in Federal Clean Energy Implementation, and a Path Forward

The Trump administration has scrapped over $8 billion (so far) in grants for dozens of massive clean energy projects in the United States. For those of us who worked on the frontlines of Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA) implementation, the near-weekly announcements and headlines have been maddening, especially at a time when many of these projects would have helped address soaring electricity prices and surging demand growth.

While some of these cancellations were probably illegal, they nevertheless raise fundamental questions for clean energy advocates: why was so much money still unspent…and why was it so easy to cancel?

In a new report, we begin to address these fundamental implementation questions based on discussions with over 80 individuals – from senior political staff to individual project managers – involved in the execution of major clean energy programs through the Department of Energy (DOE). 

Their answer? There is significant opportunity – as our colleagues at FAS have written – for future Executive branch implementation to move much faster and produce much more durable results. But to do so, future implementation efforts must look drastically different from the past, with a ruthless focus on speed, outcomes, and the full use of Executive Branch authorities to more quickly get steel in the ground.

The risk of risk aversion

Take the grant cancellations example. The Trump administration has relied on one small clause in the Code of Federal Regulations (2CFR 200.340(a)(4)) as the legal basis for its widespread cancellations. This clause, traditionally included in most grants between the government and a private company, allows the government to cancel any grant that “no longer effectuates the program goals or agency priorities” and essentially functions as a “termination for convenience” clause.

But including this “termination for convenience” clause was optional. DOE could have leveraged a different, more flexible contracting authority for many awards. It also could have processed what’s known as a “deviation” in order to exclude the clause from standard contracts. Leaders of program offices were aware of these options, with some staffers strenuously objecting to the inclusion of termination for convenience.

But in the end, DOE offices generally opted to keep this clause because it was the way the agency had always executed (primarily R&D) grants in the past, and because sticking to established procedures was seen as the best way to avoid the risk of Congressional or Inspector General oversight. 

And yet, this risk-averse approach perversely increased the risk of project failure, by creating an easy kill switch for an administration looking for grounds on which to cancel particular projects.

This attitude toward risk – which saw defaulting to the status quo as the most prudent path – was a constant barrier to effective implementation. (In addition to opening up grants to cancellation, the embrace of 2CFR 200 regulations meaningfully slowed negotiations as companies bristled at the obscure accounting and other compliance measures the regulations would impose on them.)

Understanding this culture of risk aversion offers two takeaways for improving government: (1) rigorously question status quo decisions and avoid defaulting to agency precedent and (2) avoid excessive focus on eliminating every risk or avoiding external backlash or oversight (especially given that backlash and oversight are likely regardless of the approach.) 

Speed is paramount

Of course, excluding the termination for convenience clause would not have been a panacea. It’s likely the Trump administration would have devised some other pretext for cancelling the grants that may have been just as successful, though perhaps legally shakier.

That’s why implementers also told us that speed is critical. The best defense is a strong offense. And the best way to prevent money from being taken back is to have already spent it on promising projects. The federal government has moved faster in implementation of large policies before. During the New Deal, the Tennessee Valley Authority moved from passage of its founding law to beginning construction on a major dam in just four months. Operation Warp Speed delivered cutting-edge life-saving vaccines to millions of Americans in about a year. While the contexts and goals of these programs were different, we know from history that the federal government can move fast.

But at DOE, only 5% of the funds appropriated through the Bipartisan Infrastructure Law had actually been spent (not just obligated) by the time the Biden administration ended three years later. In addition to making clean energy projects more vulnerable to subsequent cancellations, the pace of the rollout meant that the basic political hypothesis animating clean energy legislation—that the economic development projects brought, especially to red states, would create a durable bipartisan coalition for clean energy—went untested.

Practically everyone we spoke with expressed frustration at the slow pace of implementation. Interviewees highlighted many challenges associated with a relatively slow pace of BIL and IRA implementation, such as:

The work begins now

One commonality between these and other issues identified in our report is encouraging: they are mostly within the Executive Branch’s power to solve. A sufficiently prepared future administration could address many of these challenges for future federal clean energy efforts without relying on the vagaries of the legislative process. But the work must begin now. 

On contracting, for instance, a future administration’s DOE could make better use of Other Transactions Authority for clean energy. But it should be prepared with drafts of the basic commercial terms of agreements between the government and companies it works with. Similarly, a proactive future administration will come in with a clear view on how to streamline compliance with environmental, prevailing wage, domestic sourcing, and other cross-cutting requirements. On decision-making, a future administration can set norms pushing decision-making to the lowest possible level, clarify processes to elevate and execute major issues, and establish small, clear, and empowered teams that own frontline negotiations. 

If pursued, this updated approach to federal clean energy implementation will look drastically different. But one way or another it will have to: the next time there is a federal government interested in accelerating clean energy, it is likely to be dealing with a private sector much more wary of working with the government, fiscal constraints that limit the likely scale of any clean energy funding, and a dramatically altered federal workforce and state apparatus.

Much can be done outside of the federal government — including at state and local levels — to prepare for those circumstances. It is possible for a future federal administration to achieve faster and more durable clean energy outcomes. But to make that possible, the work must begin now. 

It’s not enough to say we need to make full use of DOE’s authorities; we need the drafted Secretarial directives and advance legal legwork to do it, and leadership well-equipped with the details and government-insider knowledge to execute on it. 

It’s not enough to say we want more nuclear, transmission, or critical minerals projects; we need to have identified the priority projects and designed the strategies and programs needed to actually put them in motion on Day 1. 

It’s not enough to say we should take a “whole-of-government” approach to an issue like clean energy; we need a detailed plan for how to use the $5 billion/year in electricity purchases and the PMA’s 45,000 miles of transmission lines—all under the direct control of the federal government—to achieve explicit policy outcomes. 

And it’s not enough to say we need to rebuild the federal workforce; we need a roster of hundreds of people that can be brought on and trained rapidly to implement within weeks.

To live up to the spirit of the New Deal and Operation Warp Speed—the spirit that turned ambitious goals into massive real-world impact in a matter of months—the next administration must come armed not only with broad aspirations, but also with the detailed plans required to implement them.

Want abundant energy? Ask who benefits from scarcity.

This article originally was published July 30 on Utility Dive.

A new obsession with abundance is spreading through policy conversations and governors’ mansions across the country. Abundance advocates, boosted by a recent book from Ezra Klein and Derek Thompson, envision a future in which we defeat the climate crisis, reduce cost of living and improve quality of life by speeding up construction of housing and energy infrastructure.

Making clean energy abundant is certainly critical to addressing the climate crisis. We need plentiful, cheap, clean energy to replace polluting fossil fuels in buildings, vehicles and factories. As a senior policy advisor in the Biden White House, I worked on many policies aimed at clean energy abundance, directly or indirectly, and I also saw firsthand how those policies were insufficient. That’s why it is now clear to me that the abundance movement’s playbook — to streamline permitting, simplify government processes and make public investments more focused — falls short of what’s needed.

We won’t achieve energy abundance unless we contend with the powerful interests that benefit from scarcity. Doing so requires reforming electricity markets, refreshing regulation of electric companies and rethinking the way we pay for grid infrastructure.

Let’s start with the problem: we are not building nearly enough clean energy to curb climate change and keep electricity affordable. Analysis from three leading research projects found that for us to get within striking distance of the Paris climate goals and plan for the lowest electricity costs, we must build 70 GW to 125 GW of clean energy per year, much higher than the record 50 GW built in 2024. As a result of our failure to build new energy projects fast, families and businesses will pay more for power and the planet will warm faster.

This is no longer an economic issue. Clean electricity is now often cheaper to deploy than new coal and gas, and in many cases cheaper than existing fossil-fuel-fired power plants. So what is stopping us from building it fast enough?

To answer this question, abundance proponents, including Klein and Thompson, largely focus on two main obstacles: 1) opposition from people who live nearby specific projects and groups concerned with local environmental impacts and 2) “everything-bagel liberalism,” the tendency to add too many strings to government incentives. The solution to the first problem, they argue, is to limit the power of the opposition by streamlining federal permitting and constraining public input in state and local siting processes. And for the second, their remedy is to limit the number of goals of government programs and reduce the requirements for funding.

There is no doubt that some clean energy and transmission projects have been thwarted by local opposition and lengthy litigation. And it is a worthy goal to make government incentives as effective as possible. But by portraying the primary villains defending scarcity as local landowners, conservation groups and the diversity of the liberal coalition, Klein and Thompson ignore important characters and policies that, if left unchecked, will continue to hamstring the pursuit of abundance.

For example, consider the situation unfolding in the electricity market organized by the PJM Interconnection, which operates the electricity grid for 65 million people in 13 mid-Atlantic and midwestern states and Washington, D.C. An independent, non-governmental entity, PJM runs the process to connect new power plants to the grid, among other important processes to make the electricity system work. PJM has been notoriously bad at this job. It ranks as the worst grid operator in the country in terms of the speed and effectiveness of its interconnection process. The average project waits five years for PJM to give it permission to connect to the grid. In fact, PJM closed its doors to new project applications in 2022 and has yet to re-open it. As a result, electricity demand is outpacing supply, prices are rising rapidly, and new clean energy projects are dying as they wait for word from PJM.

PJM has the power to speed up the process to connect new projects, which would increase electricity supply and cut electricity prices. But PJM has largely resisted reforms and focused instead on extending the life of existing power plants. Here is where it is helpful to ask: who benefits from an electricity shortage and the resulting high prices? It is not conservation groups or liberal stakeholder groups with competing goals (who have no voting power in PJM’s governance structure). It is the incumbent utilities that own the fleet of aging coal-fired power plants, which are struggling to compete with new clean energy projects. If cheap clean energy is allowed to enter the market, these companies will make less money. The outdated processes for approving new projects help prevent cheaper energy resources from threatening their business model. The companies have significant decision-making power — together, power plant owners, transmission owners (many of whom also own generation) and other energy service suppliers make up 60% of the voting power in PJM decisions.

Energy will not be abundant in the mid-Atlantic unless we take on the interests that are benefitting from scarcity. That means reforming the electricity market to stop overpaying existing power plants at the expense of customers, changing the rules to make it easier to connect new power plants to the grid and updating governance structures to make sure that customers are properly represented.

Similar cases abound of powerful interests benefitting from scarcity and defending policies that prevent abundance. Monopoly utilities, for example, benefit from abundant energy to the extent that they can build it and can earn a return on their investments — but not if the energy comes from their competition. That’s why utilities in the southeast have gone to great lengths to block transmission lines that enable cheap clean energy to compete with their existing power plants. Changing how those utilities make money (for example, by paying for outcomes instead of investments) could flip the script and turn the utilities into energy abundance advocates.

If the abundance movement is to succeed, it must identify the defenders of scarcity and broaden the playbook to either overcome those interests or change their incentives to bring them on the team.

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.

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.

Federal Climate Policy Is Being Gutted. What Does That Say About How Well It Was Working?

On the left is the Bankside Power Station in 1953. That vast relic of the fossil era once towered over London, oily smoke pouring from its towering chimney. These days, Bankside looks like the right:

Bankside Power Station in 1953 via A London Inheritance; Bankside today via the Telegraph.

The old power plant’s vast turbine hall is now at the heart of the airy Tate Modern Art Museum; sculptures rest where the boilers once churned.

Bankside’s evolution into the Tate illustrates that transformations, both literal and figurative, are possible for our energy and economic systems. Some degree of demolition – if paired with a plan – can open up space for something innovative and durable.

Today, the entire energy sector is undergoing a massive transformation. After years of flat energy demand served by aging fossil power plants, solar energy and battery storage are increasingly dominating energy additions to meet rising load. Global investment in clean energy will be twice as big as investment in fossil fuels this year. But in the United States, the energy sector is also undergoing substantial regulatory demolition, courtesy of a wave of executive and Congressional attacks and sweeping potential cuts to tax credits for clean energy. 

What’s missing is a compelling plan for the future. The plan certainly shouldn’t be to cede leadership on modern energy technologies to China, as President Trump seems to be suggesting; that approach is geopolitically unwise and, frankly, economically idiotic. But neither should the plan be to just re-erect the systems that are being torn down. Those systems, in many ways, weren’t working. We need a new plan – a new paradigm – for the next era of climate and clean energy progress in the United States.

Asking Good Questions About Climate Policy Designs

How do we turn demolition into a superior remodel? First, we have to agree on what we’re trying to build. Let’s start with what should be three unobjectionable principles.

Principle 1. Climate change is a problem worth fixing – fast. Climate change is staggeringly expensive. Climate change also wrecks entire cities, takes lives, and generally makes people more miserable. Climate change, in short, is a problem we must fix. Ignoring and defunding climate science is not going to make it go away.

Principle 2. What we do should work. Tackling the climate crisis isn’t just about cleaning up smokestacks or sewer outflows; it’s about shifting a national economic system and physical infrastructure that has been rooted in fossil fuels for more than a century. Our responses must reflect this reality. To the extent possible, we will be much better served by developing fit-for-purpose solutions rather than just press-ganging old institutions, statutes, and technologies into climate service. 

Principle 3. What we do should last. The half-life of many climate strategies in the United States has been woefully short. The Clean Power Plan, much touted by President Obama, never went into force. The Trump administration has now turned off California’s clean vehicle programs multiple times. Much of this hyperpolarized back-and-forth is driven by a combination of far-right opposition to regulation as a matter of principle and the fossil fuel industry pushing mass de-regulation for self-enrichment – a frustrating reality, but one that can only be altered by new strategies that are potent enough to displace vocal political constituencies and entrenched legacy corporate interests.

With these principles in mind, the path forward becomes clearer. We can agree that ambitious climate policy is necessary; protecting Americans from climate threats and destabilization (Principle 1) directly aligns with the founding Constitutional objectives of ensuring domestic tranquility, providing for the common defense, and promoting general welfare. We can also agree that the problem in front of us is figuring out which tools we need, not how to retain the tools we had, regardless of their demonstrated efficacy (Principle 2). And we can recognize that achieving progress in the long run requires solutions that are both politically and economically durable (Principle 3).

Below, we consider how these principles might guide our responses to this summer’s crop of regulatory reversals and proposed shifts in federal investment.

Honing Regulatory Approaches

The Trump Administration recently announced that it plans to dismantle the “endangerment finding” – the legal predicate for the Environmental Protection Agency (EPA) to regulate greenhouse gas emissions from power plants and transportation; meanwhile, the Senate revoked permission for California to enforce key car and truck emission standards. It has also proposed to roll back key power plant toxic and greenhouse gas standards. We agree with those who think that these actions are scientifically baseless and likely illegal, and therefore support efforts to counter them. But we should also reckon honestly with how the regulatory tools we are defending have played out so far.

Federal and state pollution rules have indisputably been a giant public-health victory. EPA standards under the Clean Air Act led directly to dramatic reductions in harmful particulate matter and other air pollutants, saving hundreds of thousands of lives and avoiding millions of cases of asthma and other respiratory diseases. Federal regulations similarly caused mercury pollution from coal-fired power plants to drop by 90% in just over a decade. Pending federal rollbacks of mercury rules thus warrant vocal opposition. In the transportation sector, tailpipe emissions standards for traditional combustion vehicles have been impressively effective. These and other rules have indeed delivered some climate benefits by forcing the fossil fuel industry to face pollution clean-up costs and driving development of clean technologies.

But if our primary goal is motivating a broad energy transition (i.e., what needs to happen per Principle 1), then we should think beyond pollution rules as our only tools – and allocate resources beyond immediate defensive fights. Why? The first reason is that, as we have previously written, these rules are poorly equipped to drive that transition. Federal and state environmental agencies can do many things well, but running national economic strategy and industrial policy primarily through pollution statutes is hardly the obvious choice (Principle 2). 

Consider the power sector. The most promising path to decarbonize the grid is actually speeding up replacement of old coal and gas plants with renewables by easing unduly complex interconnection processes that would speed adding clean energy to address rising demand, and allow the old plants to retire and be replaced – not bolting pollution-control devices on ancient smokestacks. That’s an economic and grid policy puzzle, not a pollution regulatory challenge, at heart. Most new power plants are renewable- or battery-powered anyway. Some new gas plants might be built in response to growing demand, but the gas turbine pipeline is backed up, limiting the scope of new fossil power, and cheaper clean power is coming online much more quickly wherever grid regulators have their act together. Certainly regulations could help accelerate this shift, but the evidence suggests that they may be complementary, not primary, tools.

The upshot is that economics and subnational policies, not federal greenhouse gas regulation, have largely driven power plant decarbonization to date and therefore warrant our central focus. Indeed, states that have made adding renewable infrastructure easy, like Texas, have often been ahead of states, like California, where regulatory targets are stronger but infrastructure is harder to build. (It’s also worth noting that these same economics mean that the Trump Administration’s efforts to revert back to a wholly fossil fuel economy by repealing federal pollution standards will largely fail – again, wrong tool to substantially change energy trajectories.)

The second reason is that applying pollution rules to climate challenges has hardly been a lasting strategy (Principle 3). Despite nearly two decades of trying, no regulations for carbon emissions from existing power plants have ever been implemented. It turns out to be very hard, especially with the rise of conservative judiciaries, to write legal regulations for power plants under the Clean Air Act that both stand up in Court and actually yield substantial emissions reductions. 

In transportation, pioneering electric vehicle (EV) standards from California – helped along by top-down economic leverage applied by the Obama administration – did indeed begin a significant shift and start winning market share for new electric car and truck companies; under the Biden administration, California doubled down with a new set of standards intended to ultimately phase out all sales of gas-powered cars while the EPA issued tailpipe emissions standards that put the industry on course to achieve at least 50% EV sales by 2030. But California’s EV standards have now been rolled back by the Trump administration and a GOP-controlled Congress multiple times; the same is true for the EPA rules. Lest we think that the Republican party is the sole obstacle to a climate-focused regulatory regime that lasts in the auto sector, it is worth noting that Democratic states led the way on rollbacks. Maryland, Massachusetts, Oregon, and Vermont all paused, delayed, or otherwise fuzzed up their plans to deploy some of their EV rules before Congress acted against California. The upshot is that environmental standards, on their own, cannot politically sustain an economic transition at this scale without significant complementary policies.

Now, we certainly shouldn’t abandon pollution rules – they deliver massive health and environmental benefits, while forcing the market to more accurately account for the costs of polluting technologies, But environmental statutes built primarily to reduce smokestack and tailpipe emissions remain important but are simply not designed to be the primary driver of wholesale economic and industrial change. Unsurprisingly, efforts to make them do that anyway have not gone particularly well – so much so that, today, greenhouse gas pollution standards for most economic sectors either do not exist, or have run into implementation barriers. These observations should guide us to double down on the policies that improve the economics of clean energy and clean technology — from financial incentives to reforms that make it easier to build — while developing new regulatory frameworks that avoid the pitfalls of the existing Clean Air Act playbook. For example, we might learn from state regulations like clean electricity standards that have driven deployment and largely withstood political swings.

To mildly belabor the point – pollution standards form part of the scaffolding needed to make climate progress, but they don’t look like the load-bearing center of it.

Refocusing Industrial Policy

Our plan for the future demands fresh thinking on industrial policy as well as regulatory design. Years ago, Nobel laureate Dr. Elinor Ostrom pointed out that economic systems shift not as a result of centralized fiat, from the White House or elsewhere, but from a “polycentric” set of decisions rippling out from every level of government and firm. That proposition has been amply borne out in the clean energy space by waves of technology innovation, often anchored by state and local procurement, regional technology clusters, and pioneering financial institutions like green banks.

The Biden Administration responded to these emerging understandings with the  CHIPS and Science Act, Bipartisan Infrastructure Law (BIL), and Inflation Reduction Act (IRA) – a package of legislation intended to shore up U.S. leadership in clean technology through investments that cut across sectors and geographies. These bills included many provisions and programs with top-down designs, but the package as a whole but did engage with, and encourage, polycentric and deep change.

Here again, taking a serious look at how this package played out can help us understand what industrial policies are most likely to work (Principle 2) and to last (Principle 3) moving forward.

We might begin by asking which domestic clean-technology industries need long-term support and which do not in light of (i) the multi-layered and polycentric structure of our economy, and (ii) the state of play in individual economic sectors and firms at the subnational level. IRA revisions that appropriately phase down support for mature technologies in a given sector or region where deployment is sufficient to cut emissions at an adequate pace could be worth exploring in this light – but only if market-distorting supports for fossil-fuel incumbents are also removed. We appreciate thoughtful reform proposals that have been put forward by those on the left and right.

More directly: If the United States wants to phase down, say, clean power tax credits, such changes should properly be phased with removals of support for fossil power plants and interconnection barriers, shifting the entire energy market towards a fair competition to meet increasing load, as well as new durable regulatory structures that ensure a transition to a low-carbon economy at a sufficient pace. Subsidies and other incentives could appropriately be retained for technologies (e.g., advanced battery storage and nuclear) that are still in relatively early stages and/or for which there is a particularly compelling argument for strengthening U.S. leadership. One could similarly imagine a gradual shift away from EV tax credits – if other transportation system spending was also reallocated to properly balance support among highways, EV charging stations, transit, and other types of transportation infrastructure. In short, economic tools have tremendous power to drive climate progress, but must be paired with the systemic reforms needed to ensure that clean energy technologies have a fair pathway to achieving long-term economic durability.

Our analysis can also touch on geopolitical strategy. It is true that U.S. competitors are ahead in many clean technology fields; it is simultaneously true that the United States has a massive industrial and research base that can pivot ably with support. A pure on-shoring approach is likely to be unwise – and we have just seen courts enjoin the administration’s fiat tariff policy that sought that result. That’s a good opportunity to have a more thoughtful conversation (in which many are already engaging) on areas where tariffs, public subsidies, and other on-shoring planning can actually position our nation for long-term economic competition on clean technology. Opportunities that rise to the top include advanced manufacturing, such as for batteries, and critical industries, like the auto sector. There is also a surprising but potent national security imperative to center clean energy infrastructure in U.S. industrial policy, given the growing threat of foreign cyberattacks that are exploiting “seams” in fragile legacy energy systems.

Finally, our analysis suggests that states, which are primarily responsible for economic policy in their jurisdictions, have a role to play in this polycentric strategy that extends beyond simply replicating repealed federal regulations. States have a real opportunity in this moment to wed regulatory initiatives with creative whole-of-the-economy approaches that can actually deliver change and clean economic diversification, positioning them well to outlast this period of churn and prosper in a global clean energy transition.

A successful and “sticky” modern industrial policy must weave together all of the above considerations – it must be intentionally engineered to achieve economic and political durability through polycentric change, rather than relying solely or predominantly on large public subsidies. 

Conclusion

The Trump Administration has moved with alarming speed to demolish programs, regulations, and institutions that were intended to make our communities and planet more liveable. Such wholesale demolition is unwarranted, unwise, and should not proceed unchecked. At the same time, it is, as ever, crucial to plan for the future. There is broad agreement that achieving an effective, equitable, and ethical energy transition requires us to do something different. Yet there are few transpartisan efforts to boldly reimagine regulatory and economic paradigms. Of course, we are not naive: political gridlock, entrenched special interests, and institutional inertia are formidable obstacles to overcome. But there is still room, and need, to try – and effort bears better fruit when aimed at the right problems. We can begin by seriously debating which past approaches work, which need to be improved, which ultimately need imaginative recasting to succeed in our ever-more complex world. Answers may be unexpected. After all, who would have thought that the ultimate best future of the vast oil-fired power station south of the Thames with which we began this essay would, a few decades later, be a serene and silent hall full of light and reflection?