Your DNA, Your Data: Preventing Genetic Discrimination in the Growing Bioeconomy

The U.S. bioeconomy is a growing economic sector driving technological innovation and global competitiveness. A significant portion of this innovation, especially in biotechnologies that improve health, like drug therapeutics and precision medicines, relies on the collection of genetic and non-genetic biological information through varied methods, including academic studies, direct-to-consumer testing services, and pharmaceutical companies. While this can lead to improvements in U.S. public health and biotechnology, there has been a growing fear among scientists and legal experts that this information is insufficiently protected against exploitation by foreign actors seeking to supplant U.S. leadership in biotechnology, as well as against domestic actors who might use this data to target or discriminate against certain subsets of the population 

Legislation and policy outlining the storage and use of human-derived biological data by federally-funded research, such as the NIH Genomic Data Sharing Policy, lessen the risks surrounding this data but are insufficient due to advancements in biotechnology and the multifaceted collection, use, and selling of this information by private industry and law enforcement. Meeting the moment and protecting the American people will require: 1) expanded legislative protections for biological data; 2) biological data use protocols developed for federal agencies; and 3) standardized development, storage, and use of biological data. Pursuing these policy enhancements will safeguard fundamental rights and secure national infrastructure as we enter a new era of biological understanding and innovation.

Challenge and Opportunity

The U.S. bioeconomy is an increasingly important facet of the GDP due to the growing role of biotechnology in economic sectors, including defense, agriculture, energy, and manufacturing, with the total market size of biotechnology expected to reach $2-4 trillion in 2030-40. An important driver of this growth is the increased role of biotechnology in drug discovery, therapeutics development, and precision medicine. 

This innovation, which includes novel treatments for cystic fibrosis, has necessitated the collection of massive datasets of biological data, including genetic, molecular, and biometric information. The federal government supports this through the direct creation and management or funding through grants of large-scale biobanks of individuals from varied geographic, demographic, and health backgrounds to be primarily used in biomedical research. Various pharmaceutical, technology, and biotechnology companies have additionally collected millions of primarily genetic samples from members of the public; for example, more than 26 million people have taken direct-to-consumer genetic tests through companies, such as 23andMe and Ancestry. 

However, as more human-derived biological datasets grow, they become strategic targets. There is an increasing concern that this information is insufficiently protected against exploitation by foreign actors seeking to supplant U.S. biotechnological leadership, as well as against malicious domestic actors who may misuse biological data to perpetrate genetic discrimination and biological data discrimination. While this may initially seem like a concern limited to employment or insurance, genetic discrimination has potential negative ramifications for the unchecked surveillance and intrusion into the private lives of Americans. Cases of genetic discrimination have already been identified in education, such as the case of Colman Chadam, a middle-schooler forced to leave his school because of a genetic susceptibility to cystic fibrosis. Additional civil liberties concerns arise around the non-consensual misuse of biological data in law enforcement investigations. Even while measures have been taken to secure biological datasets to minimize the number of people who might misuse this information, both public and private data collections are under scrutiny from sectors of the public about the risk of anonymized biological data being reidentified and the ability of these collectors to prevent data leaks.

The preeminent federal law guiding the use of this data in non-research settings is the Genetic Information Nondiscrimination Act (GINA). GINA, in combination with the Health Insurance Portability and Accountability Act (HIPAA) and other legislation, outlines the general use of genetic and biological information within the U.S. However, these laws leave regulatory gaps that enable the previously mentioned civil rights violations to rise. HIPAA only provides protections to biological information in the context of “protected health information” for covered entities, such as healthcare providers and their business associates. And GINA only prohibits the use of genetic data to discriminate in employment and health insurance coverage, and only restricts organizations with greater than 15 employees. Moreover, there are no laws that protect against discrimination surrounding the use of non-genetic biological information, such as those collected by private companies and personal health trackers. Protections beyond GINA at the state level are inconsistent and lacking, especially given the highly personal and largely unchanging nature of this information. While guidance exists for the storage, sharing, and oversight of biological data for institutions that receive federal funding, there is a lack of this same technical standard for commercial and direct-to-consumer companies. 

This regulatory vacuum allows deeply personal information about an individual’s disease history, familial relationships, and potential traits to be used to cause harm. This opens the door to dangerous infringements on personal safety and human rights, threatening the stability of the growing bioeconomy.

Plan of Action

To secure the U.S. bio-infrastructure, maintain global leadership in biotechnology, and safeguard American citizens from emerging threats to their privacy, the federal government must modernize its approach to human genetic and biological data. The current regulatory patchwork leaves the bioeconomy vulnerable to foreign exploitation and American citizens open to unchecked surveillance. The following recommendations establish a necessary framework to build trust in U.S. innovation while protecting individual liberty.

Recommendation 1. Modernize Genetic Privacy Laws to Close Security Gaps

Congress should advance legislation that comprehensively expands GINA to include all forms of biological data, including but not limited to: genetic, protein, microbiome, and biometric data, in order to close the loopholes present in the original law.

To ensure that an American’s biological information remains their private property and not a tool of overreach, this legislation should expand nondiscrimination protections beyond health insurance and employment. This legislation could be modeled on CalGINA, a 2011 California law that adds “genetic information” to existing protected classes, such as race, sex, and age. New federal legislation would expand on this model by codifying “biological information” as a protected class with “genetic information” within existing civil rights law. Additionally, this legislation should include direct language from CalGINA that prevents business establishments, health facilities, housing providers, and state-funded programs from demanding genetic tests, and penalizing Americans for their biological makeup. This legislation can also use language from the EU’s General Data Protection Regulation (GDPR) that classifies genetic and biometric data under a special “sensitive data” category. GDPR language would assist in classifying the scope of genetic and biological data as well as the protections individuals possess in regards to this information.

By setting this new federal baseline, Congress will harmonize the current fragmented regulatory landscape, clarifying compliance for businesses that may seek this information, and will assure the American public that their biological information cannot be weaponized against them.

Recommendation 2. Establish Guidelines For The Federal Use Of Biological Data

To prevent unwarranted surveillance and privacy erosion, the president should issue a memorandum tasking the National Institute of Standards and Technology (NIST) and the Office of Science and Technology Policy (OSTP) with developing a “Federal Human-Derived Biological Data Use Standard”. 

To ensure the standard accounts for the full spectrum of federal use cases, NIST and OSTP, in coordination with the Office of Management and Budget (OMB) and the National Security Council, must conduct an interagency review of all current and potential federal uses of biological data. The Standard should specifically adopt a privacy-centric model, similar to that established by the 2019 Interim Department of Justice policy on genetic genealogy. Once developed, federal agencies must make the Standard available to state and local partners to serve as a model for non-federal policy. Additionally, OSTP should publish a public-facing framework that clarifies federal use cases. This framework must include clear definitions of biological data types, transparent access standards, a list of actions explicitly prohibited by the new protocol, and clear accountability mechanisms.

This standard will define strict policies for permissible federal use of biological data to streamline disparate protocols and prevent the over-exposure of citizen data by the federal government. It will additionally serve as a model to ensure consistent protection for Americans across all levels of government.

Recommendation 3. Implement Technical Standards For Biological Data Security And Innovation

The president should direct OMB to issue a Biological Data Protection Directive. This directive must mandate that federal agencies standardize the technical infrastructure regarding how human-derived biological data is collected, stored, and shared. 

Specifically, the Directive should:

To implement these activities, the president should request Congress to appropriate $50-80 million over three years for staffing, training, and technical infrastructure. Standardizing this infrastructure will close security gaps that currently allow foreign adversaries to target American biological data while driving market-wide adoption of secure protocols and reducing friction for U.S. businesses.

Conclusion

Biological data is becoming as central to modern society as a traditional digital footprint and carries similar far-reaching risks if misused. Without proactive federal action, the expanding role of biological data will continue to enable new forms of discrimination, privacy violations, and civil-rights harms, while leaving critical national assets vulnerable to exploitation by foreign competitors and unchecked domestic surveillance.

If successfully and fully implemented, these new policies would protect individual rights and secure the bioeconomy, establishing the United States as a leader in responsible biotechnology  innovation. The first recommendation would provide clear and enforceable civil protections for all Americans, ensuring that individuals, businesses, and institutions cannot misuse biological information regardless of how it was obtained. This would prevent cases like that of Colman Chadam from recurring. The second recommendation would support more effective and accountable law enforcement by establishing rigorous, updated guidelines that limit federal overreach, and ultimately reduce privacy risks while improving public trust. Finally, the third recommendation would strengthen federally funded and private biomedical research by developing standards that make biological data interoperable, AI-ready, and secure.

The combination of all the recommendations will provide clarity to both state and private actors on appropriate development, storage, and use of biological information. This approach ensures that U.S. values define the global bioeconomy, creating lasting protections for the use of this information in critical facets of society.

Frequently Asked Questions (FAQ)
How will “biological information” be defined to prevent loopholes that allow discrimination based on inferred traits (e.g., ancestry, disability risk, or behavioral genetics)?

The proposed legislation will define “biological information” broadly to encompass all data derived from biological samples or measurements that can reveal health, behavioral, or ancestry-related traits. This includes molecular, biometric, and physiological data that can infer or predict personal or familial traits and diseases.

How will this expanded protection interact with existing civil rights laws and state-level equal protection statutes?

The proposal complements, rather than replaces, existing civil rights frameworks. By adding “biological information” to the list of protected classes, the law provides a clear and enforceable basis for addressing discrimination that current statutes do not explicitly cover.

Who will enforce these expanded protections, and what recourse will individuals have if they experience discrimination based on biological data?

Enforcement will rely on existing federal civil rights and consumer protection infrastructure. The Equal Employment Opportunity Commission will be empowered to investigate biological-data–based discrimination in employment, while the Department of Justice’s Civil Rights Division can address systemic violations across public institutions. The Federal Trade Commission will continue to regulate unfair or deceptive data practices by private companies.

How will this policy affect innovation in biotechnology?

Many small businesses and startups are already taking scattered approaches to protecting their data. This policy would remove burdens and accelerate biotechnological innovation by providing clear standards for the use of biological data for those entering the field and lowering the delays necessary to understand a scattered regulatory landscape.

What are the national security implications?

Due to advancements in biotechnology, malicious domestic actors may use biological data to target, blackmail, or exploit different segments of the American public who have voluntarily provided this information. This policy would minimize those risks by securing personal information and provide clear ramifications for misuses.

How does this policy support U.S. global leadership?

By implementing this policy, the U.S. will be the first country to make comprehensive policy on the security and use of personal biological datasets by federal and private actors. This policy will thus serve as a model for other nations realizing the dangers and necessity of protecting this type of information.

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

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

Implications for democratic governance:

Capacity needs:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Regulation is insufficient to drive widespread adoption 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Strange bedfellows create weak alliances 

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

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

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

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

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

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

Making policy-enabled finance programs work in the future 

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

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

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

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

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

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

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

Quasi-public Structures

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

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

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

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

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

Educating policymakers to build trust in the community finance ecosystem

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

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

State and local governments stepping up  

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

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

Conclusion 

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

Policy-enabled finance snapshot (illustrative, not exhaustive)

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

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.

Our environmental system was built for 1970s-era pollution control, but today it needs stable, integrated, multi-level governance that can make tradeoffs, share and use evidence, and deliver infrastructure while demonstrating that improved trust and participation are essential to future progress. 

Implications for democratic governance

Capacity needs

Modernize today’s system of cooperative federalism to address the lack of clear and intentional interconnections, adaptive feedback loops, and aligned objective, by:

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

Durable and legitimate climate action requires a government capable of clearly weighting, explaining, and managing cost tradeoffs to the widest away of audiences, which in turn requires strong technocratic competency. 

Democratic governance needs

State Capacity needs

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. 

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.

A National AI Laboratory to Support the Administration’s AI Agenda at the Department of Commerce

The United States faces intensifying international competition in Artificial Intelligence (AI). The Trump administration’s AI Action Plan places the Department of Commerce at the center of its agenda to strengthen international standards-setting, protect intellectual property, enforce export controls, and ensure the reliability of advanced AI systems. Yet no existing federal institution combines the flexibility, scale, and technical depth needed to fully support these functions.

To deliver on this agenda, Commerce should expand their AI capability by sponsoring a new Federally Funded Research and Development Center (FFRDC), the National AI Laboratory (NAIL). NAIL would:

  1. Advance the science of AI,
  2. Ensure that the United States leads in international AI standards and promotes the trusted adoption of U.S. AI products abroad, 
  3. Identify and mitigate AI security risks, 
  4. Protect U.S. technologies through effective export controls. 

While the National Institute of Standards and Technology’s (NIST’s) Center for AI Standards and Innovation (CAISI) within Commerce provides a base of expertise to advance these goals, a dedicated FFRDC offers Commerce the scale, flexibility, and talent recruitment necessary to deliver on this broader commercial and strategic agenda. Together with complementary efforts to strengthen CAISI and expand public-private partnerships, NAIL would serve as the backbone of a more capable AI ecosystem within Commerce. By aligning with Commerce’s broader mission, NAIL will give the Administration a powerful tool to advance exports, protect American leadership, and counter foreign competition.

Challenge

AI’s breakneck pace is having a real-world impact. The Trump administration has made clear that widespread adoption of AI, backed by strong export promotion and international standards leadership, is essential for maintaining America’s position as the world’s technology leader. The Department of Commerce sits at the center of this agenda: advancing AI trade, developing international standards, advancing the science of AI, promoting exports, and ensuring effective export controls on critical technology.

Even as companies and countries race to adopt AI, the U.S. lacks the capacity to fully characterize the behavior and risks of AI systems and ensure leadership across the AI stack. This gap has direct consequences for Commerce’s core missions. First, advances in the science of AI are necessary to ensure that AI systems are sufficiently robust and well understood to be widely adopted at home and abroad. Second, without trusted methods for evaluating AI, the U.S. cannot credibly lead the development of international standards, an area where allies are seeking American leadership and where adversaries are pushing their own approaches. Third, this deep understanding of AI models is needed to identify and mitigate security concerns present in both foreign and domestic models. Fourth, deep technical expertise within the federal government is required to properly create and enforce export controls, ensuring that sensitive AI technologies and underlying hardware are not misused abroad. A deep bench of subject matter experts in AI models and infrastructure is increasingly critical to these efforts.

As AI systems become more capable, the lack of predictable and understandable behavior risks further eroding public trust in AI and inhibiting beneficial AI adoption. Jailbreaking attacks, in which carefully crafted prompts get around Large Language Model (LLM) guardrails, can produce unexpected behavior of models. For example, jailbreaking can prime LLMs for use in cyberattacks, which can cause significant economic harms, or cause them to leak personal information, or produce toxic content, causing legal liability and reputational harm to companies using these models. As companies deploy custom models built on top of LLMs they need to know that medical assistants will not produce harmful recommendations, or that agentic AI systems will not misspend personal funds.  Addressing these concerns is an extremely challenging technical problem that requires more effective and consistent methods of evaluating and predicting model performance. 

The ability to effectively characterize these models is central to the Trump administration’s AI Action Plan, which highlights widespread adoption of AI as a major policy priority, while also recognizing that the government has a key role to play in managing emerging national security threats. The AI Action Plan gives Commerce a central role in addressing these concerns; nearly two fifths of the plan’s recommendations involve Commerce. Commerce’s responsibilities include:

For a full list of AI Action Plan recommendations involving Commerce, see Appendix A. 

While Commerce has an impressive track record in AI, including through its work at the National Institute of Standards and Technology and CAISI, it will face immense institutional challenges in delivering on the ambitions of the AI Action Plan, which require broad and deep expertise. Like other U.S. government entities, Commerce operates under federal hiring rules that make it difficult to quickly recruit and retain top technical talent. The government also struggles to match AI industry pay scales. For example, fresh PhDs joining AI companies frequently receive total compensation that is twice the cap set for the overwhelming majority of government workers, and senior researchers earn five times this cap or more. In some cases, top researchers may also hold equity in private companies, further complicating their employment by the government. Without a new institutional mechanism designed to attract and deploy world-class expertise, Commerce will struggle to execute on the ambitious goals of the AI Action Plan.

Opportunity

To deliver on the scope of the AI Action Plan, the Department of Commerce needs a dedicated institution with the resources, flexibility, and talent pipeline that existing structures cannot provide. A Federally Funded Research and Development Center (FFRDC) offers this capacity. Unlike traditional government offices, an FFRDC can recruit competitively from the same pools as industry, while remaining mission-driven and independent of commercial interests.

At its core, a new FFRDC, the National AI Laboratory (NAIL), would provide the technical expertise Commerce needs to carry out its central responsibilities. Specifically, NAIL would:

  1. Advance the science of AI, including the measurement and evaluation of AI models.
  2. Develop the methods and benchmarks that underpin international standards and ensure U.S. companies remain the trusted source for global AI solutions.
  3. Identify and mitigate AI security risks, ensuring U.S. technologies are not exploited by adversaries.
  4. Provide the technical expertise needed to support export promotion, export controls, and international trade negotiations.

NAIL would equip Commerce with the authoritative science and engineering base it needs to advance America’s commercial and strategic AI leadership.

FFRDCs are unique in combining the flexibility of private organizations with the mission focus of federal agencies. Their long-term partnership with a sponsoring agency ensures alignment with government priorities, while their independent status allows them to provide objective analysis and rapid technical response. This hybrid structure is particularly well-suited to the fast-moving and security-relevant domain of frontier AI. More background information on FFRDCs can be found in Appendix C. 

The current talent landscape underscores the value of the FFRDC model. While industry salaries are high, many senior researchers are constrained by proprietary agendas and limited opportunities to pursue foundational, publishable work. To obtain greater freedom in their research, many top industry researchers have been seeking positions at universities, despite drastically lower salaries. An FFRDC focused on frontier model understanding, interpretability, and security offers a rare combination: freedom to pursue scientifically important problems, the ability to publish, and a mission anchored in national competitiveness and public service. This environment can attract researchers who would not join the civil service but are motivated by high-impact scientific and policy goals.

FFRDCs have repeatedly demonstrated their ability to deliver large-scale technical capability for federal sponsors. For example, NASA’s Jet Propulsion Laboratory has successfully built and landed multiple rovers on Mars, among many other achievements. The Departments of Energy and Defense have led much of the U.S.’ efforts in science and technology assisted by more than two dozen FFRDCs. Their track record shows that FFRDCs are uniquely suited to problems where neither academia nor industry is structured to meet federal needs—exactly the situation Commerce now faces in AI. Commerce currently supports one FFRDC, the fourth smallest. As advanced AI technology grows even more central to Commerce’s mission, it makes sense to add to this capacity.

Plan of Action

Recommendation 1. Establish an FFRDC to support the AI Mission at Commerce.  

Commerce should establish a new FFRDC within two years with a mission to begin important research and timely evaluations. Establishing a new FFRDC requires the sponsoring organization (Commerce in this case) to satisfy the criteria laid out in the Federal Acquisition Regulations (48 CFR 35.017-2) for creating a new FFRDC. Key requirements involve demonstrating needs that are not met by existing sources and that Commerce has sufficient expertise to evaluate the FFRDC. It will require consistent government support through appropriations, and Commerce must identify an appropriate organization to manage it. The rapid pace of AI development makes it an urgent priority to move forward as soon as possible. Recent FFRDCs have taken about 18 months to establish after initial announcement, a significant length of time in the AI field. Further details related to establishing an FFRDC can be found in Appendix D. 

Recommendation 2. NAIL should focus on topics that will advance the Administration’s AI Agenda, including recommendations given to Commerce in the AI Action Plan. 

These topics should include:

The proposed FFRDC should pursue activities that range from longer term, fundamental research to rapid response to new developments. Much of the knowledge needed to fulfill Commerce’s mandate lies at the heart of the most significant research questions in AI. This requires deep research, which is also important in attracting top tier talent. On a shorter time scale, it will be important for the FFRDC to provide regular evaluations of models as they progress, including the evaluation of security concerns in foreign models. NAIL can speed up these time critical security evaluations. It will also need to use these evaluations to help create and update procurement guidelines for federal agencies and assess the state of international AI competition. Finally, the FFRDC should be a source of expertise that can support Commerce in a wide range of topics such as export control and development of a workforce trained to appropriately take advantage of AI tools.

The FFRDC will also need to work closely with industry to develop standards for the evaluation of models, and support efforts to create international standards. For example, it may seek to facilitate an industry consensus on the evaluation of new models for security concerns. NIST is well known for similar efforts in many technical areas. Finally, the FFRDC should provide a capacity for rapid response to significant AI developments, including possible urgent security concerns.

Recommendation 3. Provide a sufficient budget to cover the necessary scale of work.

There are different possible scales at which NAIL might be created. It is important to note that creating industry scale models from scratch can cost tens or hundreds of millions of dollars. However, the task of evaluating models may be undertaken without this expense by experimenting on models that have already been trained. Much of the published work on model evaluation takes this course. Such evaluations and experiments still require access to significant computational resources, requiring millions of dollars a year in compute, depending on the size of the effort. The FFRDC’s research might also include experiments in which smaller models are built from scratch at a much smaller expense than what is required to train industry sized models.

We consider two alternatives as to the size and budget of the proposed FFRDC:

The figure in Appendix B lists all current FFRDCs and their annual budget in 2023. 

The budget of the FFRDC would need to cover several different costs:  

Recommendation 4. Make NAIL the Backbone of a Broader AI Ecosystem at Commerce.

While an FFRDC offers a unique combination of technical depth and recruiting flexibility, other institutional approaches could also expand Commerce’s AI expertise. One option is to expand the Center for AI Standards and Innovation (CAISI) within NIST, leveraging its standards and measurement mission, though it remains bound by federal hiring and funding rules that slow recruitment and limit pay competitiveness.

A separate proposal envisions a NIST Foundation—a congressionally authorized nonprofit akin to the CDC Foundation or the newly created Foundation for Energy Security and Innovation (FESI)—to mobilize philanthropic and private funding, convene stakeholders, and run fellowships supporting NIST’s mission. Such a foundation could strengthen public-private engagement but would not provide the sustained, large-scale technical capacity needed for Commerce’s AI responsibilities. 

Taken together, these models could form a complementary ecosystem: an expanded CAISI to coordinate standards and technical policy within government as well as providing oversight over the FFRDC; a NIST Foundation to channel flexible funding and external partnerships; and an FFRDC to serve as the enduring research and engineering backbone capable of executing large-scale technical work.

Conclusion

The Trump administration has set ambitious goals for advancing U.S. leadership in artificial intelligence, with the Department of Commerce at the center of this effort. Ensuring America’s continued leadership in AI requires technical expertise that existing institutions cannot provide at scale.

NAIL, a new Federally Funded Research and Development Center (FFRDC) offers Commerce the capacity to:

By sponsoring this FFRDC, Commerce can secure the talent, flexibility, and independence needed to deliver on the Administration’s commercial AI agenda. While CAISI provides the technical anchor within NIST, the FFRDC will enable Commerce to act at the necessary scale—ensuring the U.S. leads the world in AI innovation, standards, and exports.

Appendix A. References to the Department of Commerce in America’s AI Action Plan

Appendix B. FFRDC Budgets

Appendix C. Further Background on FFRDCs

FFRDCs in Practice: Successes and Pitfalls

FFRDCs have been supporting US government institutions since World War II. Overviews can be found here and here. In this appendix we briefly describe the functioning of FFRDCs and lessons that can be drawn for the current proposal. 

In a paper by the Institute for Defense Analyses (IDA) a panel of experts “expressed their belief that high-quality technical expertise and a trusting relationship between laboratory leaders and their sponsor agencies were important to the success of FFRDC laboratories” and felt that “The most effective customers and sponsors set only ‘the what’ (research objectives to be met) and allow the laboratories to determine ‘the how’ (specific research projects and procedures).”  Frequent personnel exchange programs between the FFRDC and its sponsor are also suggested. 

This and the experience of successful FFRDCs suggests that the proposed FFRDC be closely linked to relevant ongoing efforts in NIST, especially CAISI, with frequent exchanges of information and even personnel. At the same time, the proposed FFRDC should have the freedom to explore very challenging research questions that lie at the heart of its mission. 

As an example of the relationship between agencies and associated FFRDCs, the Jet Propulsion Laboratory supports many of NASA’s priorities, addressing long-term goals such as understanding how life emerged on earth, along with more immediate goals such as catalyzing economic growth and contributing to national security. Caltech manages operations of JPL. In general, NASA sets strategic goals, and JPL aligns its long-term quests with these goals. NASA may solicit proposals and JPL may compete to lead or participate in appropriate missions. JPL may also propose missions to NASA. As an example, in 2011 the National Academies recommended that NASA begin a mission to return samples from Mars. NASA decided to launch a new Mars rover mission. NASA then tasked JPL to build and manage operations of Perseverance, to accomplish this mission. 

On a less positive note, after concerns about the Department of Energy’s (DOE) management of FFRDCs, DOE shifted from a “transactional model to a systems-based approach” offering greater oversight, but also leading to concerns of loss of flexibility and micromanagement. Concerns have also previously been raised about the level of transparency and assessment of alternatives when agencies renew FFRDC contracts, as well as mission creep of existing FFRDCs 

Existing FFRDCs Relevant to AI Work

One of the most important criteria for establishing a new FFRDC is to demonstrate that this will fill a need that cannot be filled by existing entities. Many current FFRDCs are conducting work on AI, but this work does not adequately address the needs of Commerce, especially in light of the requirements of the AI Action Plan. For example, the Software Engineering Institute (SEI) run by CMU has deep expertise in the development of AI systems, along with software development and acquisition. However, their mission is to  “execute applied research to drive systemic transition of new capabilities for the DoD.”  Its AI work focuses on defense related capabilities, and not on the comprehensive evaluation of frontier models needed by NIST. 

NIST does support the National Cybersecurity FFRDC (NCF) operated by MITRE. This unit focuses on security needs, not on general model evaluation (although it will be important to clearly delineate the scopes of a new Commerce FFRDC and the NCF). Other FFRDCs, such as Los Alamos or Lawrence Berkeley have significant AI efforts aimed at using AI to enhance scientific discovery. Industry AI labs address some of the questions central to the proposed FFRDC, but it is important that the government have access to deep technical expertise that is able to act in the public interest.

Establishing a New FFRDC

A precedent on the establishment of FFRDCs comes from the Department of Homeland Security (DHS). Under Section 305 of the Homeland Security Act of 2002, DHS was authorized to establish one or more FFRDCs to provide independent technical analysis and systems engineering for critical homeland security missions. In April 2004, DHS created its first FFRDC, the Homeland Security Institute. Four years later, on April 3, 2008, it issued a notice of intent to establish a successor organization, the Homeland Security Systems Engineering and Development Institute (HSSEDI), and in 2009 selected the MITRE Corporation to operate it. HSSEDI—along with DHS’s other FFRDC, the Homeland Security Operational Analysis Center—is overseen by the Department’s FFRDC Program Management Office. This case illustrates both a procedural pathway (statutory authorization, public notice, operator selection) and the typical timeline for standing up such an entity: roughly 12–18 months from notice of intent to full operation. Similarly, the National Cybersecurity FFRDC had its first notice of intent filed April 22, 2013, with the final contract to operate the FFRDC awarded to MITRE on September 24, 2014, about 17 months later. 

Appendix D. Requirements for Establishing an FFRDC

Establishing a new FFRDC requires the sponsoring organization (Commerce in this case) to satisfy the criteria laid out in the Federal Acquisition Regulations (48 CFR 35.017-2) for creating a new FFRDC.

These include:

The establishment of an FFRDC must follow the notification process laid out in 48 CFR 5.205(b). The sponsoring agency must transmit at least three notices over a 90-day period to the GPE (Governmentwide point of entry) and the Federal Register, indicating the agency’s intention to sponsor an FFRDC, and its scope and nature, requesting comments. This plan must be reviewed by the Office of Federal Procurement Policy (OFPP) within the White House Office of Management and Budget (OMB). 

A sponsoring agreement (described in 48 CFR 35.017-1) must be generated by Commerce for the new FFRDC. This agreement is required by regulations (48 CFR 35.017-1(e)) to last for no more than five years, but may be renewed. It outlines conditions for awarding contracts and methods of ensuring independence and integrity of the FFRDC. FFRDCs initiate work at the request of federal entities, which would then be approved by appropriate units within DOC. The proposed FFRDC should align its mission closely with Commerce and NIST, obtaining contracts from these sponsoring agencies that will determine its priorities. The FFRDC would hire top tier researchers who can both execute this research and provide bottom-up identification of important new research topics.

The FAIR in Education Act: Federal coordination to support responsible AI deployment

Artificial Intelligence (AI) has the potential to enhance education systems by personalizing student learning, providing real-time feedback, and streamlining administrative tasks to optimize teachers’ time and focus on instruction. AI, like other classroom technologies, can expand access to educational resources and when used properly, support student engagement. However, no long-term studies on the impacts of generative AI on student learning outcomes and the cognitive abilities of early learners exist and issues around algorithm transparency and data security persist. To meet these challenges, we propose a Framework for AI Responsibility (FAIR) in Education Act, a Governor’s Conference, and the establishment of a national center to support AI deployment in K-12.

Challenge and Opportunity

No Guardrails or Guidance 

Successful integration of classroom technologies relies on the availability and stability of infrastructure as well as the readiness of the end users. The United States AI Action Plan and Advancing Artificial Intelligence Education for American Youth Executive Order aim to promote streamlined pathways for AI adoption. However, neither provide any practical implementation guidance for the responsible deployment of AI in educational settings nor allocate funds to support the local infrastructure necessary. Current actions also fail to address longstanding concerns regarding data privacy, the establishment of guardrails to mitigate algorithm bias, and efforts to reduce the digital divide which are increasingly more important upon interactions with minors. 

AI competency is becoming a necessary skill for the future, much like knowing how to use a search engine effectively to navigate online information. Students who understand how AI works, its limitations, and its potential biases will be better equipped to navigate the technology driven world we live in. Establishing guardrails and guidance is not meant to restrict student access to AI, but aims to ensure students can use these tools safely and responsibly. Proper guardrails, transparency, and guidance allow students to leverage AI as a learning aid while minimizing risks to privacy, fairness, and well being. 

In the absence of guardrails and guidance, AI can increase inequities, introduce bias, spread misinformation, and risk data security. These negative impacts are often exacerbated in communities that are marginalized or economically disadvantaged. Simply put, the current posture towards AI puts the cart before the horse. The United States needs a better understanding of the impact of AI on student learning and clear guardrails before introducing it large-scale.  

More Data Needed 

Reeling from the impacts of the COVID-19 pandemic on student learning, such as learning loss and widening achievement gaps, the most recent National Assessment of Educational Progress asserts a clear decline in K-12 science, reading, and mathematics proficiencies compared to 2019. The results of the study will be used to inform educational reforms, however, educators and policymakers should be cautious in framing AI as the cure-all for America’s educational challenges. The promises of similar tech-driven advances foreshadow a likely failed result if the policy does not adapt accordingly .   

Currently, there are no federal guidelines that govern AI usage in the classroom and there are no longitudinal studies on AI’s impact on student learning and cognitive development.  Short-term studies have demonstrated that AI can have a positive effect on student learning, however, results are highly variable and context specific. In addition, there are significant risks, such as student overreliance on the technology, especially generative AI chatbots. Early learners are particularly at risk for negative impacts and it is unknown how AI use impacts deeper learning and information retention and synthesis. Studies indicate that  technology use among  school-aged children can negatively affect  attention spans, self-control, cognitive development, and problem-solving skills. Moreover, AI chatbots may pose psychological impacts or “empathy gaps” in children that are not well understood. Only recently has the Federal Trade Commission launched an inquiry into the impact of AI chatbots on children. We need more data on the long-term impacts of AI in the classroom in order to develop coherent policies that support educators and learners. 

These shortcomings do not imply that AI cannot have a place in the classroom. Instead it demonstrates that a comprehensive understanding of AI’s impact is necessary before its use is scaled up. Furthermore, algorithm transparency is paramount for minimizing bias, ensuring student psychological safety, and promoting data security. Organizations like TeachAI, acknowledge some of these risks and provide resources for schools and universities developing AI policy, however, there is still much to learn. 

Federal Support and Coordination are Paramount

Uncertainty around the future of federal support for education and education research is also a key challenge. The Department of Education (DoEd) is currently responsible for addressing national educational issues by setting federal policy, supporting equal access to education, protecting civil rights, collecting educational data, and analyzing trends. The DoEd also works to hold institutions and States accountable for educational outcomes.  The current administration, however, has a stated goal of abolishing the DoEd and sending those powers to States. While States should be empowered to support policy development and implementation, federal coordination and oversight is vital for protecting civil rights and understanding long-term national education trends. 

If the DoEd is abolished, it is uncertain what government agency would assume responsibility for the development, monitoring, and evaluation of educational standards at the precipice of the AI age. If States are tasked with this responsibility, it will require sustained financial federal support. Proposed cuts to the National Science Foundation (NSF) STEM Education Directorate and other STEM education federal funders would limit the ability for education researchers to effectively assess the impact of AI on the educational and psychological development of students or develop tools for the effective use of AI. 

Implementation Requires Community Involvement

While current federal initiatives are in place promoting the role of AI in education, their ultimate success depends on meaningful training experiences for educators and strong collaboration with State and local stakeholders. Federal frameworks, such as the April 2025 Advancing Artificial Intelligence Education for American Youth Executive Order (E.O. 14277), addresses the critical need to provide America’s youth with opportunities to cultivate AI competency, but it does not express the major value of having States and local districts leading the implementation effort to ensure that AI integration meets community needs, supports student achievement, and strengthens workforce development.

State and local communities could potentially draw on federal resources under this E.O. (if available) and work collaboratively with education-focused professional societies, such as the National Science Teachers Association (NSTA) and the Computer Science Teachers Association (CSTA) to help develop community-created standards, define clear metrics, and continuously evaluate what works within their specific contexts. Initiatives such as NSF’s EducateAI and the National AI Research Resource (NAIRR) offer curriculum models, research infrastructure, and other resources that can complement any locally developed approaches. These federal programs can also support collaborative networks among educators, researchers, and industry partners to share best practices and insights. However, realizing the full potential of these federal programs first requires providing teachers with professional development and training to use AI tools effectively and confidently in the classroom, because even the most advanced resources are only as impactful as the educators who apply and understand them.   

Recommendations

Framework for AI Responsibility (FAIR) in Education Act 

Congress should propose legislation on the responsible use of AI in education. This comprehensive act, known as the Framework for AI Responsibility in Education Act or the FAIR in Education Act, would support a large-scale study on the impact of AI on education, provide funding for education research, support State leadership in AI in education, require greater algorithm transparency for algorithms influencing minors, and provide infrastructure for ongoing monitoring and assessment of a community-centered implementation of AI technologies in the classroom. This legislation should address both K-12 use and higher education. 

First, the FAIR in Education Act should instruct the National Academies of Science, Engineering and Mathematics (NASEM) to conduct a study and report on the impact of AI in K-12 schools, higher education, and informal learning settings such as libraries and museums. This landscape study should address student learning, the impact on cognitive abilities, psychological impacts, the ethical use of AI, and provide recommendations for how the federal, state, and local governments can support AI literacy and teacher education. 

Next, the use of AI in the classroom raises several academic integrity and scientific integrity issues, including plagiarism, authorship and credit, accuracy, reliability of AI outputs, reproducibility, and data bias. The FAIR in Education Act should instruct the Committee on STEM Education (CoSTEM), a subcommittee of the National Science and Technology Council under Office of Science and Technology Policy (OSTP), to within 270 days of passage of the act provide guidance to assist educational institutions in thoughtfully updating their own definitions of academic integrity in light of AI and other technologies used in educational settings. This guidance would help institutions uphold ethical standards while enabling the responsible use of AI in learning and assessment. 

The Act should also require transparency in how AI algorithms used in education are trained, what data was used, and how the guardrails were tested. Educators should be aware of the design decisions and development processes that engineers made for the algorithms and how those decisions might affect the use of AI as a tool to enhance student learning. Such transparency will enable educators to guide students effectively in using AI as a learning tool, particularly supporting equitable outcomes among disadvantaged communities. 

The Act will direct federal funds to support the requisite infrastructure and security needed to safely use AI. There are examples from previous administrations of funding opportunities and convenings through the Federal Communications Commission (FCC) to support school district cybersecurity and the infrastructure required to support AI and high speed internet use. Additionally, the Act would support streamlined implementation of the Broadband Equity, Access, and Deployment Program to address high speed internet access across the country.

The responsible use of AI requires not only federal engagement, but State engagement as well. The FAIR in Education Act will require Federal, State, and local coordination on AI use in the classroom and facilitate continued monitoring and evaluation. The Act will also increase funding for teacher professional development, with emphasis on development and training for STEM fields. We envision these goals will be accomplished through the funding and development of a “Supporting Pedagogy and AI Readiness in K-12” (SPARK) Center, which will be informed by an inaugural country-wide Governor’s conference.

Governor’s Conference – State-Led Design of the SPARK Center

    The creation of the SPARK Center should be conducted in cooperation with state and local officials, as well as parents, educators, and students. The education system in the United States is heavily dependent on state and local government to provide leadership in the implementation of new initiatives or educational practices, and thus it is essential that they are involved in the decision making. To begin incorporating these essential voices, we recommend hosting a“Governor’s Conference” with a primary focus on AI in education, and specifically the community driven design of the SPARK Center. The National Governor’s Association (NGA) Center for Best Practices has a program area focused on K-12 education and previously led a Governor’s convening on a K-12 education agenda in 2023. NGA can utilize these existing networks to drive a new focus on the use of AI in education, and preparation and design of the SPARK Center.

    As of September 2025, thirty States have issued guidance on AI in Education. At the conference, Governors can share the successes and challenges of their current AI policies as they relate to education, engage in real-time conversations with teachers, students, and parents, and inspire policy action in States which may not yet have infrastructure in place to support the responsible deployment of AI in their own education systems. Attendees should include all state Governors (or their proxies, such as Secretaries of Education or people in similar positions), representatives from the American Federation of Teachers, the National Education Association, the Association of American Educators, the Superintendents Associations, possible NGOs such as the leadership from CSTA and NSTA, administrators of TeachAI, and relevant NSF funded researchers and academics conducting pedagogical studies on AI impacts on education and childhood development. In addition to representatives from state Governor offices, educators from local school districts must be an essential part of this process to garner buy-in and receive guidance from the final users. 

    The event organizer should consider the best way to integrate parent and student feedback into the outcomes of the conference, such as dedicating one day of the conference specifically to receive their feedback through Track 1.5 roundtables, or stakeholder prepared presentations. The goal of the conference is to create an opportunity for state governments to learn where there are insurmountable challenges in the deployment of AI in education for States to address independently, and where students could benefit from federal standardization of the U.S. approach. The outcome of the conference should lead to a deployable roadmap and fulsome design of the SPARK Center, including the accumulation of educational training resources for teachers and teachers associations. It could also lead to the percolation of new initiatives for the federal government, such as drafted federal guidelines for AI in K-12 education, a new country-wide grand challenge, or an increase in funding or resources provided to the States. It could also lead to the design of a new research and potential pilot projects conducted by the NGA’s Center for Best Practices. These are solely illustrative examples, and will ultimately be determined by the involved participants.

    A community-created approach, paired with federal resources, enables a two-way exchange in which federal guidance informs local practice, while lessons learned from schools will feed back into federal research, policy, and frameworks. This partnership will ensure AI is integrated responsibly, equitably, and effectively across the education system in America.

    Supporting Pedagogy and AI Readiness in K-12 (SPARK) Center 

    For AI to truly benefit classrooms, communities must create, establish, and embrace standards to help guide responsible AI use and effectiveness. These efforts, such as CSTA’s AI Learning Priorities,  will be bolstered through the establishment of the SPARK Center per the FAIR in Education Act. 

    To maximize AI benefits and minimize risks, AI use in the classroom must be guided by community-created standards. Education stakeholders including students, teachers, and families need to be involved with defining how AI is used in the classroom to ensure it aligns with local values, protects student data, and supports student-centered, teacher-facilitated learning. State and local leadership, creating essential policies for these standards, is critical in order to adapt practices to local contexts and to monitor effective classroom use. What works in one district or school may not work elsewhere; standards must be flexible and informed by the community stakeholders because a one-size-fits all approach will not work in every school across America.

    Effective AI use requires ongoing monitoring and evaluation. At a local level, schools should track learning outcomes, student experiences, teacher workload, and overall engagement and productivity with the technology. Feedback from students, teachers, and education stakeholders should be a part of every assessment monitoring and evaluation cycle to help improve AI adoption in the classroom. Implementing routine monitoring and evaluation cycles will enable schools to adjust AI practices, identify unintended consequences, and ensure AI is supporting the learning objectives established in the curriculum instead of creating new challenges in the classroom. 

    This work overall can be burdensome across teachers and school districts. If a community realizes that the deployment of AI in their educational infrastructure is not reaching anticipated goals, or potentially even causing unintended negative consequences across students, there are few places for educators to turn for answers. The SPARK Center will be designed to be a federally managed resource which manages the monitoring and evaluation capacities across the country, and compiles best practices for educators to pull from based on their analyses. Other functions of the center will be determined through a community-driven approach, and informed by a Governor’s Conference convened at the federal level.  

    Conclusion: Connecting Federal Support to Advance Community-Created Approaches

    AI has enormous potential to enhance teaching and learning but only if its adoption is guided by communities, led locally, and continuously monitored. By combining student-centered, teacher-facilitated classroom practices with State and local guidance and federal support, schools can ensure AI empowers both educators and students while safeguarding equity, ethics, and critical thinking. Federal support should strengthen these community centered approaches, providing resources and guidance without replacing local decision making. 

    The views contained in this memo reflect the personal views of the authors.

    Ending Rural Teacher Shortages: What Federal, State and Local Government Can Do

    Rural communities face unique barriers to providing every student with a well-rounded, excellent education. Chief among them are staffing shortages: rural communities often struggle to recruit and retain qualified teachers. Recent shifts to the federal policy landscape threaten to worsen this challenge. This memo recommends action steps for federal, state and district policymakers to end rural teacher shortages. 

    Challenge and Opportunity

    When I left my job as an elementary STEM teacher in rural North Carolina, I gave each of my students an envelope, pre-labeled with my family’s address, and told them to write me a letter with their good news. A year later, an envelope arrived from a student who wrote to tell me that he missed science class; he hadn’t had a science teacher all year. My heart sank, remembering his enthusiasm and interest in science, and knowing that a year without science class put him off track for more advanced courses later, courses he would need if he wanted to pursue a STEM major in college. 

    This is hardly a unique story. The Organisation for Economic Co-operation and Development (OECD) recently made headlines warning of an increasing teacher shortage crisis across the world. In the U.S., teacher shortages are a well-documented problem in certain subject areas and locations. In rural communities like the one where I taught, educator shortages are longstanding and to many, feel intractable. 

    What do we know about rural teacher shortages? 

    Rural schools serving low-income students and those serving mostly students of color have the highest rates of teacher turnover nationally–markedly higher than schools serving similar groups of students in urban and suburban areas. 

    A 2020 study of California school districts found that rural districts posted an additional twelve teacher vacancies for every 100 teachers compared to their urban counterparts. These rural California districts also struggled more to fill vacancies with qualified staff, hiring twice as many emergency certified educators. 

    And while this pattern may not be consistent across all rural communities, rural schools appear to struggle more with the impact of shortages. In the 2023-2024 school year, a national sample of rural school administrators actually reported lower rates of teacher vacancies than non-rural schools: 69% of rural schools said they were fully staffed compared to 56% of all public schools reporting. But rural schools in this same survey who experienced vacancies were more likely to report that they impacted the day-to-day experience of students and teachers.

    Rural schools struggle to recruit educators, with fewer applicants and fewer qualified candidates, and fewer teacher preparation programs nearby from which to recruit teacher candidates. Teacher preferences may work against rural schools’ efforts to recruit from outside the community: national research shows that teachers are more likely to teach within fifteen miles of their hometown, and by virtue of smaller local populations, administrators have a smaller pool of candidates to draw from who fit that profile. Instead, rural schools often find themselves working against the grain of teacher preferences, recruiting from outside of rural communities. 

    Recruiting from outside the community presents its own share of challenges, and for these and other reasons, rural schools also struggle to retain teachers. New research studying rural teacher mobility between 1987 and 2018 found that rural teacher shortages across the country were driven much more by turnover than by other causes that are often responsible for open positions (such as retirement, or growing student enrollment). Teachers were over twice as likely to move out of rural schools and to urban or suburban schools as they were to move from urban or suburban schools to rural schools.

    Non-rural schools may be able to offer some benefits and resources that rural schools cannot, but compensation may not be the main reason educators are leaving rural schools. While thirty-four percent of teachers who left rural schools did cite salary and benefits as their reason for leaving, the most significant reported causes of rural teacher turnover had to do with school culture and working conditions, particularly issues with school leadership.

    Plan of Action

    In the face of these challenges, rural schools have tremendous assets to draw on in building, hiring and retaining a strong teaching workforce. For local community members in small rural labor economies, teaching can be an attractive job, particularly to community members who don’t want to leave to access economic opportunity. Rural schools that have cultivated positive, close-knit relationships to their school communities can also be attractive to teachers looking for a supportive environment, and many rural schools offer the chance to live in a small, interconnected community with access to nature and affordable cost-of-living.

    But rural schools can’t do it alone. In order to leverage these assets and end teacher shortages, local, state and federal leaders play a critical role. What can leaders at each level of government do to end teacher shortages? We recommend action at the district and school, state, and federal levels.

    Recommendation 1. District and School-Level Actions to Attract and Retain Teaching Talent 

    Identify your school community’s strongest assets: what attracts teachers to teaching in your community? Use these as a starting point to inform your recruitment strategy.

    Gather data to find the root causes of teacher recruitment and retention issues in your community, and design your teacher recruitment and retention strategy based on these root causes. If your state does not offer a shared teacher exit survey, districts can use their own exit surveys to gather data on teachers’ reasons for leaving, and use that data to narrow in on solutions. Alaska’s Lower Kuskokwim School District, for example, has historically struggled to recruit and retain new teachers, and wanted to know why educators were leaving. As part of a Regional Education Laboratory (or REL)-supported project, the district used exit survey data to identify substandard educator housing (which is provided by the district to educators at a subsidized rate) as a key barrier to working conditions, and has since partnered with a local vocational education program to build additional housing for educators. 

    A critical step in this process is gathering and monitoring data and pivoting when solutions are not having their intended impact. For example, many rural districts have turned to four-day school weeks in the hope of solving a host of challenges, including teacher shortages, budget shortages and long student commute times. But early evidence suggests that four-day school weeks are not having the intended impact on teacher recruitment and retention, and in fact, may result in additional turnover. Armed with this evidence, districts can adjust course. 

    Put current students’ and local community members on a path to become educators and school staff. While recruiting from outside the community may still be necessary in the short and medium term, preparing the next generation of local communities for jobs that allow them to stay in the community provides a benefit to both current and future students. Grow-Your-Own programs and high school pipeline programs into teaching jobs are a powerful potential tool. As part of regular reporting, publish data on program outcomes. 

    Share teachers (and services) across districts. For the hardest to staff roles and roles where student enrollment is too low to support a full-time teacher in a certain subject area, rural districts can work together in cross-district consortia to share access to courses–sometimes virtually, sometimes in person. Some districts also use this shared services model to provide professional learning to educators.

    Recommendation 2. State Actions to Support Rural Teacher Recruitment and Retention

    Target solutions based on demonstrated staffing shortages. Too often, states fund one-size-fits-all solutions to teacher shortages that direct limited resources too broadly, often to roles that schools don’t actually struggle to fill, or to schools that don’t have any shortage of qualified applicants. Prioritizing the highest-need areas is especially critical when working with limited resources: with a limited amount of money, a state can do more to solve teacher shortages by targeting incentives to the teacher roles where they are most needed. Both Alaska and Colorado, for example,provide incentives to teacher preparation candidates to teach in rural schools.

    Fund educator pipeline programs targeted to rural communities with demonstrated shortages. States have made significant recent investments in Registered Apprenticeship, Grow Your Own, post-baccalaureate and high school pipeline programs to recruit and train new teachers. States can prioritize rural districts with demonstrated shortages to pilot and expand these programs. Ensure timely evaluation and publication of outcomes for these programs.

    Fund rural schools fairly. Rural districts have lower enrollment, face higher overall costs to deliver student services, can’t reduce costs through economies of scale, and have fewer local resources in the form of local tax dollars and ability to levy local bonds. Rural districts rely more on state and federal funds for this reason, and state education funding formulas are critical to ensure rural schools have enough money to provide critical services. To ensure local schools can fund competitive salaries and support recruitment and retention initiatives, states should evaluate whether or not their current funding formulas are sufficient to meet rural schools’ needs. 

    States nationwide have taken this on, with Utah recently revising its school funding formula to provide rural schools up to 1.5 times the per-pupil funding rate of non-rural schools. Both Wisconsin and Massachusetts provide schools with supplemental aid specifically for rural schools; Wisconsin’s program has made a demonstrated impact on rural students’ college enrollment and completion. 

    Some states are committing new state money directly to educator salaries, working to close the gap between rural and non-rural districts. In 2023, Arkansas funded a statewide raise of the state’s minimum teacher salary from $36,000 to $50,000, and provided all K-12 public educators with a raise of at least $2,000. Research from the first year of implementation found that it had substantially increased funding for both rural and urban schools. Rural schools, which had provided average starting pay of $2,400 less than urban districts, cut that gap to $48 in the initiative’s first year. 

    Give districts the flexibility to share staff and resources. Increasingly, rural school districts are working across districts to share limited staff and resources. Forming local consortia, districts may give students the opportunity to enroll in advanced or specialized coursework across districts. States can ensure that state policy reduces barriers to this approach; Texas, for example, passed state legislation to remove barriers to this approach and support growth through a new Rural Pathway Excellence Partnership Program, which currently serves ten consortia made up of thirty rural districts. Massachusetts’ Rural School Aid Program specifically prioritizes district spending to “increase regional collaboration, consolidation, or other strategies to improve long-term operational efficiency and effectiveness.”

    Provide access to virtual courses. When rural districts cannot hire enough teachers or muster enough students to provide specialized or advanced courses, states can also work creatively to provide access to these courses statewide. Montana’s legislature created the Montana Digital Academy, which has provided statewide access to virtual courses since 2009. The classes, taught by certified Montana educators, ensure that students anywhere in the state (which boasts the most one-room schoolhouses of any state), can take Advanced Placement, dual enrollment and specialized courses like Indigenous Languages or Artificial Intelligence.

    Gather and publish the data to better understand shortage patterns. States should give themselves, districts and the public the ability to understand shortage patterns at a detailed level, including by rurality. States should collect data that allows leaders to understand, at a minimum, how rural schools are experiencing shortages:

    Gather data on teachers’ reasons for leaving through statewide teacher working conditions surveys and exit surveys for departing teachers. Systematize this data by requiring collection at the state level through a single survey, deliver data back to district and schools, and provide facilitated opportunities to analyze data and act on feedback. Publish disaggregated data by rurality to understand the unique issues facing rural schools. Tennessee’s statewide teacher working conditions survey, for example, provides detailed statewide data on teachers’ and administrators perspectives on working conditions year over year; the survey’s research partner published analysis of results for rural schools.

    Recommendation 3. Federal Actions to Support Rural School Funding and Success

    Maintain access to federal education funds that rural schools rely on to support teachers. Federal funds are a critical source of funding for rural schools, who rely on them for a host of core functions, including many that directly support teachers: paying salaries, providing supportive professional learning, and funding innovative approaches to recruit new teachers. As the Trump administration has impounded allocated funds, released promised formula funds late, proposed cutting funds for future budget years, and abruptly begun moving funding programs to other agencies that lack the capacity or expertise to run them, rural schools have been left to plan for the worst. This has created an atmosphere of chaos and uncertainty, leaving rural schools struggling to plan ahead for the months and years ahead. (For more on how cuts to these programs impact rural schools, see the table, “Using federal education funds to end rural teacher shortages.”)

    Increase access to discretionary grant funding by including rural schools in the Secretary of Education’s Supplemental Priorities. Rural schools often struggle to apply for and effectively compete for discretionary federal grants that could be used to support teacher recruitment and retention. With a Supplemental Priority, the Secretary could ensure rural schools are prioritized in future grant competitions. 

    Release guidance on how federal funds can be blended and braided to end teacher shortages. The Department of Education has historically provided a wide range of federal funds that can be used in concert to fund teacher recruitment and retention strategies; it is critical to maintain access to these funds. If, in the future, the Department’s role in funding and providing technical assistance to states is restored, the agency could work to ensure that more schools are making strategic investments to meet their goals around the teacher workforce. The Department could provide guidance to states and districts highlighting how schools have successfully brought these funding streams, along with state, local and philanthropic dollars, together to end teacher shortages. For more on current funding sources that states and districts can use to solve teacher shortages, and how cuts to these programs will impact rural schools, see the table, “Using federal education funds to end rural teacher shortages.” 

    Build a real-time national teacher labor market data system. Currently, very little detailed, timely data exists to understand the national landscape of teacher hiring and persistent vacancies. The Department of Education should spearhead a collaboration between the National Center for Education Statistics (NCES) and the Department of Labor’s Bureau of Labor Statistics (BLS) to provide better national teacher labor market data. States and local communities would be able to use this data to support secondary research to understand where rural communities are having success in lowering teacher vacancies and where others are struggling. Research suggests that the prevalence of rural teacher shortages may vary by state, and the field would benefit from understanding why. 

    Build the evidence base for teacher recruitment and retention practices, and fund rural-specific research. Much of the research on effective practices for attracting and retaining teachers does not specifically test the effectiveness or implementation challenges of a specific intervention in rural contexts. The federal government has an important role to play in funding action-oriented research to solve these urgent problems. At a minimum, it is critical that Congress continue to invest in programs like the Department’s Education Innovation Research grants (which include a specific priority for rural research).

    Using federal education funds to end rural teacher shortages 

    A range of federal education funds can be used to combat rural teacher shortages, including, but not limited to:

    For rural school serving high populations of Native students, the following funds can also be used:

    Access to the funds listed here have been threatened by the Trump administration, through revoking current awards (such as Teacher Quality Partnership Grants), proposed cuts to future spending, and proposed consolidation of funding streams into block grants to states at drastically lower funding levels (such as REAP and Title II, Part A). At the same time, the administration has begun to transfer administration of many of the programs above to other agencies, which are ill-equipped to quickly stand up complex programs that send billions to states and districts nationwide. In the wake of these disruptions and potential cuts, rural schools will have little support available from the federal government to solve critical teacher shortages, and will likely face worsening challenges in an increasingly strapped budget environment. 

    Conclusion 

    The impact of teacher shortages impacts hundreds of thousands of young people like my former student each day–students who may go a whole year without a certified teacher, or graduate high school without ever having access to the advanced classes that unlock their future aspirations. Rural students of color and those living in high-poverty rural areas bear the brunt of this long-standing problem. 

    States, districts and the federal government each have a critical and distinct role to play in supporting rural schools. And while rural schools are used to being scrappy and doing more with less, without state and federal support, districts will be hard-pressed to close teacher workforce gaps on their own. 

    A Digital Public Infrastructure Act Should Be America’s Next Public Works Project

    The U.S. once led the world in building railroads, highways, and the internet. Today, America lags in building the digital infrastructure foundation that underpins identity, payments, and data. Public Digital systems should be as essential to daily life as roads and bridges, yet America’s digital foundation is fractured and incomplete.

    Digital public infrastructure (DPI) refers to a set of core and foundational digital systems like identity, payments, and data exchange that makes it easier for people, businesses, and governments to securely connect, transact, and access services. 

    DPI consists of interoperable, open, and secure digital systems that enable identity verification, digital payments, and data exchange across sectors. Its foundational pillars are Digital Identity, Digital Payments, and Data Exchange, which together provide the building blocks for inclusive digital governance and service delivery. DPI acts as the digital backbone of an economy, allowing citizens, governments, and businesses to interact seamlessly and securely.

    America’s current digital landscape is a patchwork of systems across states, agencies and private companies, and misses an interoperability layer. This means fragmented identity verification, uneven instant payment networks, and siloed data exchange rules and mechanisms. This fragmentation not only frustrates citizens but also costs taxpayers billions, leads to inefficiency and fraud. This memo makes the case that the United States needs sweeping legislation– a Digital Public Infrastructure Act— to ensure that the nation develops a coherent, secure, and interoperable foundation for digital governance. 

    Challenges and Opportunities 

    Around the world, governments are investing in digital public infrastructure to deliver trusted, inclusive, and efficient digital services. In contrast, the United States faces a fragmented ecosystem of systems and standards. This section examines each pillar of digital public infrastructure, digital identity, digital payments, and data exchange, highlighting leading international models and what institutional and policy challenges the U.S. must address to achieve a similarly integrated approach.

    Fragmented and non-interoperable Digital Identities

    Digital Identity. The U.S. has no universal digital identification system. Proving who you are online often relies on a jumble of methods like scanning driver’s licenses, giving your social security number, or one-off logins. Unlike many countries with national e-ID schemes, the U.S. relies on the REAL ID law which sets higher standards for physical driver’s licenses, but it provides no digital ID or consent mechanism for online use. Just under half of U.S. states have rolled out some form of mobile driver’s license (mDL) or digital ID, and each implementation is largely unique.

    Federal agencies have tried to streamline login with services like Login.gov, yet many agencies still contract separate solutions (Experian, ID.me, LexisNexis, Okta, etc.), leading to duplication. The Government Accountability Office recently found that two dozen major agencies use a mix of at least five different identity-proofing providers. The result is an identity verification landscape that is inconsistent and costly, both for users and the government.

    Fragmented Digital Payment Infrastructure

    Digital Payments. The United States still lags in offering universal, real-time payments accessible to all. The payments landscape is highly fragmented, with multiple systems operated by both public and private entities, each governed by distinct rule sets. The Automated Clearing House (ACH) network is the batch-based system that processes routine bank-to-bank transfers such as salaries, bill payments, and account debits or credits. It is co-run by the Federal Reserve (FedACH) and The Clearing House (EPN) under Nacha rules and settles with delay. The Real-Time Payments (RTP) network is an instant 24/7 credit-push system that moves money within seconds through a prefunded joint account at the Federal Reserve Bank of New York. It was launched by The Clearing House in 2017 and is governed by its private bank owners.

    In 2023, the Federal Reserve launched FedNow, the first publicly operated real-time payment rail in the United States, offering instant settlement through banks’ Federal Reserve master accounts. Card networks such as Visa, Mastercard, Amex, and Discover continue to operate proprietary systems, while peer-to-peer platforms like Zelle, Venmo, and CashApp run closed-loop schemes that often rely on RTP for back-end settlement. Because these systems differ in ownership, governance, settlement models, and liability frameworks, they remain largely non-interoperable. A payment sent through RTP cannot be received on FedNow, and card or wallet systems do not seamlessly connect to ACH or instant payment rails. 

    FedNow operates as a real-time gross settlement (RTGS) infrastructure, enabling participating banks and credit unions to send and receive instant payments around the clock. Its design is infrastructure-centric: the Federal Reserve provides the back-end rail, while banks must opt in, build their own consumer interfaces, and set transaction fees and rules. The system does not define standardized public APIs, merchant QR systems, or interoperable consumer applications. These layers are left to the market. Its policy intent centers on efficiency and resilience in interbank payments rather than universal inclusion or open access.

    Examples of Complete Public Payment Ecosystems

    By contrast, India’s Unified Payments Interface (UPI) and Brazil’s Pix were designed as full digital public infrastructures that combine settlement, switching, and retail layers within a single public framework. Both are centrally governed, with UPI managed by the National Payments Corporation of India under Reserve Bank of India oversight and Pix managed by the Central Bank of Brazil. They enforce mandatory interoperability across all banks, wallets, and payment apps through open API standards. Their architecture integrates digital identity, authentication, and consent layers, allowing individuals and merchants to transact instantly at zero or near-zero cost.

    While FedNow provides the plumbing for real-time settlement among banks, UPI and Pix function as complete public payment ecosystems built on open standards, public governance, and inclusion by design. Real-time payment systems in India (UPI), Brazil (Pix), and the United Kingdom (Faster Payments) now process far higher transaction volumes than their U.S. counterparts, reflecting how deeply these infrastructures have become embedded in daily economic activity.

    Credit: fxcintel.com

    This fragmented payment ecosystem became painfully apparent during COVID-19: some people waited weeks or months for stimulus and unemployment checks, while fraudsters exploited the delays. Only in 2025 did the Treasury Department finally announce it will stop issuing paper checks for most federal payments, to reduce delays, fraud, and theft.

    Clearly, the U.S. needs a more cohesive approach to instant, secure payments, from Government-to-Person (G2P) benefits to Person-to-Government (P2G) tax payments and everyday Person-to-Person (P2P) transactions.

    Data Exchange. Americans routinely encounter data silos and repetitive paperwork when interacting with different sectors and agencies. Each domain follows its own regulatory and technical standards. Health records are governed by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Trusted Exchange Framework and Common Agreement (TEFCA) established under the 21st Century Cures Act of 2016. Financial data are protected by the Gramm–Leach–Bliley Act of 1999 (GLBA) and will soon fall under the Consumer Financial Protection Bureau’s proposed Personal Financial Data Rights Rule (Section 1033, Dodd–Frank Act). Tax and education data are separately governed by the Internal Revenue Code and the Family Educational Rights and Privacy Act of 1974 (FERPA).

    There is no unified, citizen-centric protocol for individuals to consentingly share their data across sectors. For example, verifying income for a mortgage, student loan, or benefits application might require three separate data pulls from the IRS or employer, each with its own process. In healthcare, TEFCA is creating a nationwide data-sharing framework but remains voluntary and limited to medical providers. In finance, Europe’s PSD2 Open Banking Directive (2018) forced banks to open consumer data via APIs, while the United States is only beginning similar steps through the CFPB’s data portability rulemaking. Overall, data-sharing rules remain sector-specific rather than citizen-centric, making it difficult to “connect the dots” across domains.

    Data Protection. The United States follows a fragmented, sectoral approach to data protection rather than a single, unified framework. Health information is covered by HIPAA (1996), financial data by GLBA (1999), student records by FERPA (1974), and children’s online data by the Children’s Online Privacy Protection Act (COPPA, 1998).

    States have layered on their own privacy laws, most notably the California Consumer Privacy Act (CCPA, 2018) and the California Privacy Rights Act (CPRA, 2020). At the federal level, the Federal Trade Commission (FTC) fills gaps using its authority to regulate “unfair or deceptive practices” under Section 5 of the FTC Act (15 U.S.C. §45). However, there remains no nationwide baseline for consent, portability, or deletion rights that applies uniformly across all sectors.

    An illustration from 2021 by the New York Times shows the picture very well.

    Credit: Dana Davis

    Recent efforts in Congress, including the proposed American Data Privacy and Protection Act (ADPPA, 2022) and the American Privacy Rights Act (APRA, 2024), sought to create a comprehensive federal framework for data privacy and user rights. APRA built on ADPPA’s foundations by refining provisions related to state preemption, enforcement, and individual rights, proposing national standards for access, correction, deletion, and portability, and stronger obligations for large data holders and brokers. It also envisioned expanded enforcement powers for the FTC and state attorneys general, along with a limited private right of action.

    Despite initial bipartisan attention, APRA has not secured sustained bipartisan support and remains stalled in Congress. The bill was jointly introduced in 2024 by the Republican Chair of the House Energy and Commerce Committee and the Democratic Chair of the Senate Commerce Committee, reflecting early cross-party interest. However, Democratic support weakened after language addressing civil-rights protections and algorithmic discrimination was removed, prompting several members to withdraw backing (Wired, 2024). As a result, the legislation has not advanced beyond committee referral, leaving the United States reliant on a patchwork of sector-specific and state-based privacy laws.

    The outcome is a system where Americans face both fragmented data exchange and fragmented data protection, undermining trust in digital public services and complicating any transition toward a citizen-centric digital infrastructure.

    The High Cost of Fragmentation

    This patchwork system isn’t just inconvenient; it also bleeds billions of dollars. When agencies can’t reliably identify people, deliver payments quickly, or cross-check data, waste and fraud increase. Here are just a few examples:

    Improper Payments. In FY2023 the federal government reported an estimated $236 billion in improper payments. That astronomical sum (almost a quarter-trillion dollars) stemmed from issues like payments to deceased or ineligible individuals and clerical errors. In fact, over 74% of the improper payments were overpayments The largest drivers included Medicare/Medicaid billing mistakes and identity-verification failures in pandemic relief programs. For example, the Pandemic Unemployment Assistance program alone saw an increase of $44 billion in erroneous payments, as identity thieves and imposter claims slipped through weak verification checks. While not all improper payments can be eliminated, a significant portion, GAO notes, can be eliminated. The biggest share of improper payments results from documentation and eligibility verification weaknesses, not intentional fraud. All errors could be reduced with better digital identity and data sharing systems.

    Identity Theft and Fraud. American consumers are suffering a wave of identity-related fraud. In 2023, the Federal Trade Commission received over 1 million reports of identity theft such as credit cards opened in another person’s  name or fraudsters hijacking unemployment benefits. Identity theft now accounts for about 17% of all consumer fraud reports. The surge during the pandemic (when government aid became a target) showed how criminals exploit weak ID verification. State unemployment systems, for instance, paid out a significant sum to fraudsters who used stolen identities. Strengthening the digital ID infrastructure in U.S. could curb these losses by catching imposters before payments go out.

    Administrative Overhead. Fragmentation forces each agency and company to reinvent the wheel, at great expense. Consider identity proofing: federal agencies spent over $240 million from 2020–2023 on contracts for login and ID verification solutions, much of it to third-party vendors, despite overlapping functionality. States and private institutions likewise pour resources into redundant systems for onboarding and verifying users. Processing paper documents and manual checks adds further costs and an indirect cost of time and frustration for citizens. A GAO report noted that agencies have widely varying systems and that a coordinated digital identity approach could improve security and save money. In short, the lack of shared public digital infrastructure means higher costs and slower service across the board.

    Plan of Action 

    What would a Digital Public Infrastructure Act do?

    It’s clear that the status quo isn’t working. The U.S. needs a Digital Public Infrastructure (DPI) Act, a comprehensive federal law that would build the rails and rules for secure, efficient digital interactions nationwide. Just as past Congresses invested in highways and the internet itself, Congress today should invest in core digital systems to serve as public goods. A DPI Act could establish three pillars in particular:

    Federated, Privacy-preserving Digital Identity

    A secure digital ID that Americans can use (voluntarily) to prove who they are online, without creating a centralized “Big Brother” database. This would be a federated system, meaning you could choose from multiple trusted identity providers. For example, you could share your identification with your state DMV, the U.S. Postal Service, or a certified private entity, all adhering to common standards. The federated system must follow the latest NIST digital identity guidelines for security and privacy (e.g. NIST SP 800-63) to ensure high Identity Assurance Levels.

    Crucially, it should be privacy-preserving by design: using techniques like encrypted credentials and pairwise pseudonymous identifiers so that each service you log into only sees a unique code, not your entire identity profile. A federated approach would leverage existing ID infrastructures (state IDs, passports, social security records) without replacing them. Instead, it links and elevates them to a digital plane.

    Under a DPI Act, an American citizen might verify their identity once through a trusted provider and then use that digital credential to access any federal or state service, open a bank account, or consent to a background check, with one login. This approach can dramatically reduce fraud (no more 5 different logins for 5 agencies) while protecting civil liberties by avoiding any single centralized ID database. The Act could establish a national trust framework (operating under agreed standards and audits) so that a digital ID issued in, say, Colorado is trusted by a bank in New York or a federal portal, just as state driver’s licenses are mutually recognized today. Done right, a digital ID saves time and protects privacy: imagine applying for benefits or a loan online by simply confirming a verified ID attribute (e.g. “I am Alice, over 18 and a U.S. citizen”) rather than scanning and emailing your driver’s license to unknown clerks.

    Universal, Real-time Payments (G2P, P2G, P2P)

    The DPI Act should ensure that instant payment capability becomes as ubiquitous as email. This likely means leveraging FedNow, the Federal Reserve’s new instant payment rail, and expanding its use. For Government-to-Person (G2P) payments, Congress could mandate that federal disbursements (tax refunds, Social Security, veterans’ benefits, emergency relief, etc.) use a real-time option by default, with an ACH or card fallback only if a recipient opts out.

    No citizen should wait days or weeks for funds that could be sent in seconds. The same goes for Person-to-Government (P2G) payments: taxes, fees, and fines should be payable instantly online, with immediate confirmation. This reduces float and uncertainty for both citizens and agencies. Finally, Person-to-Person (P2P): while the government doesn’t run private payment apps, a robust public instant payments infrastructure can connect banks of all sizes, enabling truly universal P2P transfers. This way, someone at Bank A can instantly pay someone at Credit Union B without needing both to join the same private app.

    FedNow, as a public utility, is an important player, but the Act could incentivize or require banks to join so no institution is left behind. The result would be a seamless national payments system where money moves as fast as email, enabling things like on-demand wage payments, rapid disaster aid, and easier commerce.

    Cross-sector, Consent-based Data Exchange

    The third pillar is perhaps the most forward-looking: creating standard protocols for data sharing that put individuals in control. Imagine a secure digital pipeline that lets you, the citizen, pull or push your personal data from one place to another with a click – for instance, authorizing the IRS to share your income info directly with a state college financial aid office, or allowing your bank to verify your identity by querying a DMV record (with your consent) instead of asking you to upload photos or scans.

    A DPI Act can establish an open-data exchange framework inspired by efforts like open banking and TEFCA, but broader. This framework would include technical standards (APIs, encryption, logging of data requests) and legal rules (what consents are needed, liability for misuse, etc.) to enable “tell us once” convenience for the public. 

    Importantly, it must be consent-based: your data doesn’t move unless you approve and authorize it.It can let you carry digital attestations i.e. driver’s license, vaccination, veteran status, etc. on an e-wallet and share just the necessary bits with whoever needs to know. Some building blocks already exist: the federal Office of the National Coordinator for Health IT (ONC) is working on health data interoperability through TEFCA (so hospitals can query each other’s records), and the Consumer Financial Protection Bureau has begun rulemaking to give bank customers the right to share their financial data with third-party apps.

    A DPI Act could unify these efforts under one umbrella, extend them to other domains, and fill in the gaps (for instance, enabling portable eligibility, if you qualify for one program, easily prove it for another). It could establish a governance entity or standards board to oversee the trust frameworks needed. Crucially, this must be accompanied by strong privacy and security measures like audit trails, encryption, and an emphasis that individuals can see and control who accesses their data. An example of this is how the EU wallet provides a dashboard for users to review and revoke data sharing.

    The Digital Public Infrastructure Act would not necessarily build each piece from scratch but set national standards and provide funding to knit them together. It could, for example, direct NIST and a multi-agency task force to implement a federated ID by a certain date (building on Login.gov’s lessons), require the Treasury and Federal Reserve to ensure every American has a route to instant payments across platforms (leveraging FedNow), and authorize pilot programs for cross-sector data exchange in key areas like social services.

    Precedent for such an approach already exists in bipartisan efforts:

    Navigating Roadblocks: Federalism, Privacy, and Tech Contractors

    Enacting a U.S. Digital Public Infrastructure Act will face several real challenges. It’s important to acknowledge these roadblocks and consider strategies to overcome them:

    Federalism and Decentralized Authority

    Unlike many countries where a central government can launch a national ID or payments platform by decree, the U.S. must coordinate federal, state, and local authorities. Identity in the U.S. is traditionally a state domain (driver’s licenses, birth certificates), while federal agencies also issue identifiers (Social Security numbers, passports). A DPI solution must respect these layers. States may fear a federal takeover of their DMV role, and agencies might guard their IT turf. Solution: design the system as a federation of trust. The Act could explicitly empower states by providing grants for states to upgrade to digital driver’s licenses (the Improving Digital Identity Act proposed in 2022 did exactly this, offering grants for state DMV mobile IDs). It could also create a governance council with state CIOs and federal officials to jointly set standards.

    Civil Liberties and Privacy Concerns

    Any mention of a “digital ID” in America raises eyebrows about Big Brother. Civil liberties advocates will rightly question how to prevent government overreach or mass surveillance. The Act should incorporate privacy by design provisions e.g., require minimal data collection, mandate independent audits for security, and give users legal rights over their data. One promising approach is using decentralized identity technologies, where your personal data (like credentials) stay mostly on your device under your control, and only verification proofs are shared. Also, the law can explicitly forbid certain uses, for instance, prohibit law enforcement from fishing through the digital ID system without a warrant, or forbid using the digital ID for profiling citizens. Including groups like the ACLU and EFF in the drafting process could help address concerns early. It’s worth noting that privacy and security can actually be enhanced by a good digital ID: today, Americans hand over copious personal details to random companies for ID checks (e.g. scan of your driver’s license to rent an apartment, which might sit in a landlord’s email forever). A federated ID could reduce exposure by only transmitting a yes/no verification or a single attribute, rather than a photocopy of your entire ID. Conveying that narrative, that this can protect people from identity theft and data breaches, will be key to overcoming knee-jerk opposition. Still, robust safeguards and perhaps a pilot phase to prove the concept will be needed to convince skeptics that a U.S. digital identity won’t become a surveillance tool.

    Incumbent Resistance (Big tech and Contractors)

    There are vested interests in the current disjointed system. Large federal IT contractors and identity verification vendors profit from selling agencies one-off solutions; big tech companies dominate payments and data silos in the status quo. A unified public infrastructure could be seen as competition or a threat to some business models. For example, if a free government-backed digital ID becomes widely accepted, companies like credit bureaus (which sell ID verification services) or ID.me might lose market share. If open-data sharing is mandated, banks that monetize data might push back. The solution is to engage industry so they can find new opportunities within the ecosystem. Many banks, for instance, actually support digital ID because it would cut fraud costs for them. The banking industry has been calling for better ID verification to fight account takeover and synthetic identities. In fact, a coalition of financial institutions endorsed the earlier Improving Digital Identity legislation.

    Fintechs will favor Digital Public Infrastructure (DPI) because it transforms customer acquisition from a slow, expensive manual process into an instant, low-cost digital utility. By plugging into standardized government layers for identity (e-KYC) and data sharing (Account Aggregators), fintechs can instantly verify and underwrite users who lack traditional credit histories. This allows them to scale rapidly and profitably serve millions of previously “unbanked” customers by making lending decisions based on real-time data rather than rigid credit scores.. The Act can create a public-private task force (as earlier bills proposed) to hash out implementation. For government contractors, the reality is that building DPI will still require significant IT work, just more standardized. Contractors who adapt can win contracts to build the new infrastructure.

    Political Will and Public Perception

    DPI can be a bipartisan win if framed correctly.

    For conservatives and fiscal hawks: emphasize the anti-fraud, waste-cutting angle. Stopping improper payments (recall that $236B figure!) and preventing identity theft aligns with the goal of efficient government. The Act  essentially plugs leaky buckets, something everyone can get behind.

    For liberals and tech-progressives: emphasize equity and empowerment. How digital infrastructure can help the unbanked access financial services, ensure eligible people aren’t left out of benefits, and give individuals control of their own data (a pro-consumer, anti-monopoly stance). Indeed, digital public goods are often framed as a way to ensure big tech doesn’t exclusively control our digital lives.

    The key will be avoiding hot button mis-framings: this is not a surveillance program, not a national social credit system, etc. It’s an upgrade to basic government digital infrastructure. One strategy is to start with pilot programs and voluntary adoption to build trust. For example, the Act could fund a pilot in a few states to link a state’s digital driver’s license with federal Login.gov accounts, showing a working federated ID in action. Or pilot using FedNow for a chunk of tax refunds in one region. Early successes will create momentum and help refine the approach. Champions in the Congress will need to communicate that this is infrastructure in the truest sense: just as U.S. needed electrification and interstate highways, it now needs the digital equivalent to keep America competitive and secure.

    Conclusion

    A Digital Public Infrastructure Act represents more than a technical upgrade; it is an investment in America’s institutional capacity. The challenges the U.S. faces today like identity theft, improper payments, slow benefit delivery, and fragmented data governance are the predictable consequences of an outdated public digital foundation that has never been treated as national infrastructure. Just as the interstate highway system knit together the physical economy, and just as the early internet created the backbone for the digital economy, the United States now needs a unified, secure, and interoperable set of digital rails to support the next era of public service delivery and economic growth.

    Unlike centralized systems elsewhere in the world, the American version of DPI would be federated, privacy-preserving, and deeply respectful of federalism. States would remain primary issuers of identity credentials. Private innovators would continue to build consumer-facing services. Federal agencies would govern standards rather than run monolithic platforms. This hybrid model plays to America’s institutional strengths such as distributed authority, competitive innovation, and strong civil liberties protections.

    Congress must enact a Digital Public Infrastructure Act, a recognition that the government’s most fundamental responsibility in the digital era is to provide a solid, trustworthy foundation upon which people, businesses, and communities can build. America has done this before when it built the railroads, electrified the nation, and invested in the early internet. The next great public works project must be digital.

    Increasing the Value of Federal Investigator-Initiated Research through Agency Impact Goals

    American investment in science is incredibly productive. Yet, it is losing trust with the public, being seen as misaligned with American priorities and very expensive. To increase the real and perceived benefit of research funding, funding agencies should develop challenge goals for their extramural research programs focused on the impact portion of their mission. For example, the NIH could adopt one goal per institute or center “to enhance health, lengthen life, and reduce illness and disability”; NSF could adopt one goal per directorate “to advance the national health, prosperity and welfare; [or] to secure the national defense”. Asking research agencies to consider person-level or economic impacts in advance helps the American people see the value of federal research funding, and encourages funders to approach the problem holistically, from basic to applied research. For almost every problem there are different scientific questions that will yield benefit over multiple time scales and insight from multiple disciplines. 

    This plan has three elements: 

    1. Focus some agency funding on measurable mission impacts 
    2. Fund multiple timescales as part of a single plan
    3. Institutionalize the impact funding process across science funders

    For example, if NIH wanted to reduce the burden of Major Depression, it could invest in a shorter time frame to learn how to better deliver evidence-based care to everyone who needs it. At the same time, it can invest in midrange work to develop and test new models and medications, and in the decades-long work required to understand how the exosome influences mood disorders. A simple way to implement this approach would be to build on the processes developed by the Government Performance Results Act (GPRA), which already requires goal setting and reporting, though proposals could be worked into any strategic planning process through a variety of administrative mechanisms.

    Challenge and Opportunity

    In 1945, Vannevar Bush called science the ‘endless frontier’, and argued funding scientific research is fundamental to the obligations of American government. He wrote “without scientific progress no amount of achievement in other directions can insure our health, prosperity, and security as a nation in the modern world”. The legacy of this report is that health, prosperity, and security feature prominently in the missions of most federal research agencies (see Table 1). However, in this century we have begun to drift from his focus on the impacts of science. We have the strange situation where our enterprise is both incredibly productive, and losing trust with the public, viewed as out of touch or misaligned with American priorities. This memo  proposes a simple solution to address this issue for federal funding agencies like NIH and NSF that largely focus on extramural investigator-initiated research. These are research programs where the funding agency signals interest in specific topics and teams of scientists submit their research plans addressing those topics. The agency then funds a subset of those plans with input from external scientific reviewers.

    Sample Mission Statements of Federal Research Funders as of November 2025
    Research Agency or DivisionCurrent Mission, with Impact Emphasized
    NIHSeek fundamental knowledge about the nature and behavior of living systems and the application of that knowledge to *enhance health, lengthen life, and reduce illness and disability.*
    NHLBIProvides global leadership for a research, training, and education program to *promote the prevention and treatment of heart, lung, and blood disorders and enhance the health of all individuals* so that they can live longer and more fulfilling lives.
    NINDSSeek fundamental knowledge about the brain and nervous system and to use that knowledge to *reduce the burden of neurological disease* for all people.
    NSFTo promote the progress of science; to *advance the national health, prosperity and welfare; and to secure the national defense.*
    Directorate for Mathematical & Physical Sciences (MPS) *Enhances our nation’s economic growth, security and quality of life* by advancing human understanding of the fundamental nature of the universe at all scales.
    USDA The National Institute of Food and AgricultureProvides leadership and funding for programs that advance agriculture-related sciences. We invest in and support initiatives that *ensure the long-term viability of agriculture.*

    This funding approach is incredibly productive. For example, NIH funds most of the pipeline for the emerging bioeconomy, which accounts for 5.1% of our GDP. From 2010 to 2016, every one of the 210 new entities approved by the FDA had some NIH funding. And yet, there appears to be a disconnect between our funding strategy and the public interest focus of the Endless Frontier operationalized through our federal science agency missions for investigator initiated research. 

    A fundamental driver of this disconnect might be a slight misalignment of the incentives of academic scientists, who are rewarded for novelty and scientific impact, with the broader public interest. Our federal agencies are highly attuned to scientific leaders, and place equal or even greater weight on innovation (novelty plus scientific impact) than real world impact. For example, NSF review criteria place equal weight on intellectual merit (‘advance knowledge’) and broader impacts (‘benefit society and contribute to the achievement of specific, desired societal outcomes’). NIH’s impact score of new applications is an ‘assessment of the likelihood for the project to exert a sustained, powerful influence on the research field(s) involved’ [emphasis mine], which is only part of the agency’s mission. The practical implications of this sustained focus away from the impact portion of agencies missions become apparent in figure 1, showing tremendous spending in health research unrelated to a key public interest measure like lifespan, especially when compared to other nations’ health research spending. 

    Perhaps the realization that the federal research investment is not strongly linked to their mission impact is one reason why American science has been slowly losing public trust over time. Among the people of 68 nations ranking the integrity of scientists, Americans ranked scientists 7th highest, whereas we ranked scientists 16th highest in our estimation of them acting in the public interest. And this is despite the fact that the American investment in science is many times higher than the 15 nations who rated scientists more highly on public interest. A more accurate description of our 21st century federal science enterprise might be the ‘timeless frontier’, where our science agencies pursue cycles of funding year in and year out, with their functional goal being scientific changes and their primary measure of success being projects funded. Advancing the economy, health, national defense, etc., are almost incidental benefits to our process measures. 

    We can do better. In 2024, the National Academy of Medicine called out the lack of high level coordination in research funding. In 2025, the administration has been making drastic cuts and dramatic changes to goals and processes of federal research funding, and the ultimate outcome of these changes is unclear. In the face of this change, Drs. Victor Dzau and Keith Yamamoto, staunch champions of our federal science programs, are calling for “a coherent strategy […] to sustain and coordinate the unrivaled strengths of government-funded research and ensure that its benefits reach all Americans”.

    We can build on the incredible success of the federal science enterprise – inarguably the most productive science enterprise in all history. The primary source of American scientific strength is scale. American funding agencies are usually the largest funders in their space. I will highlight some challenges of the current approach and suggest improvements to yield even more impactful approaches more closely aligned with the public interest.

    The primary federal funding strategy is broad diversification, where our agencies fund every high scoring application in a topic space (see FAQs). Further, federal science agencies pay little attention to when they expect to see a fundamental impact arising from their research portfolio. For example, a centrally directed program like the Human Genome Project can lead to breakthrough treatments decades later, but in the meantime, other research that generates improvements on faster timescales could have been coordinated, such as developing conventional drug treatments, or research to optimize quality and delivery of existing treatment. 

    And yet, the breadth and complexity of broad diversification makes it easy to cherry pick successes. This is a strategic issue, and is bigger than the project selection issues highlighted in the earlier discussion about review criteria. When research funding agencies make their pitch for federal dollars they highlight a handful of successes over tens of thousands of projects funded over many years. They ignore failures, the time when investments were made, and time to benefit. With the goals and metrics we have in place, it is simply too hard to summarize progress in any other way. 

    Overly diversified science funding supports both good Congressional testimony and bad strategy. If your problem happens to fall into a unicorn space of success, there is a lot to celebrate. But most problems do not, and we experience inconsistent returns. We need to define the success of research funding more precisely, in advance, and in ways that more obviously align with the public interest. 

    Plan of Action 

    If we tweak our funding strategy to focus on societal impacts, we can move to a more impactful science enterprise, and help regain public support for science funding. We can focus federal research funding on effective answers to difficult problems demanding both urgency and short term improvements, and fundamental discoveries that may take decades to realize. My solution and implementation actions for agencies, and potentially Congress, are described below. 

    Recommendation 1. Focus some agency funding on measurable mission impacts. 

    We should empower our science agencies to step away from broad diversification as the predominant funding strategy, and pursue measurable mission impacts with specific time horizons. It can be a challenge for funders to step away from process measures (e.g. projects or consortia funded) and focus on actual changes in mission impact.

    Ideally, these specific impacts would be broken into measurable goals that would be selected through a participatory process that includes scientific experts, people with lived experience of the issue, and potential partner agencies. I recommend each agency division (e.g. an NSF Directorate) allocate a percentage of their budget to these mission impact strategies. Further, to avoid strategic errors that can arise from overwhelming power of federal funding to shape the direction of scientific fields, these high level funding plans should be as impact focused as possible, and avoid steering funding to one scientific theory or discipline over another. 

    Recommendation 2. Fund multiple timescales as part of a single plan. 

    Research funders need to balance their investment portfolios not only across problem areas, but over time. Complex challenges will often require funding different aspects of the solution on different timelines in parallel as part of a larger plan. Balancing time as well as spending allows for a more robust portfolio of funding that draws from a broader array of scientific disciplines and institutions. 

    Note, this approach means starting lines of research that may not lead to ultimate impact for decades. This approach might seem strange given our relatively short budget cycles, but is very common in science, where projects like the Human Genome initiative, the Brain Initiative, or the National Nanotechnology Initiative, have all exceeded a single budget cycle and will take years to realize their full impact. These kinds of efforts require milestones to ensure they stay on track over time. 

    Recommendation 3. Institutionalize the impact funding process across science funders.

    Our research enterprise has become oriented around investigator-initiated, project-based awards. Alternative funding strategies, such as the DARPA model, are viewed as anomalies that must require completely different governance and procedures. These differences in goals are unnecessary. A consistent focus on impacts and strategy in funding across agencies will help the scientific community become more aware of the time to benefit of research, help underscore the value of research investment to the American public, and help research agencies collaborate among themselves and with their partner agencies (e.g. NIH collaborates more closely with CMS, FDA, etc.). 

    In short, institutionalizing this process can lead to greater accountability and recognition for our science enterprise. This structure allows our funders to report to the public progress on specific goals on predetermined and preannounced timelines, rather than having to comb through tens of thousands of independent funding decisions and competing strategies to find case studies to highlight. In this way, expected and unexpected scientific results, and even operational challenges, can be discussed within an impact framework that clearly ties to the agency mission and public interest.

    Example of Planning using  an Impact Focus

    Here is an example of a mission impact goal Reducing the Burden of Major Depressive Disorder that could be put forth by the National Institute of Mental Health (NIMH), and the process to develop it.

    Commence Inclusive Planning: NIMH brings together experts from academia, clinical care, industry, people impacted by depression, and FDA and CMS to develop measures, timelines and funding strategies. 

    Develop Specific Impact Measures: These should  reflect the agency’s impact portion of their mission. For example, NIH’s mission impact of “enhance health, lengthen life, and reduce illness and disability” requires measuring impact on human beings. Example measurement targets could include:

    Fund Multiple Time Scales: Designate time scales in parallel as part of a comprehensive strategy. These different plans would involve different disciplines, funding mechanisms, and private sector and government partners. Examples of plans working at different timescales to support the same goal and measures could include:

    Implementation Strategies for Impact Goals

    Each federal funding agency could allocate a percentage of their budget to these and other  impact goals. The exact amount would depend on the current funding approach of each agency. As this proposal calls for more direct focus on agency mission, and not a change in mission, it is likely that a significant percentage of the agency’s current budget already supports an impact goal on one or more of its time scales. 

    For an agency heavily weighted towards project based funding of small investigator teams, like NIH, I would recommend starting with a goal of 20% of their budgets set towards impact spending and consider increases over time. Other agencies with different funding models may want to start in a different place. Further, I would recommend different goals and targeted funds for each major administrative unit, such as an institute or directorate. 

    All federal funders already engage in some form of strategic and budget planning, and most also have formal structures for engaging stakeholders into those planning decisions. Therefore, each agency already has sufficient authorities and structures to implement this proposal. However, it is likely that these impact goals will require collaboration across agencies, and that could be difficult for agencies to efficiently conduct by themselves. 

    Additional support to make this change could come from Congressional Report language as part of the budget process, through interagency leadership from the White House Office of Science and Technology, or through the Office of Management and Budget. For example, the Government Performance Results Act (GPRA) already requires agency goal setting, reporting and supports cross agency priority goals. That planning process could easily be adapted to this more specific impact focus for research funding agencies, and reporting on those goals could be incorporated into routine reporting of agency activities. 

    Conclusion 

    We are living through a massive disruption in federal research funding, and as of the fall of 2025, it is not clear what future federal research funding will look like. We have an opportunity to focus the incredibly productive federal research enterprise around the central reasons why Americans invest in it. We can meet Bush’s challenge of the Endless Frontier simply by clearly defining the benefits the American people want to see, and explicitly setting plans, timing and money to make that happen. 

    We can call our shots and focus our science funding around impacts, not spending. And we can set our goals with enough emotional resonance and depth to capture both the interests of the average American, and the needs of scientists from different disciplines and types of institutions. We already have the legal authorities in place to adopt these techniques, we just need the will.

    Frequently Asked Questions
    What are the risks to the direction of science that can arise from being a very large funder like NIH?

    Inadvertently, the huge scale of federal funding could lead to a monopsonistic effect. In other words, NIH’s buying power is so large, if NIH does not fund a specific type of research, people may stop studying it. This risk is highest within a narrow scientific field if there is a bias in grant selection. A well publicized example being NIH’s strong funding preference to one theory of Alzheimer’s Disease to the diminishment of competing theories, which in turn influenced careers and publication patterns to contribute to that bias.

    Privacy-Preserving Research Models Essential for Large Scale Education R&D Infrastructure

    The current education research-to-policy pipeline is too slow to keep pace with the urgent needs of districts and states. Researchers face steep barriers to accessing high-quality, multimodal data, while existing R&D infrastructures remain siloed and under-resourced. Without scalable, trusted, systems that enable timely and secure data use, the U.S. risks falling behind in generating actionable and evidence-based insights to guide policy and practice. In this memo, we discuss how privacy-preserving research models can be used to strengthen education R&D capacity. 

    Challenge and Opportunity

    Learning is a lifelong and multidimensional process, yet data about learning has historically been difficult to obtain. The shift to digital learning platforms (DLPs), accelerated by COVID-19, has created a wealth of data, but accessing it remains complex and slow – especially for researchers with fewer institutional resources.

    Additionally, complex privacy laws, such as the Children’s Online Privacy Protection Act (COPPA) and Family Educational Rights and Privacy Act (FERPA), alongside state-specific regulations and institutional risk aversion, create substantial barriers. These laws were not designed to accommodate privacy scenarios within the current environment of pervasive data collection and rapidly advancing AI. 

    As such, trusted mechanisms for safe data access that remove barriers to critical R&D, bolster global competitiveness, and leverage innovation to cultivate a skilled STEM workforce, are more important than ever.  Without trusted mechanisms to ensure privacy while enabling secure data access, essential R&D stalls, educational innovation stalls, and U.S. global competitiveness suffers.

    Flipping the traditional research model

    The landscape of educational research and development (R&D) is rapidly evolving as digital learning platforms (DLPs) capture increasingly rich streams of data about how students learn. These multimodal data streams provide unprecedented opportunities to accelerate insights into how learning happens, for whom, and in what contexts – as well as how these processes, in turn, affect learning outcomes, engagement, and persistence. Yet, despite this potential, access to platform-generated learning data remains highly constrained – particularly for early-career researchers with minimal institutional resources and organizations outside elite academic settings. 

    Current challenges to accessing DLP data include privacy risks (e.g., data leaks), opaque legal environments, institutional risk aversion, and the lack of trusted third-party intermediaries to balance privacy with data utility. As a result, promising research is delayed and the research-to-policy pipeline is exacerbated – leaving decision-makers without timely evidence to address urgent needs such as learning recovery, responsible AI integration, or workforce readiness.

    Privacy-preserving models offer transformative opportunities to address these barriers. Across sectors, the field is converging on trusted research environments that include secure enclaves that keep data in situ and move analysis to the data. SafeInsights, the U.S. Census’ Federal Statistical Research Data Center (FSRDC), and North Carolina Education Research Data Center (NCERDC) are examples of such systems complemented by privacy-preserving methods.

    Privacy-preserving research models, such as SafeInsights, flip the traditional research model: instead of giving data to researchers, it brings researchers’ questions and analyses, encoded as software, to the data. At no point in the research process does the researcher have direct access to raw data, thereby minimizing concerns for data leaks. 

    Researchers instead use sample or synthetic data to craft their analyses. Once the researchers’ analysis code is submitted to the owner of the data, it is reviewed by experts for approval. This model minimizes risk, reduces delays in the research-to-policy pipeline, and unlocks data that would otherwise remain inaccessible.

    Think of it as a secure research zone: a trusted third-party intermediary where researchers can run analyses using specific tools and applications, but cannot access data directly, ensuring strict security.

    Rather than extracting and sharing sensitive data with researchers, privacy-preserving research models bring researchers’ analytic tools to secure data enclaves – preserving privacy while enabling rigorous, scalable, inquiry of DLP data. Through secure enclaves, transparent governance, and standardized compliance frameworks, a durable large-scale infrastructure for research can be created.

    Benefits of privacy-preserving research models

    By securing cross-sector investment for embedding scalable privacy-preserving models into R&D ecosystems and infrastructures, we can expand access to high-value data while supporting long-term research scalability, security, and trust.

    Such models can fill a critical gap in the R&D ecosystem by establishing a secure and sustainable research infrastructure that extends well beyond its initial NSF funding and is ideally suited to broker access between DLP developers, school districts, and researchers.

    Plan of Action

    Promote R&D Infrastructure Development and Sustainability

    Privacy-preserving research models have the potential to offer researchers safer, faster, reliable, high-value, de-identified data analyses – while simultaneously saving DLPs and school districts time and resources on compliance reviews and privacy audits. It also creates opportunities for funders to support a sustainable research infrastructure that multiplies the impact of each dollar invested.

    To move from promise to practice, interested stakeholders, including research institutions, school districts, and funders, should consider the following actions:

    Recommendation 1. Lay the Foundation for Sustainable Large-Scale R&D Infrastructure

    Recommendation 2. Embed Infrastructure Costs into Research Contracts and Budgets

    Recommendation 3. Catalyze Scaling through Foundation and Philanthropic Support

    Recommendation 4. Develop Large Scale R&D Infrastructure across Sectors

    Conclusion

    Privacy-preserving research models offer standardized, secure, and privacy-conscious ways to analyze data – helping researchers at the local, state, and federal levels understand long-term educational trends, policy impacts, and demographic disparities with unprecedented clarity.

    By accelerating time-to-insight, investing in critical R&D infrastructure, and expanding participation in complex research, privacy-preserving research models offer possibilities for delivering on urgent policy priorities – building towards a modern, responsive, trustworthy education R&D ecosystem.

    Frequently Asked Questions
    What kinds of research topics can be explored using privacy-preserving research models?

    Privacy-preserving research models could offer the possibility to connect researchers with DLP data representing different learning contexts. DLP data is often rich and versatile, possibly enabling the exploration of multiple research topics, including:



    • Learning Behaviors: Analyze patterns of engagement, tool usage (e.g., text-to-speech, digital pencil), or response time.

    • Personalized Learning: Investigate how adaptive experiences influence outcomes.

    • Achievement Gaps: Study differences across subgroups (e.g., students with disabilities, English Language Learners).

    • Intervention Effectiveness: Test how interventions or instructional strategies impact student performance.

    • Learning Trajectories: Examine longitudinal progress and identify barriers to success.

    What kinds of data could be made available through privacy-preserving research models?

    Privacy-preserving research models could facilitate connections among various types of educational data from DLP developers, each representing different aspects of K16+ teaching and learning, including administrative records, learning management systems, and curricular resource usage data.


    Examples of DLP data categories include digital curricula, university data systems, and student information systems for K-12 institutions.

    What are some examples of privacy-preserving research models utilizing secure enclaves across different sectors?

    Across sectors, the field is converging on privacy-preserving research models that utilize secure enclaves to keep data in situ and move analysis to the data. Such examples include:



    • Federal statistical system: the FSRDC network provides secure facilities (now including some remote access) where qualified researchers run analyses on restricted microdata under rigorous review.

    • Cross-agency administrative data: the Coleridge Initiative’s Administrative Data Research Facility (ADRF) is a FedRAMP-certified, cloud based platform that supports inter-state and inter-agency linkages under shared governance.

    • State education data enclaves: NCERDC at Duke University and the Texas Education Research Center (ERC) support secure access to longitudinal education/workforce data with well-defined agreements and masking rules.

    • Health: OpenSAFELY operationalizes a strict “code-to-data” model—researchers develop code on dummies, submit jobs to run against in-place EHR data, and only aggregate outputs leave the enclave. NIH’s N3C and All of Us Researcher Workbench similarly provide secure, cloud based research environments where individual-level data never leave the enclave.


    These approaches are complemented by privacy-preserving release methods (e.g., differential privacy), used by the U.S. Census Bureau and supported by open-source toolkits like OpenDP/SmartNoise.

    How might privacy-preserving research models support research and researchers?

    At the center of privacy-preserving research models is privacy-by-design that enables secure research with protected information – while alleviating technical, logistical, and collaborative challenges for researchers.


    Technical


    Privacy-preserving research models can offer technical components that support large-scale digital learning research such as:



    • Analysis options, which enable large-scale analysis of single platform data

    • Intervention options, which enable researchers —under appropriate agreements—to introduce different kinds of interactive activities (including surveys, assessments, and learning activities) within a partner platform’s student experience

    • Enclave fusion, which in some designs can enable researchers to leverage multi-platform data


    Logistical



    • Shared data sharing agreement templates

    • Streamlined IRB and data-sharing processes

    • Consent management across different populations

    • Regulatory compliance with the changing data protection landscape


    Community and Collaboration



    • Help easily surface researchers and the research that they are conducting

    • Bridge connections among platforms, researchers, and educational institutions to support meaningful research to inform practice

    • Connect researchers at different levels of their careers and different domains to support mentorship and collaboration


     

    Case Study: Turning Student Assessment into Actionable Insights

    If assessment results are the scoreboard that reveals what students are learning, user data is the game film that reveals how students learn: time on task, requesting support, revising, using resources.


    Using SafeInsights’ privacy-preserving tools, researchers can securely analyze real-time digital learning platform data to better understand how students engage with digital learning. Consider two students with the same score:


    Student A works steadily, using hints to revise answers. This pattern suggests a need for additional content support, scaffolding, and practice.


    Student B races through with rapid guessing and skipped items. This pattern suggests a need to adjust prompts, pacing, and support.


    By distinguishing between these pathways, researchers, educators, and policymakers can target digital learning platform interventions more precisely—whether that means redesigning practice problems, adjusting instructional supports, or tailoring engagement strategies.


    Bottom line: SafeInsights securely transforms raw data into actionable evidence, helping policymakers and practitioners invest in solutions that boost learning outcomes and improvement at scale.