A Vision for Western Solidarity in the Mid-Transition, Beyond the Resource Curse
The energy transition happens in real places with real people, and different regions face different obstacles in moving through the “messy middle” of the energy transition toward a more fully decarbonized economy. So while clean generation and capacity are growing fast across the country, continued progress depends on supporting that growth from the ground up.
Mid-transition challenges are particularly salient in Alaska and other Western states. Along with Appalachia, the American West has long been at the core of the fossil economy. Now, at a time of federal retreat with respect to clean energy, the American West can play an outsized role in driving a new kind of energy story.
The American West has a proud history: of policy leadership, environmental stewardship, and entrepreneurialism. However, the region is also largely dependent on resource extraction and fossil fuel production, industries that are deeply woven into its social, political, and economic fabric. This resource curse has concentrated economic and political power in the hands of a few companies at the expense of residents and communities. As new pressures like climate overshoot and geopolitical turmoil have arisen, the resource curse has complicated Western states’ ability to chart a more resilient future.
Complicated, but not compromised. The flip side of the resource curse is that Western states – as the bedrock of U.S. energy production – have a unique opportunity to reinvent not only their relationship to energy, but that of our entire country. Too often, the national conversation on climate and energy centers on the Eastern states that are geographically proximate to our nation’s capital. To the extent that policymakers look west, they often focus myopically on California. This essay broadens the aperture, exploring how the principles of regulatory ingenuity can position Western states beyond California to lead on mid-transition challenges and help a region transform itself in ways that can also create new possibilities for the country as a whole, starting now.
Escaping the Resource Curse
Escaping the resource curse means envisioning a future that does not simply replace oil with other extractive industries, but instead drives shared prosperity.
As home to significant domestic oil and gas production, Western states face complex pathways to decarbonization. In states like Alaska, Texas, Arizona, and Wyoming, natural resource extraction is inseparable from economic and government structures (e.g., sovereign wealth funds that underpin public services or gas industries as majority local employers), and that relationship directly impacts how these states go about the transition. For example, Alaska’s Renewable Energy Fund, which supports more reliable and cleaner energy sources for remote and Indigenous communities, is funded by state revenue and has historically benefited from windfalls resulting from global oil shocks. Boosts (or drops) in state funding are often driven by the volatility of resource markets, and the inconsistency of that revenue makes it difficult to sustain energy transition funds like Alaska’s.
Similarly, Wyoming’s mineral resources provide at least a third of the state’s annual public revenue (not counting earnings from its sovereign wealth fund). Though mineral extraction supports the development of clean energy technology, it has its own environmental impacts. In New Mexico, a recent oil boom has helped supercharge critical services, like universal childcare and public schools, but has also made it harder for the state to provide those services long-term without the help of fossil fuel revenue.
The legal frameworks of oil-producing states often favor investment in and subsidization of fossil fuels, including through tax incentives and below-market rate land leases. That limits market development for clean tech and renewables, and makes it harder to implement conventional policy tools that drive the transition in other states, like renewables mandates and supply-side incentives. Even where Western states are moving to accelerate renewables, existing regulation can favor incumbent fossil fuels over emerging clean sources because of the deep ties between resource revenue and public services and the higher bar to entry for clean sources versus subsidized energy sources. New Mexico has made significant progress on clean generation, but its budget still relies heavily on resource wealth.
In addition, the actual time, expertise, and resources necessary to reform an entire statutory and regulatory structure can be well beyond the capacity of any legislative body, even one with the best intentions. Many Western states have legislatures that operate on a biennial cycle of short and long legislative sessions; others have very short sessions every year (California is unique, with a year-round legislature). These structures can limit legislatures’ ability to dig deeply into existing legal frameworks and start untangling these dependent policies. Hyperpolarization nationally and electoral whiplash don’t help – state officials aren’t incentivized to try new things when there might be political consequences.
Alaska’s recent political wrangling to facilitate the construction of a new natural gas pipeline from the North Slope to Southcentral Alaska is an unfortunate example of how those pressures hinder progress. State elected leaders sparred in three special legislative sessions in 2026 over creating a more favorable tax structure for the pipeline developer, while also trying to safeguard the fiscal interests of the cities through which the pipeline would pass. Legislators otherwise largely ignored renewable energy policy, beyond one-time budget allocations. Given the revenue a gas pipeline represents for Alaskans and their public services, elected officials are incentivized to spend time figuring out how to create a friendlier environment for those developers, instead of for clean energy that doesn’t represent as much direct wealth for the state.
Turning the freighter of these policy frameworks risks very real impacts on communities. In Alaska, the singular dependence on oil and gas as the state’s economic driver for nearly 50 years has made it a classic resource colony, while exposing it to untenable long-term fiscal risk as the world energy system evolves away from fossil fuels. Early resource wealth helped build civic institutions that provide basic services to communities, like education, childcare, and safety. As those resource markets become more unstable, state and local institutions have contracted – the city of Juneau is facing a $10–12 million budget gap and Alaska’s projected deficit is $1.8 billion next year. The state is already prioritizing Permanent Fund dividends over things like childcare workers and increased Medicaid payments. Communities need reliable services, and dependence on fossil fuels or resource extraction won’t provide that stability long-term. But diversifying too quickly or haphazardly could upend the current system and leave Westerners unable to access basic needs, further damaging public trust in institutions, and hobbling the state’s ability to make it through the mid-transition.
Opportunity for Transformation
How, then, do Western states break their resource curse? The ideas below are a starting point for Western states looking to diversify – and thereby strengthen – their economies while simultaneously leading on environmental stewardship and an equitable, politically attractive energy transition.
The West has long echoed with calls for a more independent and self-reliant future, but often these visions, including the Sagebrush Rebellion of the 1970s and 80s, ended instead in frustration and constraints on the very government creativity needed to reshape economies – leading to neither local control nor shared prosperity. This is a chance for a more constructive path, aimed this time at creating fiscal room for democratic creativity.
Governance/Finance
Many Western states have unique economic instruments in their policy toolboxes. Sovereign wealth funds, for instance, are inherently tied to resource extraction but can also provide the capital needed to finance economic diversification and decarbonization. Resource wealth can be invested to derisk renewables markets, build more resilient infrastructure, and catalyze innovation – the building blocks of a modern, climate-smart economy. Resource wealth can also be invested in the enablers of that economy: e.g., better public engagement strategies that increase trust in government while producing better policy, new legal regimes that decouple state budgets from resource revenues, and accountability structures for reigning industries that force them to pay their fair share and keep benefits local. Initial approaches could include:
Collaborative finance. States can pool capital from green banks and infrastructure banks across the West into shared investments, or at least align on a shared strategy to reach the scale needed to shift markets while keeping capital in the region. Mutual lending and intra-West investing could shore up regional relationships and allow states to focus on what helps them grow instead of exporting resource wealth outside of the state. The West already has much of the capital it needs for economic growth, and being more strategic about scaling within the region would support independence and diversification.
Long-term revenue sustainability, including through resource stewardship. By diversifying their funding sources and investment strategies, Western states can secure truly permanent funds. Alaska’s Permanent Fund helps stabilize its budget, but is not large enough to sustainably support public services and relies on diminishing resources, while federal safety net cuts and natural risks like wildfires and floods increasingly burden public budgets. But Alaska – like many Western states – can provide valuable services to the country that extend well beyond raw resource production. Their land bases and locations position them to reduce global risks – and secure revenue for doing so. As an example, the Tongass Rainforest is a globally important carbon storehouse whose services warrant federal investment – not just in science but in enhancing its capacity on the ground by supporting continued stewardship in the state budget. Likewise, Alaska, alone among the states, can take meaningful action to lessen methane releases from permafrost that threaten trillions in global investments, or explore new climate interventions that may be able to protect globally important sea ice and the reflectivity of the Arctic. Other Western states have aligned opportunities in their land bases, from carbon capture to forestry stewardship to novel research and experimentation with public oversight. Monetization solutions are complex, nuanced, and need development – and can receive that attention through Western collaboration. The West can be a place that reduces national and global risk, reaps federal research dollars in exchange, and potentially secures longer-term financial support to maintain critical solutions.
These new strategies can also open up more opportunities for interdependence between Western states and the federal government, through federal capital transfers (when possible) supporting the West’s role in the national transition, as well as local governments, with increased funding shoring up responsive capacity at the city level. These could include new payments to manage public health and climate risks (e.g., forest management or underwriting community resilience investments like workforce development).
Western interdependence and solidarity. Creating a system where Western resources help build shared benefits within the West – not outside of it. Western state governors have already begun to weave together Western power grids, and they should look to other shared infrastructure and economic development projects, like new transmission lines connecting regional grids to the East and Canada. States can secure the benefits of these lines within the region by activating major new opportunities to build and sell clean energy projects (while capturing those benefits in enhanced state revenue) or new regional clean industrial zones to support advanced manufacturing.
Proactive transfer of governance to Tribes. Tribal governments play a unique role in Western governance and resource management. Transferring that role through compacts and co-management of federal lands, creative financing partnerships, shared workforce development, and increased Tribal authority and decision-making power can strengthen Western and Tribal independence from extractive industries and resilience to climate risks. Tribal leaders still face similar economic pressures, but have their own sets of policymaking tools – providing Tribal governments more policymaking agency could spur more innovation and allow for more supportive regional partnerships.
Energy
As pressures for energy generation and production mount, fossil fuels will continue to play a role in the West. But states also have unique opportunities to diversify their supply of affordable, reliable, and clean power and catalyze new Western economic engines. Geothermal energy and hydropower are uniquely abundant in the West, and vast amounts of federal land, if managed appropriately and sustainably, can unlock new development opportunities that don’t rely on extraction. State regulatory structures currently tilt the scales toward fossil fuels, so while states start the process of reforming those structures, governments will need to get creative in the short term to make sure renewables have a fair shot at staying competitive. Regardless of source, states will also need to invest in grid stabilization and modernization as prices and demand increase.
Some are leading already. The New Mexico Comprehensive Energy Transition Strategy is building out an integrated roadmap to support the state on its transition toward clean energy and net-zero commitments. Both Wyoming and Utah have made significant investments in renewables markets despite their reliance on fossil fuels. Utah’s DOE-sponsored and state-supported FORGE laboratory focuses on enhanced geothermal research, and groundbreaking geothermal developments across the state have helped kickstart the industry. Wyoming hosts major wind and solar projects alongside its coal production, and the state provides matching funds for innovative energy projects to attract outside developers. These states are not unique in the West in terms of political makeup, resource wealth, and generally limited government capacity, making them useful examples of how others can adapt to a new energy reality.
Resilience
The West’s tens of millions of acres of wilderness are a crown jewel of the continent and another unique opportunity for the region. Its intact natural systems are important not just as a focus of conservation or nature-based solutions, but also as a key component of economic development, built environment, and resilience. Joint strategies to build out learning and capacity for how to leverage that nature – for example, through public–private partnerships – could aid Western states in strengthening resilience to climate shocks. Turning nature into part of states’ economic engines (while stewarding the land responsibly) is a way to further aid the transition – and is something only Western states can do.
But the increasing risks of climate overshoot also complicate those efforts. Wildfires, floods, droughts, and changing landscapes result in massive cost increases and community disruptions. Current costs associated with climate-driven wildfire risks alone are in the hundreds of billions per year, to say nothing of the health costs of wildfires that are still difficult to quantify. There is tremendous need for wildfire prevention across Western landscapes, whether on federal, state, or private lands.
Broadly, more research is needed on both climate risk and stabilization approaches, especially, as noted above, because Western states functionally manage trillions in global climate risk (permafrost, forest carbon, etc.) and can do so in ways that drive state economic development. There are enormous opportunities to put public universities and science agencies in the lead on this front, securing federal appropriations to further support this work, and linking together collaboratives across the landscape. Imagine a cross-Arctic collaborative from Alaska on emergent ideas such as protecting volatile permafrost or restoring sea ice, along with paths to develop economies around these ideas, or a Pacific Northwest academic/government/industry collaborative to move the needle on forest and ocean carbon storage. With increased global attention on ecological systems interventions, Western states can be proactive leaders in research and governance on this front. Success in any of these efforts could reduce billions, or even trillions, of dollars’ worth of risk to the country and the world – making it vital to invest and creating a path for returns not just in knowledge but in careers for young people moving through public university systems.
Capacity and Expertise
To make this regulatory and economic transformation successful, the West will need smart and capable people to carry it out. In states where the dominant industries are fossil fuels, the workforce tends to be fossil fuel-oriented as well, but deep understanding of energy systems and skills with specific infrastructure or operations can be useful foundations for other industries (like geothermal). Professional expertise, mentoring and development, and training pipelines are all critical to workforce transition and economic diversification, including educational and vocational resources, workforce development programs, and good opportunities across the public and private sectors.
States can design both push and pull strategies for workforce development. Reinvesting resource wealth into clean job opportunities in technology, manufacturing, infrastructure, and energy; creating public sector openings for key expertise in permitting and utility regulation; and redesigning educational curricula to diversify pathways for students should all be part of the playbook. Interdependence among states can help expand pipelines for resource sharing, regional collaboration, and shared learning. Western state university systems – which are already linked through the Western Undergraduate Exchange (WUE) – can work together to create professional on-ramps for the next generation of energy leaders and workers.
Why now?
With many of them facing resource curses, increased natural disasters, and uphill political battles, Western states cannot afford to wait around for new policy tools. They have the know-how and the history to be able to lead in this moment – to reimagine economic and governance structures, to work regionally toward safer and healthier communities, and to build out cleaner and more reliable energy systems. This is a critical moment. Next month, nine Western states, including Alaska, will hold gubernatorial elections at a time when constituents are hungry for new ideas that actually deliver on government promises. Policymakers who can reimagine the existing paradigm will be the ones who usher in this new era of Western leadership.
Western states functionally manage trillions in global climate risk (permafrost, forest carbon, etc.) and can do so in ways that drive state economic development.
Implementation will not be easy. Several of the plan’s critical strategies challenge established utility business models.
We won’t solve the cost-of-living crisis without improving the capacity of state public utility commissions to protect customers, find and implement new solutions to meet rising demand, and realign broken utility incentives.
Public service commissions should require utilities to quantify avoided healthcare costs, reduction in pollution exposure, and improvements in population health alongside traditional metrics.