Strategy 3: Mobilize Investment

3.1 Design, implement, and iteratively evaluate policies to push the technological frontier.

Studies project that most of the emissions reductions needed can be generated by technologies that are already mature or in early adoption. However, other technologies needed do not yet exist or are still too costly to be widely deployed.73 Clean energy technologies, such as advanced nuclear reactors, offshore wind systems in deep water, and carbon capture and storage, have been imagined but not yet demonstrated at scale in the United States. What is missing is a clear mapping of the plausible impacts of these technologies, along with stronger incentives to expand the array of potential climate-resilient innovations and develop the workforce necessary to realize rapid expansion. Together, this will lower the cost of climate action, enabling pragmatic, just, and accountable investments in climate action.

Increase investment in early-stage research, development, and demonstration of new technologies.

Significant funding has been made available through the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act. The CHIPS and Science Act may also lead to substantial funding for climate-related technologies. The private sector and philanthropy must also sustain and expand funding for frontier technologies and research.

New technologies are intrinsically uncertain, making them less appealing for private-sector investment in the absence of public policy incentives. Therefore, an important priority must be reducing the financial risk to investors that want to deploy novel technologies but are unwilling or unable to absorb all the risks themselves.

The Commission does not take a position on the exact level of funding that government or philanthropy should invest. Experts’ assessments of the appropriate expansion of public-sector support for new technologies range from doubling to tripling current investments, or increasing by even larger ratios.74 A greater combination of resources and funding would deliver value to American society through cutting emissions and providing jobs. The U.S. government has long performed this role through the national laboratories, the DOE loan programs office, the Advanced Research Projects Agency for Energy, and others.75

Later-stage prototypes will need support from blended finance models that combine government and private investment. Recent legislation provides support for clean energy technologies, although the longest-lasting provisions tend to be subsidies for mature technologies while the provisions for the most innovative technologies will expire too quickly. Boosting innovation and testing new technologies for the long term requires the extension of funding beyond these programs’ projected expirations in five to seven years. And while there has been substantial support for innovation related to emissions reduction and control, much less is dedicated to novel technologies that could improve the nation’s resilience to the impacts of climate change.

Reassess and eliminate barriers to expanding international scientific collaborations.

It is imperative that the U.S. national system of innovation remains strong and effective. That system relies on international students at American universities, collaborators around the world, and innovators from abroad who start companies in the United States.76 Burdensome visa processes, overclassification, and mistrust between nations impede the flow of scientists across borders and harm the pace and quality of scientific achievement. While the American public is often reluctant to commit to overseas relationships, the United States must nevertheless maintain international connections for the benefit of the laboratories, universities, and companies that are the engines of American innovation.77

Regularly evaluate the effectiveness of the U.S. investment in clean industry and climate resilience innovation.

Innovation is intrinsically steeped in uncertainty: about the sources of new technologies, how market demand affects that supply, and the effectiveness of various policy instruments. Thus, the United States must regularly evaluate the efficacy of its national policy strategies for technological development and deployment. That evaluation must focus on innovation around emission controls and efforts to improve resilience. With input from the Office of Management and Budget and other arms of the government that address these issues, such as the Congressional Budget Office and Office of Science and Technology Policy, evaluations can ensure that funds are spent efficiently, effectively, and ethically. These reviews should be done by independent, specialist organizations and funded by the government or private philanthropy.
 

Endnotes

• 73Rory Clune, Laura Corb, Will Glazener, et al., “Navigating America’s Net Zero Frontier: A Guide for Business Leaders,” McKinsey Sustainability, May 5, 2022.
• 74Rebecca Henderson and Richard G. Newell, Accelerating Energy Innovation: Insights from Multiple Sectors (Chicago: University of Chicago Press, 2011).
• 75U.S. Department of Energy, “Advanced Research Projects Agency Energy (ARPA-E),” May 8, 2023.
• 76American Academy of Arts and Sciences, America and the International Future of Science (Cambridge, Mass.: American Academy of Arts and Sciences, 2020); American Academy of Arts and Sciences, Bold Ambition: International Large-Scale Science (Cambridge, Mass.: American Academy of Arts and Sciences, 2021); and American Academy of Arts and Sciences, Global Connections: Emerging Science Partners (Cambridge, Mass.: American Academy of Arts and Sciences, 2022).
• 77Pew Research Center, Public Uncertain, Divided Over America’s Place in the World (Washington, D.C.: Pew Research Center, 2016); and E. William Colglazier, “The Precarious Balance Between Research Openness and Security,” Issues in Science and Technology 39 (3) (2023).

3.2 Leverage investments in infrastructure modernization to correct historical underinvestment in marginalized communities.

Much of new climate-related spending, such as through the recent Infrastructure Investment and Jobs Act, will go toward infrastructure projects related to energy, clean industry, and resilient buildings. These new investments are an opportunity to bring resources to communities that have experienced historical underinvestment. Polluting industries with disproportionately high greenhouse gas emissions are frequently located among marginalized communities, so these investments have simultaneous benefits for climate, human health, environmental and social justice, and local economies.78

The electricity grid is one promising area for infrastructure modernization that increases equity. Local conditions of the grid determine the ability of the grid to take on renewable resources, thus perpetuating historical underinvestment by keeping older, more polluting energy sources near the poorest communities with underinvested grids. Prioritizing investment in frontline communities through identifying local infrastructure gaps builds a more equitable, less polluting, and more resilient grid.

Support for modernizing infrastructure can come from government incentive programs to redevelop communities unduly impacted by pollution. Many business owners the Commission spoke to identified tax credits and state-administered rebates as key to enabling infrastructure improvements in frontline communities.79 Recent executive actions have also created new opportunities to connect these communities with funding. The Justice40 Initiative mandated that at least 40 percent of federal climate investments go directly to frontline communities. Justice40 recommends the creation of screening tools that identify underresourced communities and set funding guidelines to improve economic conditions and protect against climate impacts.80 One such tool, the Climate and Economic Justice Screening Tool, features an interactive map identifying communities experiencing different categories of environmental and economic burdens. Publicly available and continuously updated with new data, this tool can direct private-sector spending to communities at the greatest risk and with the most to gain. For example, the screening tool helped fund the EPA’s Clean School Bus Program, which is replacing 2,600 school buses with electric alternatives in frontline communities.81 Many other large federal agencies have already drafted and are beginning work on Justice40-covered programs.

In addition to the large federal projects covered by Justice40, community-led organizations should be funded directly to identify and support local projects. Public funders such as the EPA’s Environmental Justice Thriving Communities Grantmaking Program and private grantmakers such as the Climate and Clean Energy Equity Fund or the Building Equity and Alignment Fund provide millions of dollars annually to nonprofit grassroots organizers. These grantmakers also support local capacity-building by providing technical assistance and sharing strategies for economic development with grantees. Similarly, the DOE provides funding and technical assistance for municipalities and community organizations to implement energy efficiency and weatherization programs in all fifty states and U.S. territories.82
 

Dominion Energy: Supporting Local Economies through Investments in Renewable Energy

Dominion Energy’s Coastal Virginia Offshore Wind (CVOW) project plans to build 176 wind turbines and three substations off the coast of the Hampton Roads region of Virginia, along with accompanying onshore transmission lines.83 Once completed, this will be the largest offshore wind project in the United States and is expected to support economic development in the region as well as provide new clean energy jobs. Economic analysis performed by the firm Magnum Economics predicts that the project will result in nine hundred new jobs and millions of dollars in economic output and local and state tax revenues.84 To fill new jobs, Dominion Energy has agreed to hire and train local workers, with a focus on employing veterans and people from historically marginalized communities.

Throughout the planning process, Dominion Energy has engaged with the local community in a variety of ways, holding public meetings and producing materials in multiple languages.85 In addition, they created the online tool GeoVoice to allow community members to view and provide feedback on transmission line route options.86 Community feedback, along with an analysis of existing infrastructure, historical sites, and community and natural resources, was essential to determining the final route.

Construction for CVOW is expected to begin in 2024 and to be completed in 2026.

Endnotes

• 78Susan Perlin, David Wong, and Ken Saxton, “Residential Proximity to Industrial Sources of Air Pollution: Interrelationships among Race, Poverty, and Age,” Journal of the Air and Waste Management Association 51 (3) (2001).
• 79American Academy of Arts and Sciences, Barriers to Private Sector Action (Cambridge, Mass.: American Academy of Arts and Sciences, 2022).
• 80Colleen Callahan, Daniel Coffee, J. R. DeShazo, and Silvia R. González, Making Justice40 a Reality for Frontline Communities: Lessons from State Approaches to Climate and Clean Energy Investments (Los Angeles: Justice40, UCLA Luskin Center for Innovation, 2021).
• 81U.S. Environmental Protection Agency, 2023 Clean School Bus (CBS) Grant Program: Notice of Funding Opportunity, EPA-OAR-OTAQ-23-06 (Washington, D.C.: U.S. Environmental Protection Agency, 2023).
• 82Office of State and Community Energy Programs, “State and Community Energy Programs Project Map,” U.S. Department of Energy, (accessed June 12, 2023).
• 83Coastal Virginia Offshore Wind, “About Coastal Virginia Offshore Wind,” (accessed June 12, 2023).
• 84Mangum Economics and Hampton Roads Alliance, Potential Impact of the Development of the Offshore Wind Energy Industry on Hampton Roads and Virginia (Glen Allen, Va.: Mangum Economics, 2020).
• 85Dominion Energy, Climate Report 2022 (Richmond, Va.: Dominion Energy, 2022).
• 86Coastal Virginia Offshore Wind, “About Delivering Wind Power,” (accessed June 12, 2023).

3.3 Create more robust, credible, and comprehensive incentives to retire and replace high-emission facilities and vulnerable infrastructure.

Over the last decade, the nation has begun to retire high-emitting industrial facilities, notably coal-fired power plants. Coal has shrunk from generating about 52 percent of power in 2005 to about 22 percent today.87 These plant closures have reduced local air and water pollution, lowered carbon dioxide (CO₂) emissions, and opened the way for a new generation of investments in energy generation.

The process of retiring existing high-emission assets should be extended and even accelerated, clearing away high-polution infrastructure to make more room for newer, cleaner systems. The United States has simultaneously begun to identify infrastructure and places that are particularly vulnerable to climate impacts. In some cases, retiring those assets to make room for newer and more resilient approaches would help improve the nation’s ability to adapt to climate impacts while also benefiting the most vulnerable communities. Owners of aging infrastructure often expect compensation for stranded assets, but regulators and other policy-makers have been haphazard in their responses. In some states, legislators and utility regulators have compensated asset owners for the early retirement and stranded costs of coal plants.88

Augment state, local, private, and philanthropic funding mechanisms with a national fund to compensate early retirement of high-emission facilities and of infrastructure particularly vulnerable to climate impacts.

In other pollution-control areas, government programs have used a combination of subsidies and fees to incentivize the removal of high polluters. These programs leverage market forces to ensure funds are spent effectively while evaluating proposals for their cobenefits to community health and redevelopment. Evaluation criteria should ensure that funds go to diverse projects.

Articulate a national strategy for the retirement or retrofitting of high-carbon industrial facilities within the next five years.

The nation can accelerate deep cuts in emissions by helping high-pollution facilities retire, allowing cleaner alternatives to spread more widely and into service more quickly. An effective funding program in this area would offer the building blocks for a comprehensive strategy, including a toolkit of effective practices, identification of key successes, and outline of the vision for growth. This toolkit should be funded and organized by philanthropic organizations that emphasize community redevelopment, for they have the relationships and knowledge to integrate climate change into local development.

To implement this strategy successfully, organizations involved in implementation such as the National Association of Regulatory Utility Commissioners and the National Governor’s Association should develop and share their own strategic toolkits that offer promising practices and successful, transferable examples.
 

Endnotes

• 87U.S. Energy Information Administration, “Electricity Explained,” last updated July 15, 2022, with preliminary data for 2021.
• 88Paul Bodnar, Matthew Gray, Tamara Grbusic, et al., How to Retire Early: Making Accelerated Coal Phaseout Feasible and Just (Basalt, Colo.: Rocky Mountain Institute, 2020).

3.4 Redesign permitting processes to be less burdensome and more trustworthy.

Cutting emissions and making society more resilient to the effects of climate change will require new infrastructure, such as transmission lines and improved water handling and treatment systems. Yet due to the current regulatory environment, the actual building of this infrastructure lags far behind what is needed. For example, the U.S. electric transmission system currently expands by 1 percent per year but must move closer to 2.3 percent annually to achieve deep decarbonization.89

Expanding this key infrastructure more rapidly will require reforms to permitting processes, which at present can slow projects by years and deter investors from pursuing some projects altogether. But permitting is one of the nation’s tools for ensuring that projects do not cause undue harm to the environment or the health of surrounding communities. Infrastructure with such harmful effects exacerbates existing inequities when near low-wealth communities or communities of color. Applying a justice lens to reforms to permitting processes makes it easier for low-income communities to gain clean energy.

Streamline the permitting process by adopting promising practices at federal, state, and local levels.

It is possible to improve and accelerate the permitting process for siting new clean energy infrastructure using existing legislative authority. Many of the most promising opportunities lie with broadening participation early in project planning so developers can better anticipate resistance and adjust designs, especially for multijurisdictional projects. Such transparent engagement increases trust between communities, government agencies, and project developers. It may also reduce the odds of lawsuits when the project approaches completion.

Achieving deeper and earlier engagement requires that government agencies continue to identify and share promising practices for broadening early participation, especially for making the permitting process accessible to nonexperts. It also requires adequate funding to train personnel in federal agencies on how to engage on environmental justice issues. In addition, Congress should amend the Federal Advisory Committee Act to allow convenings of agencies, project proponents, industry, tribes, and state and local governments without cumbersome notification and other constraints.90

Permitting regulations at the state and local levels can pose additional complications. Most localities have zoning laws that restrict a wide variety of new developments. The National Renewable Energy Laboratory has identified nearly two thousand siting ordinances on wind power and one thousand on solar power.91 Infrastructure projects that cross state and municipal boundaries often must engage with a patchwork of regulations, complicating approval processes for projects as a whole. To ease the permitting of clean energy, electricity transmission, and resilience projects, federal funding should be contingent on state and municipal adherence to a unified set of guidelines.92 These guidelines should be similar to those in the federal government’s FAST-41 program, created in 2015 to accelerate infrastructure in certain sectors.

Continue to reform permitting without meaningfully compromising the quality or inclusivity of environmental review, while giving siting authority to federal agencies for high-value energy projects.

Historically, the permitting process has been slow and has favored developers with the capital and lawyers to navigate the process.93 But to achieve just outcomes, projects of all types must advance, especially those that advantage frontline communities. The Fiscal Responsibility Act, passed in June 2023, contains reforms to the National Environmental Policy Act (NEPA) designed to speed up the permitting process by limiting times for review and exempting some projects from major reviews.94 The reforms also narrow the scope of environmental effects and options for alternatives under reasonableness standards, while providing the opportunity for greater state, local, and tribal engagement through lead and cooperating agency roles. Further reforms to the NEPA and other permitting processes should maintain the quality of environmental review while removing existing barriers to build green infrastructure.

A promising development is the new backstop authority given to the Federal Energy Regulatory Commission (FERC) by the Infrastructure Investment and Jobs Act to site particularly valuable electric power lines. The FERC is proposing that developers submit an environmental justice public engagement plan and an environmental justice resource report. So environmental justice communities can have a well-articulated, influential voice in this process, developers and government should fund environmental-justice and Indigenous liaisons. The establishment of a mandatory funded account could be a meaningful reform to provide funding for this purpose.

Projects that are predesignated by federal agencies to be both low-risk and clean-energy, as well as projects that are outside of federal land, are candidates for exemption from lengthy federal review processes. Already many federal agencies, including DOE, are advancing efforts to identify these high-priority, low-risk infrastructure projects. Additionally, the North American Electric Reliability Corporation will be carrying out a study to identify where key transmission projects may be needed.95 Having the government engage in programmatic reviews for solar, wind, and transmission projects could help proponents make more informed siting decisions that have comprehensive benefits.

To preempt disputes and facilitate resolution outside of the courts, litigants could be required to submit feedback during the public comment period. Alternatively, the statute of limitations could be shortened, decreasing the period when projects could become enmeshed in litigation. As an alternative to the court system, the Federal Permitting Improvement Steering Council (FPISC) should be empowered to resolve interagency disputes, and the director of the FPISC should be a Senate-confirmed position that reports to the President. Remaining lawsuits could also be directed to a specialized court with expertise on NEPA and conservation that many courts lack. Despite many reforms included in the Fiscal Responsibility Act that could speed up agency reviews, the fundamental problems created by looming litigation on the content of those reviews remain largely unchanged.

Use promising practices to determine and consider cumulative impacts to reduce the potential pollution burden on frontline communities.

Cumulative impacts refers to the combined effects of multiple environmental stressors on communities, especially those that are already facing multiple burdens, such as pollution, poverty, and lack of political agency. Permitting decisions that fail to consider cumulative impacts can result in the concentration of environmental hazards in certain areas, which can further exacerbate existing inequalities and decrease broad public will for climate action. For example, a community may be burdened with multiple sources of pollution, such as a power plant, a refinery, and a waste facility, leading to higher levels of air and water pollution and associated health risks.

To ensure these impacts are considered and distributed more fairly, the federal government should develop standards on how to measure them. Many federal, state, and local mitigation and adaptation projects already include assessments and mitigation of cumulative impacts in their planning. For example, the Light Rail Transit Project in Phoenix created a model that considered air and water quality, noise pollution, and impact on existing traffic that they shared with local community members in outreach sessions. Based on this model and community feedback, the builders changed the plans to better protect water quality and not disturb sensitive habitats. To expand cumulative impacts analysis and demonstrate how to improve current practices, philanthropy should identify high-value projects that could benefit from more systematic assessments and invest in a sample of them.
 

Endnotes

• 89Jesse D. Jenkins, Jamil Farbes, Ryan Jones, et al., Electricity Transmission is Key to Unlock the Full Potential of the Inflation Reduction Act (Princeton, N.J.: REPEAT Project, Princeton University Zero Lab, 2022).
• 90U.S. General Services Administration, “The Federal Advisory Committee Act (FACA) Brochure: An Overview,” (accessed June 12, 2023).
• 91Madeline Geocaris. “NREL Releases Comprehensive Databases of Local Ordinances for Siting Wind, Solar Energy Projects,” The National Renewable Energy Laboratory, August 9, 2022.
• 92Aspen Institute, Building Cleaner, Faster (Washington, D.C.: Aspen Institute, 2021).
• 93Jonathan M. Moch and Henry Lee, “The Challenges of Decarbonizing the U.S. Electrical Grid by 2035” (Cambridge, Mass.: Belfer Center for Science and International Affairs, Harvard Kennedy School, 2022).
• 94Stephen Lee, “Debt Deal Pares Federal Role in Environmental Permitting Reviews,” Bloomberg Law, May 30, 2023.
• 95U.S. Department of Energy, National Transmission Needs Study: Draft for Public Comment (Washington, D.C.: U.S. Department of Energy, 2023).

3.5 Strengthen the mandate for companies to measure and disclose climate-related physical and transitional risks that are auditable, replicable, and material.

The changing climate and society’s responses to it pose immense risks to the economy, especially in the sectors with the highest emissions and locations most exposed to the impacts of climate change. Some companies and government agencies have begun to assess their exposures. The insurance industry has produced reports analyzing the physical risks of climate change to their industry, and some segments of the oil and gas industry have calculated the risk of transition to low-emission futures. However, awareness and data on these risks are highly uneven, and many organizations do not measure or report their vulnerabilities.96 For example, the municipal bond industry, one of the nation’s most important mechanisms for raising money for public works projects, has made little progress in recognizing physical climate risks.97 Without better data, shareholders and debtholders cannot make informed decisions about risk or participate effectively in proxy votes, which weakens oversight and accountability.

Inconsistency and imprecision in reported metrics undermine the usefulness of current risk assessments. Several organizations have undertaken efforts to standardize disclosures, including the Sustainability Accounting Standards Board, the Task Force of Climate-Related Disclosures, and the International Sustainability Standards Board.98 The Securities and Exchange Commission (SEC), the primary government agency responsible for market oversight, must determine which disclosure standards should be implemented in the United States.

In 2022, the SEC published a proposal for enhancing climate-related disclosures.99 If confirmed, the rule would require disclosures of, among other items, climate-related risks and their actual or likely material impacts on business, strategy, and outlook. While there is demand for reform to climate-related disclosures, including from some of the world’s largest asset managers and many of our private-sector interviewees, the specifics of the proposal were often unpopular.100 Many of our interviewees felt the disclosures required by the proposed SEC rule were insufficiently relevant to their investing and voting decisions and too costly to adhere to. Because of widespread opposition during the public comment period, the process stalled before taking effect, leaving no clear timeline for when a modified rule would be proposed. Even if the current draft rule were sustained, it would face severe legal challenges.

In this context, this Commission recommends a renewed proposal by the SEC that would align with independent experts’ recommendations, and whose disclosures are comparable across companies within a given sector, verifiable, and updated regularly. And as SEC rules only cover public companies, this Commission recommends incentives for private companies to comply voluntarily. Municipal bond rating agencies also should develop a similar proposal to help investors in those instruments invest wisely.

Endnotes

• 96Parker Bolstad, Sadie Frank, Eric Gesick, and David G. Victor, “Flying Blind: What Do Investors Really Know about Climate Change Risks in the U.S. Equity and Municipal Debt Markets?” (Washington, D.C.: Brookings Institution, 2020).
• 97Erika Smull, Evan Kodra, Adam Stern, et al., “Climate, Race, and the Cost of Capital in the Municipal Bond Market” (Washington, D.C.: Brookings Institution, 2022).
• 98For more information on these three organizations, see SASB Standards; Task Force on Climate-Related Financial Disclosures; and International Sustainability Standards Board, “About the International Sustainability Standards Boards.”
• 99U.S. Securities and Exchange Commission, “The Enhancement and Standardization of Climate-Related Disclosures for Investors,” Federal Register 87 (69) (2022): 21334.
• 100BlackRock, “Policy Spotlight: BlackRock Supports Consistent Climate-Related Disclosures; Urges Global Coordination,” June 2022; and Eric Rosenbaum, “There’s an ESG Backlash inside the Executive Ranks at Top Corporations,” CNBC, September 29, 2022.