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A conversation with Harvard Law School’s Jody Freeman about life after the endangerment finding.
The Environmental Protection Agency unveiled a proposal on Tuesday to reverse its own conclusion that greenhouse gases are a threat to public health and welfare. Known as the “endangerment finding,” this 2009 determination initially compelled the agency to regulate carbon emissions from vehicles under the Clean Air Act. But the agency has since used it as the basis for many of its efforts to tackle climate change, including emissions limits on power plants, oil and gas operations, and aviation.
If the reversal is finalized as written — and survives court challenges — the EPA will no longer have the legal authority to regulate carbon dioxide from the tailpipes of cars or trucks, invalidating the vehicle standards issued by the Biden administration last year.
While other greenhouse gas regulations wouldn’t automatically disappear, the agency could easily use the same arguments to repeal them. Indeed, the agency said that it has already initiated or intends to initiate “separate rulemakings that will address any overlapping issues” related to other sources of greenhouse gas emissions, such as power plants.
EPA’s primary justification for reversing course, detailed in a 302-page document, is that the Clean Air Act is designed to target air pollution that endangers public health “through local or regional exposure,” and therefore that it cannot be used to rein in greenhouse gases “based on global climate change concerns.” Richard Revesz, a professor of law at New York University and former Biden official, told me this was “breathtakingly broad,” and said that it was “inconsistent with 55 years of regulation under the Clean Air Act. That limitation was never understood to be there.”
The EPA also put forth a host of other legal and scientific arguments, “basically throwing the kitchen sink at this issue,” Revesz said. The proposal asserts that the EPA should have considered the downstream costs of making the finding, as well as weighed the potential benefits of a warmer climate. In a section entitled “Alternative Rationale for Proposed Rescission,” the agency attempts to poke holes in the scientific evidence that climate change is a threat to public health, concluding that the research is uncertain. It cites a report from the Department of Energy, also released Tuesday, that says the warming caused by greenhouse gases is not as bad for the economy as people once thought, and that regulating such emissions will have “undetectably small direct impacts on the global climate.”
The proposal cherry-picks data and misinterprets scientific findings. For example, it says that recent evidence suggests that the temperature projections EPA used to make the endangerment finding were “unduly pessimistic,” citing a 2020 paper by climate scientist Zeke Hausfather. But Hausfather has already posted on social media that this is wrong — his paper supported the EPA’s 2009 temperature projections.
My inbox is currently full of statements from legal experts, scientists, and activists adamant that the administration’s arguments are baseless. The agency will be taking public comments on the proposal through September 21, and hold at least two public hearings on August 19 and 20. To get a sense of what to expect over the coming months and years as a result of this move, I called up Jody Freeman, the director of the Environmental and Energy Law Program at Harvard and a former White House counsel for the Obama administration. Our conversation has been lightly edited for clarity.
What will EPA have to do in order to finalize this proposal?
What they do is put it out for public comment. There’ll be a huge reaction to this, and so they’ll have a very big set of comments that they’re going to have to go through, which then will take them several months at a minimum. And they’re not necessarily going to be in a rush, right? At a minimum, we’re going to be getting into 2026 before we’d see a final rule. And then the lawsuits would start.
Other than just responding to the public comments, are there certain things that they would have to demonstrate to finalize this determination?
The normal process is you have to respond to the most serious and relevant comments. So if the comment says, The claims you’re making about the science are wrong, they’d have to respond to that. The normal course is they come back with a final rule that explains why they’re doing what they’re doing, and why they either didn’t agree with the comments, or they do agree with some of them, and they’ve adapted the proposal.
And as you said, then the lawsuits would start.
It doesn’t take effect for 30 days after it’s final. But yes, at that point, they get sued. These rules go to the D.C. Circuit Court of Appeals because that’s what the Clean Air Act says, and usually it would take about a year or so for a D.C. Circuit decision to happen. So now you’re in 2027. You can see the timeline on this stretching out. And if you ultimately think this could go to the Supreme Court, you can imagine that’s another year away. So basically, for the rest of President Trump’s term, you really shouldn’t expect to see enforcement or action on federal climate rules.
Even if the EPA hadn’t taken this step, wouldn’t that still have been the case, since the Trump administration is fighting the power plant rules and the vehicle emissions rules?
Well, you could see them dragging their feet enforcing these standards. Of course, they would get sued if they weren’t enforcing vehicle emission standards against the auto industry. There would be efforts to force them to enforce. But it’s more serious and more long term damage for them to try to rescind the underlying endangerment finding because depending on what the Supreme Court does with that, it could knock out a future administration from trying to bring it back. Now that would be the nuclear option. That would be their best case scenario. I don’t think that’s likely, but it’s possible.
At a minimum, let’s say they don’t win everything, but the court says they can do this for now — they have the discretion, the flexibility not to make this finding. Another administration can come back and make it and restore the rules. But that would take, again, several years. So even if they lose, they win.
If they do finalize this, would the other lawsuits that are going on around the power plant rules and the vehicle emissions rules automatically be dropped?
There are a few lawsuits that were challenging the Biden-era rules, but the Trump administration asked the courts to hold them in abeyance because they said, We’re going to go revisit all those rules and replace them. So those lawsuits aren’t moving forward anyway at the moment. It would probably be true that the administration, in taking this action, wants to set up a situation where it can go back into court and say, Well, now all these challenges are moot. We don’t have any authority to regulate anyway. But for now, they’re all on hold.
Are there other regulations this will affect besides those for vehicles and power plants?
The methane rule for oil and gas facilities is more of a question mark because they don’t seem to be announcing they’ll eliminate it. It’s possible they push off compliance. It’s possible they make the rule weaker. But there are a couple reasons why they might not rescind that.
One is that there’s a very complicated history of this rule. Congress disapproved of a weaker methane rule the first time around in the Trump administration, and because of that congressional action, there’s a barrier there. They can’t easily just rescind that methane rule. They’ve got more legal hurdles to jump through.
The other reason is there are some good reasons to regulate methane that have to do with ozone pollution and pollution that isn’t just about climate change. And the third reason is the oil and gas industry might actually want a methane rule. They might want a weak one, but they might want one federally. So that’s a bit separate, and you have to be on the lookout for them handling methane differently.
Could a future EPA just develop stronger pollution standards for other pollutants that would indirectly reduce greenhouse gas emissions?
It’s true that when you set toxics standards, for example, for power plants to control their toxic pollution, a side benefit is those power plants become more efficient, and that means they control their carbon pollution, too. But this is more around the margins. This is not taking big bites out of power plant greenhouse gas emissions or big bites out of car and truck emissions. It would be a much, much, much weaker version of what you can do with the endangerment finding.
So if the endangerment finding is reversed, is the only path for future regulation for Congress to explicitly tell EPA that it must regulate greenhouse gases?
That’s one option, but it may not necessarily be the only one. It depends on where this lands after it moves through the courts. If the Supreme Court said, You, Trump EPA, you can rescind this finding, but another administration could bring it back, then another administration can say, Well, we think the science is clear, and we’re going to make the finding again and issue these rules. So it all depends on how far the court goes. If it’s going to agree with EPA, how much will it agree? But if the court were to essentially say, this agency has no authority now and forever to make this finding, well then yes, you need new law.
Will the overturning of the Chevron doctrine also play into this?
That’s another interesting one. So what they have to do now is argue that greenhouse gases might be pollutants, but we don’t have to regulate them. And when they argue that we don’t have to regulate them, they’re going to be asking for a lot of deference. And so in that sense, they’re kind of asking for what Chevron used to give you — deference. But they don’t have Chevron anymore, so they’re going to have to say to the court, You should agree with our reading of this law. This is the best reading of this law, that we don’t have to regulate. They no longer can just say, you ought to defer to us under Chevron.
In that scenario, is it left to the court to decide?
It’s left to the court to say, your reading of the law is right. You have flexibility here, and you can decide you don’t need to regulate. The court would have to agree with their reading of the Clean Air Act.
Isn’t the endangerment finding more of a scientific question than a legal one?
Well, in making that scientific decision about what constitutes a danger to human health, there’s a lot of judgment in there. How do we interpret the science? Is it okay for us to say, well, there are a lot of good things that happen because of climate change? This is what they might do, right? They might say, The EPA, long ago, they ignored all the good stuff about climate change, and we think that’s really important. They might say some ludicrous stuff that leading scientists would think is completely wrong. But there’s some discretion in there about how you count the science and what you weigh, and they’re going to try to get the court to agree that they have a lot of flexibility in what method they use. That means the court will have to agree with them on how they read the law.
So they might say, We have flexibility to interpret the science, and the court might say, No, you don’t, the science is really clear. Then they might say, Okay, well even so, the U.S. contribution is so infinitesimally small that we don’t consider it a contribution to the problem. Now there, the court might say, Okay, you have discretion there. So it’s a little bit of a moving target, where at every opportunity they’re going to say, We have flexibility, don’t you agree?, and hope the court bites on one of those.
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Same goes for the Midwest, according to Stanford air quality researcher Marshall Burke.
It’s not just you: Summers are getting smokier.
For the third year in a row, cities like Detroit, Minneapolis, Boston, and New York are experiencing dangerously polluted air for days at a time as smoke drifts into the U.S. from wildfires in Canada.
Smoke has traveled to these places in the past, Stanford University researcher Marshall Burke told me. But the data is clear that the haze is becoming more severe.
“The worst days are worse,” said Burke, “and you can see that in the averages, the last couple of years are much, much higher across the Midwest and the East Coast than we’ve observed in the past many decades.”
Burke is one of the leading scholars studying wildfire smoke, investigating everything from its effect on air quality, public health, and behavior, to preventative and adaptive public policy responses. In one of his most recent papers, which has not yet been peer reviewed, he and his co-authors analyzed the influence of smoke on air quality over the past two decades, using satellite imagery of smoke plumes to disentangle how much of the fine particulate matter, or PM2.5, measured by air monitoring stations came from fires versus more typical sources like cars and furnaces.
The study shows a sharp increase in the amount of smoke in the air around the U.S. in just the past few years. From 2020 to 2023, the average American breathed in concentrations of smoke-related PM2.5 that were between 2.6 and 6.7 times higher than the 2006 to 2019 average.
The paper also contains a stunning set of charts that show that wildfires are eroding decades of air quality gains — and the efficacy of air quality regulation in general — and that without these smoke events, PM2.5 levels would have been significantly lower.
Courtesy of Marshall Burke
I caught up with Burke to better understand what we know about this seemingly sudden escalation of smoke events, and what we can do to better protect ourselves from them moving forward. Our conversation has been lightly edited for clarity.
Given the smoke events we’ve seen in the last three years, can we say anything about the next three years?
I don’t think you want to make bets on any specific years. The long run trend, unfortunately, suggests that the last few years are going to be more representative than the sorts of years we got 10 to 15 to 20 years ago. And that is due to the underlying physical climate that’s warming and drying out fuels and making fire spread faster and fires much larger. Larger fires generate more smoke.
Has it all been driven by Canadian wildfires?
No. The East Coast and the Midwest will get exposure from fires as far as California, often in the Northern Rockies. But the recent very bad exposure — 2023 was by far the worst year in the Midwest and East Coast — that was nearly all from Canadian fires. This year, again, it’s nearly all from Canadian fires.
Why is that?
The reason we’ve seen a lot more Canadian fires is the same reason we’ve seen a lot more fires in the U.S. West — increasing fuel aridity. As temperatures warm, forests dry out. And so when you get lightning strikes, which tend to start most of the large fires in Canada, you get faster fire spread and much larger fires.
Interestingly, we’ve seen in Canada fewer total fires over time. Often I see people posting this on Twitter — Climate change is not a problem, we’re getting fewer fires in Canada — and that’s true. I think they’ve reduced other sources of ignitions. But you still get lightning ignitions.
Burned area has gone the other way — you’ve seen an increase in burned area. So, fewer fires, but much larger fires, and these larger fires are the ones that put out a lot more smoke, and the smoke gets pushed into population centers in Canada and into the U.S.
There were really large wildfires in California before 2023. Why weren’t places on the East Coast having smoky days as a result of those?
It’s the way the wind blows and how far it has to go. In the large 2020 and 2021 fire seasons we had in the U.S. West, some of that smoke certainly was making it to the East Coast, but given the prevailing wind patterns and the distance the smoke had to travel, the influence of those fires on air quality was not as big as the recent Canadian fires.
Are there other events that cause comparable air quality degradation to wildfires?
You can get really specific things — if a train crashes and lights on fire and a given town is exposed to really high levels of whatever pollutant for a few days. Sometimes you can get dust events that have broad scale exposure. But basically never do you reach the AQI levels that we see in wildfires. Wildfires are pretty unique in their ability to expose very large numbers of people to a very high level of pollutants for days, or unfortunately now, weeks, at a time. Nothing else compares in the U.S.
If you go to other parts of the world where you have large anthropogenic sources — Indian cities, Chinese cities — it can be quite different. There’s some exceptions. Salt Lake City and places where you get inversions and you get pollution trapped for many days, you can get pretty high levels of exposure, but typically nowhere close to what you get during these acute wildfire events.
When the AQI goes back down to levels that are more common in a city after a smoke event and people feel safer going outside, are you able to measure how much of the PM2.5 remaining in the air is from a wildfire? Does it matter?
We try to measure that directly — on any given day, how much of the PM that you’re experiencing is from wildfires versus from other sources. What you see is these events can turn on really quickly, and they can also turn off really quickly, either because the wind direction changes or because it rains — if it rains, you rain out a lot of these pollutants, and then you’re breathing mostly clean air right away.
We also try to measure, how does human health respond? One thing that science doesn’t give us a crisp answer to yet is, is one day of 100 micrograms better or worse than 10 days of 10 micrograms of exposure? We don’t actually really know. What we do see is people respond very differently to those two scenarios in ways that likely affect health outcomes. On really bad days, people tend to stay inside. In California, total emergency department visits go down instead of up, and that’s because people are not getting in their cars, they’re not getting in car accidents, they’re not spraining their ankle playing football or whatever because they’re staying at home.
On lower smoke days, we see emergency department visits go up. That’s probably because people are not changing their behavior. But, maybe surprisingly, we still don’t have a crisp answer if you’re thinking about asthma or mortality or other cardiovascular outcomes.
What are some of the other questions researchers are trying to answer as this becomes more of a national issue?
All sorts of things. The immediate health impacts that you think about — respiratory outcomes have been the one that’s been measured best in a lot of different settings. Cardiovascular outcomes, I would say the evidence is surprisingly more mixed on that. There’s a long-standing literature that shows cardiovascular mortality impacts of exposure to PM, but for wildfire PM, specifically, that evidence is less clear. Sorting that out and trying to understand whether there are differences is important.
Cognitive outcomes — does it increase your risk of dementia? Does student learning go down? Does it reduce cognitive performance at work? I think there’s emerging evidence that smoke is pretty important. Exposure to air pollution, more broadly, is important, but wildfire smoke, specifically, can impact these outcomes.
Birth outcomes is another one we and others have looked at. You see a pretty clear signature of wildfire smoke in birth outcomes — increases to the risk of pre-term birth, for instance. We used to just think about sensitive populations as elderly populations or people with pre-existing conditions. And basically what the research is showing is, no, actually, everyone is sensitive in some way. The list of people who are likely affected probably includes most, if not all of us.
What are the potential policy responses to this in places that haven’t had to deal with it in the past?
I think there’s three policy buckets. This is more true in the U.S. than Canada, but our fire problem is a combination of a warming climate and a century of fire suppression that has left abundant fuel in our landscapes, so number one is dealing with climate change as best we can, and two is doing something about the accumulated fuel loads. There’s a lot we can do there — prescribed burning is one approach that we and others are studying a lot; mechanical thinning, where you go out and actually remove the fuel. Understanding when and where to do that and what the benefits are is an ongoing scientific challenge, but I think most of the evidence would suggest we’re going to need a lot more of that than we’ve done, historically.
But even if we do a lot of that, we’re going to get more of these smoke events, unfortunately. And so we need to protect ourselves when these events happen. Indoor air filtration works really well, so we need to make sure people have access to filters of various types. The evidence would suggest that we see health impacts even at pretty low levels of exposure, and so if you have a portable filter — I drive my family crazy, I’m turning ours on all the time. You should basically just be running them all the time.
What about in terms of messaging? I’m thinking about city officials or state officials, when a smoke event is coming — and maybe this is still an active area of research — but what’s the current thinking on what message to send to people?
Yeah, I think it is an ongoing area, in terms of exactly how to do this and who to target with the information. The way we typically do this is to set these thresholds, right? So, above some threshold, you get a notice, and below, you don’t. That is understandable.
But what we see in the data is that there’s not some level below which you’re fine and above which you’re screwed. What we see is the more smoke you’re exposed to, the worse off you are, and so our goal should just be to reduce our exposure as best we can. How to message that effectively is not something we have a crisp social scientific answer to yet.
A lot of the advice has historically been that you should stay at home with your windows and doors closed. In California homes that is not very protective because California homes tend to be not very tight. In my view, just telling people to close their windows and doors is not sufficient for protecting health. They need some sort of active filtration — portable air filter, central air — to do that.
The other thing that’s happened in California, and I’ve seen this with my own kids — should we cancel school on really bad days? The assumption is that kids are better protected at home than they would be in the school environment, and that’s just not obviously true. It could be the case that for many kids, schools are better. We don’t know, because we do not have comprehensive measurement of indoor air quality, and this is a huge failing that we need to fix. Just as we measure it pretty comprehensively outside, we’ve got to do the same thing inside, and we just haven’t done this.
On TVA’s new nuclear deal, plastics talks’ ‘abject failure’, and powerless Puerto Rico
Current conditions: After briefly strengthening into a Category 5 storm, Hurricane Erin continues toward Puerto Rico as a Category 4 • China is reeling from flash floods that killed 10 in Inner Mongolia on Sunday • Spain is battling 20 major wildfires as blazes across Europe displace thousands.
The Internal Revenue Service released guidance on Friday for wind and solar projects attempting to access the federal tax credits that start phasing out next year. For more than a decade, renewable developers needed to show only that they’d spent 5% of the total cost of the construction to qualify in a given tax year. Once the new rules kick in next month, almost all new projects will need to actually begin physical construction to be eligible. The change comes in response to an executive order President Donald Trump issued after signing the One Big Beautiful Bill Act, which directed the Treasury Department to raise the hurdles for wind and solar developers to tap what remained of the federal tax credits the new law had dramatically curtailed.
Trade associations representing renewables developers balked at the new rules. But solar stocks soared on Friday in large part because the guidance was less strict than many had anticipated, as I reported for Latitude Media. Prior to its release, some sources had speculated to me that the guidance could lift the investment threshold from 5% to somewhere closer to 51%, effectively requiring that developers spend more than half the total cost upfront or lose out on tax credits. “It’s not good, it’s not helpful, but from my perspective, the guidance could have been a lot worse,” David Burton, a partner at Norton Rose Fulbright who specializes in energy tax credits, told Heatmap’s Emily Pontecorvo. “Utility-scale solar and wind developers should be able to plan around this and not be that harmed.” This past weekend was also the third anniversary of many of these tax credits, which were created by the 2022 Inflation Reduction Act. As Center for Public Enterprise researcher Advait Arun wrote in an essay for Heatmap, going beyond past policy endeavors to “deliver an energy policy that stabilizes Americans’ cost of living while driving an energy transition away from fossil fuels and toward the technologies of the future ― Democrats should embrace this challenge. But they should also be aware that climate ambition runs headlong into the same institutional problems facing American democracy at large.”
For all the hype around building new types of reactors, the only new nuclear deals U.S. utilities have so far finalized involve what’s called third-generation designs. That means the reactors are still cooled with water like the rest of the traditional U.S. nuclear fleet, and include everything from the large-scale Westinghouse AP1000 to the small modular reactors NuScale and GE Vernova-Hitachi Nuclear Energy are promoting. On Monday, the Tennessee Valley Authority became the first U.S. utility to sign onto a power purchase agreement to buy electricity from what’s called a fourth-generation reactor company, whose SMR design uses a coolant other than water. The company, Kairos Power, is building its first reactor in Oak Ridge, Tennessee, with backing from Google. Under the terms of the new deal announced this morning, Google will buy as much power from the TVA grid as Kairos’ debut reactor produces.
If successful, the project could be the first next-generation nuclear plant to hook onto the U.S. grid. Reaching that goal has become a major political priority for the Trump administration since China hooked its first fourth-generation nuclear plant onto its grid last December.
For two weeks, international negotiators gathered in Geneva to hash out a global treaty to curb plastic pollution. More than 100 countries backed a pledge to halt production of new plastic waste. But oil-producing nations whose crude petroleum is transformed into plastics blocked the effort. Those included the United States, Saudi Arabia, and Russia. When talks ended last Friday, the nonprofit Center for International Environmental Law called the process “an abject failure.”
“When faced with a failure of this magnitude, it’s essential to learn from it,” David Azoulay, the head of the center’s delegation to the talks, said in a statement. “It’s impossible to find a common ground between those who are interested in protecting the status quo and the majority who are looking for a functional treaty that can be strengthened over time.”
The Environmental Defense Fund and the Union of Concerned Scientists sued the Department of Energy, accusing the agency of violating the law by secretly recruiting a group of people who reject the scientific consensus on climate change to author a report downplaying the risk of rising temperatures. The lawsuit alleges that Secretary of Energy Chris Wright “quietly arranged for five handpicked skeptics of the effects of climate change” to form a committee called the Climate Working Group. This, the litigation alleges, violates the Federal Advisory Committee Act of 1972,which does not allow federal agencies to recruit or rely on secret groups when engaging in policymaking, according to The New York Times.
Without major events such as a hurricane, Puerto Ricans lost power for a combined 30 hours last year..EIA
Puerto Ricans experienced an average of 27 hours of combined power grid interruptions each year between 2021 and 2024, according to new data from the U.S. Energy Information Administration. And that’s without counting major events such as hurricanes. By comparison, ratepayers in the mainland United States experienced about two hours of outages per year without major events. The frequency of blackouts increased throughout the three-year period. On average, Puerto Ricans faced 19 service interruptions in 2024: 14 without major events and 5 from major events.
The frequency of outages also increased last year. EIA
Earlier this month, Trump fired nearly the entire fiscal control board that Congress put in charge of the U.S. territory’s finances. His administration has said the terminations are part of an overhaul meant to reindustrialize the bankrupt island.
Massachusetts Institute of Technology researchers uncovered a link between the properties of graphite and how the material behaves in response to radiation. The findings could lead to more accurate, less destructive ways of predicting the lifespan of graphite materials in nuclear reactors. “The paper proposes an attractive idea for industry: that you might not need to break hundreds of irradiated samples to understand their failure point,” Boris Khaykovich, the MIT research scientist who authored the study, said in a statement.
On the third anniversary of the signing of the Inflation Reduction Act, Heatmap contributor Advait Arun mourns what’s been lost — but more importantly, charts a path toward what comes next.
Today, the Inflation Reduction Act would have turned three years old — if it hadn’t been buried alive in a big, beautiful grave. While the IRA was a hodgepodge of programs salvaged from President Biden’s far more ambitious Build Back Better agenda, it still represented the biggest climate investment in U.S. history. It catalyzed over $360 billion in energy and manufacturing investments and was expected to drive the installation of over 155 gigawatts of new solar and wind energy by 2030. And now Republicans have taken a sledgehammer to its achievements.
The timing could not be worse — not just for the climate, but also for the energy systems that we rely on. At a moment when the energy sector requires $1.4 trillion worth of upgrades by 2030 just to keep up with rising energy demand and increasingly erratic weather, Republicans have instead delivered a one-two punch of tariffs and tax hikes, sabotaging the industrial base required to deliver those investments and raising the retirement age of our power generation fleet.
All over the country (Texas and California maybe exempted), our aging electricity system is putting in its two-weeks notice. Staring down the barrel of precipitous demand growth, the country’s regulated utilities have requested over $29 billion in rate increases, concentrated across the West and South. The Department of Energy ordered the delayed retirement of coal plants and oil generators to manage this summer’s demand peaks. Meanwhile, capacity market prices on two of the country’s largest grids, PJM and MISO, have reached record highs ― a cry for new supply that is now increasingly unlikely to materialize quickly or cheaply. Two months ago, an unplanned nuclear reactor outage on a congested part of Louisiana’s energy grid led to a blackout for 100,000 people in and around New Orleans. That meant no working AC or refrigerators across large swaths of the city during a sweltering Memorial Day weekend.
All of this amounts to an opening for Democrats to shift public opinion decisively in favor of renewed climate action. Moving forward, lawmakers cannot ignore our infirm fossil-fired energy system, which stands to thwart their ability to deliver affordability, employment, health, and resilience to their constituents. Despite our recent losses, we still need an energy policy ― a climate policy.
What should the Democrats’ second attempt at a clean investment program look like? Having delivered the Bipartisan Infrastructure Law and the Inflation Reduction Act, laws that committed the state to the realization of a particular energy future, Democrats are well-positioned to build on their successes, and even to engage Republicans who remain interested in supporting innovative technologies, decarbonizing industry, and protecting public lands.
Where they cannot meet Republicans halfway, Democrats should double their ambitions. They must continue to embrace the power of federal investment to shape markets and achieve policy goals. But they must also learn from the shortcomings of their previous legislative outings and substantively change how the federal government invests in the first place. The way forward for Democrats starts with mapping out exactly how far they didn’t go, and ends with going there.
IRA and BIL were paradigm-shifting attempts at market-shaping. They laid the groundwork for the deployment of promising clean firm energy technologies such as next-generation geothermal and nuclear energy, as well as for necessary grid and supply chain upgrades, such as long-distance transmission corridors and critical minerals processing.
IRA and BIL were not, however, a comprehensive climate policy. They created cost-share programs for infrastructure resilience but neglected to buttress municipal bond markets, which states and local governments can use to make longer-term investments in climate resilience and adaptation. They penalized methane emissions but organized no comprehensive or compulsory managed phaseout of fossil fuel infrastructure. They failed to advance or adequately finance a coordinated deployment strategy for any key energy sector. And they shed the transformative vision of Biden’s Build Back Better agenda, which sought to stabilize the cost of living for Americans in the meantime — a tactical retreat that, in retrospect, looks ill-advised given voters’ current worries about affordability.
I am aware that criticizing BIL and IRA on these grounds amounts to judging them for goals they didn’t attempt to achieve. Judging them by the goals they did attempt to achieve, however, reveals that they only ever worked incompletely. Taken together, BIL and IRA expanded the energy tax credit system, created powerful programs for piloting and deploying innovative energy technologies, and seeded an ecosystem of regional financing institutions devoted to more equitably distributing the benefits of decarbonization. But the energy tax credits were never expansive enough; the programs intended to motivate investments into deeper decarbonization were not flexible enough to drive the mass uptake of emerging technologies; and efforts to decarbonize disadvantaged communities lacked a coherent strategy and ran headlong into local capacity constraints.
Speeding up the energy transition and building new infrastructure at scale requires endowing federal and state agencies with adequate appropriations, access to liquidity, and crystal-clear, wide-ranging mandates, as well as empowering them in statute with considerable flexibility as to the financial products and strategies they deploy to achieve those mandates.
Although imperfect, the IRA’s tax credits scored some significant wins that should undoubtedly inform future policy. The law took an existing system of technology-specific subsidies that had been on the books in some form since 1978 and made them technology-neutral, allowing developers of nearly any zero-emissions energy technology to access tax relief. It expanded the credits to domestic manufacturers of certain low- and zero-carbon technologies. It created a tax credit transfer market, allowing developers with limited tax liability to sell their credits for cash on an open market to any tax-liable buyer, rather than engage in expensive and complex “tax equity” transactions with a few large banks. It made certain credits directly accessible to tax-exempt entities, significantly broadening the pool of potential users. And most of these credits remained entirely uncapped ― a “bottomless mimosa” for developers that spurred over $321 billion in clean energy and manufacturing investments and supported more than 2,000 new facilities across the country.
To be sure, the IRA did not level the playing field perfectly across developers or across technologies. Developers of energy transmission, grid transformers, and electric rail were shut out of the credits. Tax-exempt public and nonprofit developers ― entities as large as the New York Power Authority and as small as local churches ― could not monetize depreciation or participate in the transfer market. And some credits remained capped, forcing developers to apply and cross their fingers. But as early as 2023, Goldman Sachs argued that even with these inadequacies ― which have easy legislative and statutory fixes ― the IRA would still have spurred over $3 trillion in investment by 2033.
The GOP has gutted much of this system, shortcomings and all, and replaced it with a tangle of red tape. The energy tax credits are once again technology-specific ― solar and wind developers have a few months left to start a project and claim the credits as written, though what it means to start a project got more complex just yesterday. But even the “clean firm” energy technologies that can still claim credits until 2032, such as nuclear and geothermal, may not be safe under new “foreign entity of concern” rules, which condition credits on developers’ ability to limit their reliance on Chinese suppliers and investment, requiring them to map out their supply chains at an unprecedented level of detail.
Democrats seeking to restore and build upon this plank of the IRA have their work cut out for them. The developers and manufacturers of any technology that contributes to zero-emissions energy production should be able to access and monetize federal support regardless of their tax status and free from the rigmarole and uncertainties imposed by competitive application procedures. Goldman Sachs’ $3 trillion estimate is now the lower bound of what’s possible — for instance, a tax credit for transmission investments suggested as part of Build Back Better but excluded from the IRA could have catalyzed over $15 billion in investment and supported the economics of all other energy projects. To the degree that the tax credits can help build industrial capacity and institutional support for decarbonization, future policymaking should maximize their remit and their distribution.
Tax credits alone, however, are hardly a skeleton key to decarbonization. Being disbursed only once a project is complete, tax credits do not substitute for the kinds of upfront financial support that project developers — especially developers of emerging technologies — require to complete their projects in the first place. Private investors have been comfortable with solar, batteries, and onshore wind because these projects can be completed, claim their tax credits, and earn revenues on the grid on a mostly predictable timetable. But new nuclear reactors, geothermal, hydrogen, green steel, and carbon capture are unfamiliar investments, have uncertain development pathways and return profiles, and thus remain un-bankable to investors.
This is why BIL and IRA created powerful programs worth tens of billions of dollars to finance the deployment of emerging clean technologies and break this vicious cycle of uncertainty. The Office of Clean Energy Demonstrations, or OCED, and the Loan Programs Office, or LPO, in particular, were empowered to support, at scale, the testing and commercialization of these emerging technologies as well as conversions of whole electricity grids.
OCED, with over $27 billion in appropriations, set up hubs for hydrogen and carbon capture projects across the country, and funded a suite of advanced steel and iron decarbonization projects. Endowed by BIL and IRA with over $15 billion in total credit subsidy and well over $300 billion in total loan authority, LPO made ambitious investments across a host of innovative technology categories, including ― but certainly not limited to ― energy storage, sustainable aviation fuels, virtual power plants, EV charging, and bioenergy. At the end of 2024, the LPO had over 200 loan applicants in its queue.
By rescinding OCED’s unobligated funding, ambiguously rewriting LPO’s lending authorities (while rescinding most of its unobligated credit subsidy), and pulling the plug on billions of dollars worth of conditional commitments, the GOP has stopped years of progress in its tracks. In the meantime, LPO has shed considerable staff while the administration has prevented it from making any new commitments. The combination of the “foreign entity of concern” rules constraining tax credit eligibility and this shuttering of federal financing opportunities could seriously throttle the development and commercialization of nuclear energy in particular, the darling du jour of Republicans’ energy strategy.
If these offices were once the engines of decarbonization, they needed a stronger spark plug. The LPO, in particular, has a special authority to finance state government-backed, non-innovative clean energy projects, such as regional battery manufacturing clusters or a state power developer’s renewables portfolio, but has never used it. And while OCED and LPO can provide developers with some degree of upfront support, LPO cannot easily provide construction loans, cannot derisk project cash flows to provide security to investors, and cannot mandate offtake. These deficiencies prevent ambitious borrowers with unproven technologies from scaling up: they scare off private lenders in the infrastructure sector, many of which are skittish about construction risk, require project developers to demonstrate three to five years of stable cash flows, have a low tolerance for market price uncertainty, and have shareholders who demand a certain level of returns.
The DOE can bridge this “valley of death” by using its broader market-shaping authorities to take a more aggressive “dealership” role in these sectors, providing stable offtake for developers through upfront purchasing while becoming a reliable source of supply to downstream customers (like an actual car dealership or a grocery store). The DOE has in fact already used this approach to provide demand-side support to its now-endangered hydrogen hubs through OCED.
These kinds of public dealership arrangements are not unique or path-breaking: The Federal Reserve’s backstop of the municipal bond market in 2020, nonprofit investor Climate United’s planned EV trucking purchase-and-lease program in California, and even the Department of Defense’s recent MP Materials deal are all examples of public entities addressing a mismatch in the supply of and demand for a critical good and, in doing so, shaping markets toward public ends.
For all that BIL and IRA built avenues for developing and deploying energy technologies, they were also full of programs aimed at distributing the fruits of decarbonization equitably. Both the energy community bonus credits, a provision in the IRA that increased the value of the energy tax credits for projects in poorer, higher-unemployment, and energy facility-adjacent communities, and President Biden’s Justice40 initiative, which directed 40% of federal spending toward poorer and more rural communities, exemplified the administration’s “place-based” approach to industrial policy and economic development. The Biden administration heavily encouraged disadvantaged communities, local governments, schools, nonprofits, and tribal nations to develop their own clean energy projects — aided by the IRA’s direct pay mechanism, which allowed tax-exempt entities to access subsidies — by drawing on the various local decarbonization programs in BIL and IRA.
The Greenhouse Gas Reduction Fund, perhaps the most important of these programs, exemplifies the promises and pitfalls of the administration’s approach to “place-based” industrial policy. Managed by the Environmental Protection Agency, GGRF provided $27 billion to disadvantaged communities for the financing of rooftop solar, zero-emissions transport, and net-zero housing. That pot was split into three thematic buckets ― $7 billion to the Solar for All program, specifically for rooftop solar development; $14 billion to the National Clean Investment Fund, for supporting clean energy project finance more broadly in disadvantaged communities; and $6 billion more to local and regional technical assistance providers. Each program then subdivided its appropriations further. Solar for All went to 60 recipients across the country via a competitive application. The National Clean Investment Fund’s $14 billion was split among three awardees, each a coalition of various financial institutions designed to lend to energy projects, such as green banks, impact investors, and nonprofits ― and each of those recipient coalitions planned to subdivide much of its funds still further, first among coalition partners and then to subordinate local and state partners.
That dizzying program structure was meant to endow local communities with the ability to finance their own projects. And by including so many nonprofit institutions, GGRF could make significant inroads into Republican states, whose officials might otherwise reject federal funding.
But there was not much coordination between partners and subawardees around how best to deploy those funds. And what seemed like a firehose of financing often reached local recipients as a trickle of pre-development and technical assistance grants. Demanding that local organizations build their own capacity to plan, finance, and develop projects (or hire expensive external consultants to do so) ― with limited and one-time funds, no less ― is duplicative and inefficient, and it defeats GGRF’s own stated goal of mobilizing private capital through building standardized markets for decarbonization, thereby slowing down the pace of emissions reductions. The program’s complexity also left it vulnerable to EPA Administrator Lee Zeldin’s efforts to hound the program in court and freeze its funding.
Pandemic-era proposals for a National Investment Authority, as well as legislative proposals for a national green bank ― predecessors to the GGRF ― differ sharply from this status quo, instead highlighting how public finance can benefit from economies of scale. Larger financial institutions tasked with deploying clean energy projects can more easily prepare portfolios of projects for co-investors, engage with utilities, raise debt on municipal bond markets, and build a bench of trustworthy private developers to contract for projects. If they are publicly administered, these institutions can also take more risk, undercut private lenders, support more developers, engage with local communities to meet their needs, and use revenues from higher-return projects to derisk lower-return projects that might be necessary to build to achieve their resilience and affordability goals.
Should policymakers get a second shot at building a national green bank system, they should not try to recreate GGRF’s fractal approach to energy finance. Rather, policymakers must ensure that financing sits in the hands of public agencies that already have the authorities and expert staff to be ambitious market-shapers: bond banks, state-led energy finance authorities, and public developers. The good news is that state-level green banks empowered with state funding and a political mandate are already exercising their capacities to shape markets and support disadvantaged communities directly: the New York Power Authority, the Minnesota Climate Innovation Finance Authority, the Connecticut Green Bank, and the Greater Arizona Development Authority, to name a few, are all taking it upon themselves to raise debt and contract with developers to undertake ambitious energy and infrastructure investment programs.
But Democrats should be clear-eyed about the consequences of this reorientation: It means rejecting the prevailing wisdom that local nonprofits should necessarily coordinate local project development. Local groups can be extremely effective advocates for communities’ needs ― but in contrast to public investment agencies, their capacity to finance and implement solutions is simply not great enough.
This analysis of IRA and BIL leaves out more parts of the laws than it includes ― to take just one example, the BIL’s $5 billion National Electric Vehicle Infrastructure charging station program. But the story is similar: Ambitious as it seemed, NEVI money could only flow when state governments set up implementation offices and had their spending plans approved by federal officials. Most states, which had not prepared for any of this, took years to build the requisite capacity ― just in time for the Trump administration to try and snatch away the funding (though it recently admitted defeat in that project). In fairness to state governments, the EV charging sector is incredibly new. But even this program highlights how IRA and BIL lacked the capacity to be implemented as quickly and efficiently as their supporters hoped.
Going above and beyond BIL and IRA to deliver an energy policy that stabilizes Americans’ cost of living while driving an energy transition away from fossil fuels and toward the technologies of the future ― Democrats should embrace this challenge. But they should also be aware that climate ambition runs headlong into the same institutional problems facing American democracy at large. The Senate filibuster prevents either party from comprehensively redesigning the federal government, its institutions, and its regulations to serve Americans more quickly and more efficiently. That leaves both parties reliant on budget reconciliation ― to our detriment. The head-spinning design of GGRF was itself an artifact of the reconciliation process, which prevented Congress from creating a single green bank institution or giving it a specific mandate; its awardee organizations and coalitions certainly did not ask for the program structure they got.
There’s a lot more that budget reconciliation will never solve: the century-old American utility system, the regulatory thicket of U.S. electricity markets, or the land use and permitting rules that constrain project development and grid interconnection. And things could get worse: Trump-appointed judges and Supreme Court justices who reject federal agencies’ and state governments’ attempts to regulate fossil fuel infrastructure have placed the legal system itself at odds with responsible energy system management. The courts may no longer be able to block clawbacks and recissions of legally obligated federal spending. Democrats, like clean energy developers, do not fight on a level playing field.
While Democrats are out of federal power, they should practice ambitious climate policymaking at the state level. States already have considerable ability to raise finance and build capacity for ambitious infrastructure projects ― and they might have to quickly, considering the drain of federal capacity that might support them. By developing their own public programs for transmission finance, utility-scale battery procurement, virtual power plants, and clean firm energy pilots, Democratic state governments can ensure that the ecosystem of clean energy developers created by BIL and IRA does not disappear for lack of demand — and in doing so, these states would help stabilize the cost of clean energy project development.
Finally, Democrats should not forget that climate remains a cost of living issue. In a city like New Orleans, rocked by the recent nuclear outage, residents spend, on average, over 19% of their incomes on their energy bills, over three times the DOE’s threshold to be considered an energy-burdened community. Their bills already include adders for climate adaptation and disaster preparedness ― yet, for all they spend, they still face blackouts, and their costs will only increase as their grid continues to deteriorate. Here, climate policy is not about combating Chinese supply chain dominance, or even about delivering an American industrial renaissance. It’s about keeping the lights on, keeping bills low, keeping the air clean, and keeping residents safe from disaster.
It turns out that voters all over the country still care about these goals. A majority of likely voters in the next election think climate change will have a direct impact on their or their family’s finances. This constituency is still in play — and given sharply deteriorating macroeconomic conditions, soon-to-spike electricity prices, and the ever-increasing threat of climate disaster, these cost-of-living-focused voters could be far more vocal, relevant, and hungry for change than a coalition built on vague sabre-rattling against China.
In 2022, Democrats made a valiant first attempt to transform the state itself. Perhaps it was inadequate, perhaps it was impossible to do more at the time, but that’s no reason not to think seriously about the kind of policymaking, institutional, and financial interventions that would be called for should they get a second shot at realizing that goal. The rollback of the IRA only reveals how much Democrats left on the table three years ago ― and how much farther a real climate policy could go.