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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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Microsoft dominated this year.
It’s been a quiet year for carbon dioxide removal, the nascent industry trying to lower the concentration of carbon already trapped in the atmosphere.
After a stretch as the hottest thing in climate tech, the CDR hype cycle has died down. 2025 saw fewer investments and fewer big projects or new companies announced.
This story isn’t immediately apparent if you look at the sales data for carbon removal credits, which paints 2025 as a year of breakout growth. CDR companies sold nearly 30 million tons of carbon removal, according to the leading industry database, CDR.fyi — more than three times the amount sold in 2024. But that topline number hides a more troubling reality — about 90% of those credits were bought by a single company: Microsoft.
If you exclude Microsoft, the total volume of carbon removal purchased this year actually declined by about 100,000 tons. This buyer concentration is the continuation of a trend CDR.fyi observed in its 2024 Year In Review report, although non-Microsoft sales had grown a bit that year compared to 2023.
Trump’s crusade against climate action has likely played a role in the market stasis of this year. Under the Biden administration, federal investment in carbon removal research, development, and deployment grew to new heights. Biden’s Securities and Exchange Commission was also getting ready to require large companies to disclose their greenhouse gas emissions and climate targets, a move that many expected to increase demand for carbon credits. But Trump’s SEC scrapped the rule, and his agency heads have canceled most of the planned investments. (At the time of publication, the two direct air capture projects that Biden’s Department of Energy selected to receive up to $1.2 billion have not yet had their contracts officially terminated, despite both showing up on a leaked list of DOE grant cancellations in October.)
Trump’s overall posture on climate change reduced pressure on companies to act, which probably contributed to there being fewer new buyers entering the carbon removal market, Robert Hoglund, a carbon removal advisor who co-founded CDR.fyi, told me. “I heard several companies say that, yeah, we wouldn't have been able to do this commitment this year. We're glad that we made it several years ago,” he told me.
Kyle Harrison, a carbon markets analyst at BloombergNEF, told me he didn’t view Microsoft’s dominance in the market as a bad sign. In the early days of corporate wind and solar energy contracts, he said, Microsoft, Google, and Amazon were the only ones signing deals, which raised similar questions about the sustainability of the market. “But what it did is it created a blueprint for how you sign these deals and make these nascent technologies more financeable, and then it brings down the cost, and then all of a sudden, you start to get a second generation of companies that start to sign these deals.”
Harrison expects the market to see slower growth in the coming years until either carbon removal companies are able to bring down costs or a more reliable regulatory signal puts pressure on buyers.
Governments in Europe and the United Kingdom introduced a few weak-ish signals this year. The European Union continued to advance a government certification program for carbon removal and expects to finalize methodologies for several CDR methods in 2026. That government stamp of approval may give potential buyers more confidence in the market.
The EU also announced plans to set up a carbon removal “buyers’ club” next year to spur more demand for CDR by pooling and coordinating procurement, although the proposal is light on detail. There were similar developments in the United Kingdom, which announced a new “contract for differences” policy through which the government would finance early-stage direct air capture and bioenergy with carbon capture projects.
A stronger signal, though, could eventually come from places with mandatory emissions cap and trade policies, such as California, Japan, China, the European Union, or the United Kingdom. California already allows companies to use carbon removal credits for compliance with its cap and invest program. The U.K. plans to begin integrating CDR into its scheme in 2029, and the EU and Japan are considering when and how to do the same.
Giana Amador, the executive director of the U.S.-based Carbon Removal Alliance, told me these demand pulls were extremely important. “It tells investors, if you invest in this today, in 10 years, companies will be able to access those markets,” she said.
At the same time, carbon removal companies are not going to be competitive in any of these markets until carbon trades at a substantially higher price, or until companies can make carbon removal less expensive. “We need to both figure out how we can drive down the cost of carbon removal and how to make these carbon removal solutions more effective, and really kind of hone the technology. Those are what is going to unlock demand in the future,” she said.
There’s certainly some progress being made on that front. This year saw more real-world deployments and field tests. Whereas a few years ago, the state of knowledge about various carbon removal methods was based on academic studies of modeling exercises or lab experiments, now there’s starting to be a lot more real-world data. “For me, that is the most important thing that we have seen — continued learning,” Hoglund said.
There’s also been a lot more international interest in the sector. “It feels like there’s this global competition building about what country will be the leader in the industry,” Ben Rubin, the executive director of the Carbon Business Council, told me.
There’s another somewhat deceptive trend in the year’s carbon removal data: The market also appeared to be highly concentrated within one carbon removal method — 75% of Microsoft’s purchases, and 70% of the total sales tracked by CDR.fyi, were credits for bioenergy with carbon capture, where biomass is burned for energy and the resulting emissions are captured and stored. Despite making up the largest volume of credits, however, these were actually just a rare few deals. “It’s the least common method,” Hoglund said.
Companies reported delivering about 450,000 tons of carbon removal this year, according to CDR.fyi’s data, bringing the cumulative total to over 1 million tons to date. Some 80% of the total came from biochar projects, but the remaining deliveries run the gamut of carbon removal methods, including ocean-based techniques and enhanced rock weathering.
Amador predicted that in the near-term, we may see increased buying from the tech sector, as the growth of artificial intelligence and power-hungry data centers sets those companies’ further back on their climate commitments. She’s also optimistic about a growing trend of exploring “industrial integrations” — basically incorporating carbon removal into existing industrial processes such as municipal waste management, agricultural operations, wastewater treatment, mining, and pulp and paper factories. “I think that's something that we'll see a spotlight on next year,” she said.
Another place that may help unlock demand is the Science Based Targets initiative, a nonprofit that develops voluntary standards for corporate climate action. The group has been in the process of revising its Net-Zero Standard, which will give companies more direction about what role carbon removal should play in their sustainability strategies.
The question is whether any of these policy developments will come soon enough or be significant enough to sustain this capital-intensive, immature industry long enough for it to prove its utility. Investment in the industry has been predicated on the idea that demand for carbon removal will grow, Hoglund told me. If growth continues at the pace we saw this year, it’s going to get a lot harder for startups to raise their series B or C.
“When you can't raise that, and you haven't sold enough to keep yourself afloat, then you go out of business,” he said. “I would expect quite a few companies to go out of business in 2026.”
Hoglund was quick to qualify his dire prediction, however, adding that these were normal growing pains for any industry and shouldn’t be viewed as a sign of failure. “It could be interpreted that way, and the vibe may shift, especially if you see a lot of the prolific companies come down,” he said. “But it’s natural. I think that’s something we should be prepared for and not panic about.”
America runs on natural gas.
That’s not an exaggeration. Almost half of home heating is done with natural gas, and around 40% — the plurality — of our electricity is generated with natural gas. Data center developers are pouring billions into natural gas power plants built on-site to feed their need for computational power. In its -260 degree Fahrenheit liquid form, the gas has attracted tens of billions of dollars in investments to export it abroad.
The energy and climate landscape in the United States going into 2026 — and for a long time afterward — will be largely determined by the forces pushing and pulling on natural gas. Those could lead to higher or more volatile prices for electricity and home heating, and even possibly to structural changes in the electricity market.
But first, the weather.
“Heating demand is still the main way gas is used in the U.S.,” longtime natural gas analyst Amber McCullagh explained to me. That makes cold weather — experienced and expected — the main driver of natural gas prices, even with new price pressures from electricity demand.
New sources of demand don’t help, however. While estimates for data center construction are highly speculative, East Daily Analytics figures cited by trade publication Natural Gas Intel puts a ballpark figure of new data center gas demand at 2.5 billion cubic feet per day by the end of next year, compared to 0.8 billion cubic feet per day for the end of this year. By 2030, new demand from data centers could add up to over 6 billion cubic feet per day of natural gas demand, East Daley Analytics projects. That’s roughly in line with the total annual gas production of the Eagle Ford Shale in southwest Texas.
Then there are exports. The U.S. Energy Information Administration expects outbound liquified natural gas shipments to rise to 14.9 billion cubic feet per day this year, and to 16.3 billion cubic feet in 2026. In 2024, by contrast, exports were just under 12 billion cubic feet per day.
“Even as we’ve added demand for data centers, we’re getting close to 20 billion per day of LNG exports,” McCullagh said, putting more pressure on natural gas prices.
That’s had a predictable effect on domestic gas prices. Already, the Henry Hub natural gas benchmark price has risen to above $5 per million British thermal units earlier this month before falling to $3.90, compared to under $3.50 at the end of last year. By contrast, LNG export prices, according to the most recent EIA data, are at around $7 per million BTUs.
This yawning gap between benchmark domestic prices and export prices is precisely why so many billions of dollars are being poured into LNG export capacity — and why some have long been wary of it, including Democratic politicians in the Northeast, which is chronically short of natural gas due to insufficient pipeline infrastructure. A group of progressive Democrats in Congress wrote a letter to Secretary of Energy Chris Wright earlier this year opposing additional licenses for LNG exports, arguing that “LNG exports lead to higher energy prices for both American families and businesses.”
Industry observers agree — or at least agree that LNG exports are likely to pull up domestic prices. “Henry Hub is clearly bullish right now until U.S. gas production catches up,” Ira Joseph, a senior research associate at the Center for Global Energy Policy at Columbia University, told me. “We’re definitely heading towards convergence” between domestic and global natural gas prices.
But while higher natural gas prices may seem like an obvious boon to renewables, the actual effect may be more ambiguous. The EIA expects the Henry Hub benchmark to average $4 per million BTUs for 2026. That’s nothing like the $9 the benchmark hit in August 2022, the result of post-COVID economic restart, supply tightness, and the Russian invasion of Ukraine.
Still, a tighter natural gas market could mean a more volatile electricity and energy sector in 2026. The United States is basically unique globally in having both large-scale domestic production of coal and natural gas that allows its electricity generation to switch between them. When natural gas prices go up, coal burning becomes more economically attractive.
Add to that, the EIA forecasts that electricity generation will have grown 2.4% by the end of 2025, and will grow another 1.7% in 2026, “in contrast to relatively flat generation from 2010 to 2020. That is “primarily driven by increasing demand from large customers, including data centers,” the agency says.
This is the load growth story. With the help of the Trump administration, it’s turning into a coal growth story, too.
Already several coal plants have extended out their retirement dates, either to maintain reliability on local grids or because the Trump administration ordered them to. In America’s largest electricity market, PJM Interconnection, where about a fifth of the installed capacity is coal, diversified energy company Alliance Resource Partners expects 4% to 6% demand growth, meaning it might even be able to increase coal production. Coal consumption has jumped 16% in PJM in the first nine months of 2025, the company’s Chairman Joseph Kraft told analysts.
“The domestic thermal coal market is continuing to experience strong fundamentals, supported by an unprecedented combination of federal energy and environmental policy support plus rapid demand growth,” Kraft said in a statement accompanying the company’s October third quarter earnings report. He pointed specifically to “natural gas pricing dynamics” and “the dramatic load growth required by artificial intelligence.”
Observers are also taking notice. “The key driver for coal prices remains strong natural gas prices,” industry newsletter The Coal Trader wrote.
In its December short term outlook, the EIA said that it expects “coal consumption to increase by 9% in 2025, driven by an 11% increase in coal consumption in the electric power sector this year as both natural gas costs and electricity demand increased,” while falling slightly in 2026 (compared to 2025), leaving coal consumption sill above 2024 levels.
“2025 coal generation will have increased for the first time since the last time gas prices spiked,” McCullagh told me.
Assuming all this comes to pass, the U.S.’s total carbon dioxide emissions will have essentially flattened out at around 4.8 million metric tons. The ultimate cost of higher natural gas prices will likely be felt far beyond the borders of the United States and far past 2026.
Lawmakers today should study the Energy Security Act of 1980.
The past few years have seen wild, rapid swings in energy policy in the United States, from President Biden’s enthusiastic embrace of clean energy to President Trump’s equally enthusiastic re-embrace of fossil fuels.
Where energy industrial policy goes next is less certain than any other moment in recent memory. Regardless of the direction, however, we will need creative and effective policy tools to secure our energy future — especially for those of us who wish to see a cleaner, greener energy system. To meet the moment, we can draw inspiration from a largely forgotten piece of energy industrial policy history: the Energy Security Act of 1980.
After a decade of oil shocks and energy crises spanning three presidencies, President Carter called for — and Congress passed — a new law that would “mobilize American determination and ability to win the energy war.” To meet that challenge, lawmakers declared their intent “to utilize to the fullest extent the constitutional powers of the Congress” to reduce the nation’s dependence on imported oil and shield the economy from future supply shocks. Forty-five years later, that brief moment of determined national mobilization may hold valuable lessons for the next stage of our energy industrial policy.
The 1970s were a decade of energy volatility for Americans, with spiking prices and gasoline shortages, as Middle Eastern fossil fuel-producing countries wielded the “oil weapon” to throttle supply. In his 1979 “Crisis of Confidence” address to the nation, Carter warned that America faced a “clear and present danger” from its reliance on foreign oil and urged domestic producers to mobilize new energy sources, akin to the way industry responded to World War II by building up a domestic synthetic rubber industry.
To develop energy alternatives, Congress passed the Energy Security Act, which created a new government-run corporation dedicated to investing in alternative fuels projects, a solar bank, and programs to promote geothermal, biomass, and renewable energy sources. The law also authorized the president to create a system of five-year national energy targets and ordered one of the federal government’s first studies on the impacts of greenhouse gases from fossil fuels.
Carter saw the ESA as the beginning of an historic national mission. “[T]he Energy Security Act will launch this decade with the greatest outpouring of capital investment, technology, manpower, and resources since the space program,” he said at the signing. “Its scope, in fact, is so great that it will dwarf the combined efforts expended to put Americans on the Moon and to build the entire Interstate Highway System of our country.” The ESA was a recognition that, in a moment of crisis, the federal government could revive the tools it once used in wartime to meet an urgent civilian challenge.
In its pursuit of energy security, the Act deployed several remarkable industrial policy tools, with the Synthetic Fuels Corporation as the centerpiece. The corporation was a government-run investment bank chartered to finance — and in some cases, directly undertake — alternative fuels projects, including those derived from coal, shale, and oil.. Regardless of the desirability or feasibility of synthetic fuels, the SFC as an institution illustrates the type of extraordinary authority Congress was once willing to deploy to address energy security and stand up an entirely new industry. It operated outside of federal agencies, unencumbered by the normal bureaucracy and restrictions that apply to government.
Along with everything else created by the ESA, the Sustainable Fuels Corporation was also financed by a windfall profits tax assessed on oil companies, essentially redistributing income from big oil toward its nascent competition. Both the law and the corporation had huge bipartisan support, to the tune of 317 votes for the ESA in the House compared to 93 against, and 78 to 12 in the Senate.
The Synthetic Fuels Corporation was meant to be a public catalyst where private investment was unlikely to materialize on its own. Investors feared that oil prices could fall, or that OPEC might deliberately flood the market to undercut synthetic fuels before they ever reached scale. Synthetic fuel projects were also technically complex, capital-intensive undertakings, with each plant costing several billion dollars, requiring up to a decade to plan and build.
To address this, Congress equipped the corporation with an unusually broad set of tools. The corporation could offer loans, loan guarantees, price guarantees, purchase agreements, and even enter joint ventures — forms of support meant to make first-of-a-kind projects bankable. It could assemble financing packages that traditional lenders viewed as too risky. And while the corporation was being stood up, the president was temporarily authorized to use Defense Production Act powers to initiate early synthetic fuel projects. Taken together, these authorities amounted to a federal attempt to build an entirely new energy industry.
While the ESA gave the private sector the first shot at creating a synthetic fuels industry, it also created opportunities for the federal government to invest. The law authorized the Synthetic Fuels Corporation to undertake and retain ownership over synthetic fuels construction projects if private investment was insufficient to meet production targets. The SFC was also allowed to impose conditions on loans and financial assistance to private developers that gave it a share of project profits and intellectual property rights arising out of federally-funded projects. Congress was not willing to let the national imperative of energy security rise or fall on the whims of the market, nor to let the private sector reap publicly-funded windfalls.
Employing logic that will be familiar to many today, Carter was particularly concerned that alternative fuel sources would be unduly delayed by permitting rules and proposed an Energy Mobilization Board to streamline the review process for energy projects. Congress ultimately refused to create it, worried it would trample state authority and environmental protections. But the impulse survived elsewhere. At a time when the National Environmental Policy Act was barely 10 years old and had become the central mechanism for scrutinizing major federal actions, Congress provided an exemption for all projects financed by the Synthetic Fuels Corporation, although other technologies supported in the law — like geothermal energy — were still required to go through NEPA review. The contrast is revealing — a reminder that when lawmakers see an energy technology as strategically essential, they have been willing not only to fund it but also to redesign the permitting system around it.
Another forgotten feature of the corporation is how far Congress went to ensure it could actually hire top tier talent. Lawmakers concluded that the federal government’s standard pay scales were too low and too rigid for the kind of financial, engineering, and project development expertise the Synthetic Fuels Corporation needed. So it gave the corporation unusual salary flexibility, allowing it to pay above normal civil service rates to attract people with the skills to evaluate multibillion dollar industrial projects. In today’s debates about whether federal agencies have the capacity to manage complex clean energy investments, this detail is striking. Congress once knew that ambitious industrial policy requires not just money, but people who understand how deals get done.
But the Energy Security Act never had the chance to mature. The corporation was still getting off the ground when Carter lost the 1980 election to Ronald Reagan. Reagan’s advisers viewed the project as a distortion of free enterprise — precisely the kind of government intervention they believed had fueled the broader malaise of the 1970s. While Reagan had campaigned on abolishing the Department of Energy, the corporation proved an easier and more symbolic target. His administration hollowed it out, leaving it an empty shell until Congress defunded it entirely in 1986.
At the same time, the crisis atmosphere that had justified the Energy Security Act began to wane. Oil prices fell nearly 60% during Reagan’s first five years, and with them the political urgency behind alternative fuels. Drained of its economic rationale, the synthetic fuels industry collapsed before it ever had a chance to prove whether it could succeed under more favorable conditions. What had looked like a wartime mobilization suddenly appeared to many lawmakers to be an expensive overreaction to a crisis that had passed.
Yet the ESA’s legacy is more than an artifact of a bygone moment. It offers at least three lessons that remain strikingly relevant today:
As we now scramble to make up for lost time, today’s clean energy push requires institutions that can survive electoral swings. Nearly half a century after the ESA, we must find our way back to that type of institutional imagination to meet the energy challenges we still face.