Strategy 3: Mobilize Investment
Retire Fossil Fuel Infrastructure
Building new, cleaner infrastructure quickly will require retiring some older facilities. This process can accelerate the shift to cleaner futures, but it can also create social and economic disruption. The U.S. must develop a consistent plan across states for compensating both owners and workers.
Augment state, local, private, and philanthropic funding mechanisms with a national fund to compensate early retirement of high pollution emitters and assets particularly vulnerable to climate impacts.
Articulate a national strategy for the retirement or retrofitting of high-carbon industrial facilities within the next five years.
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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.[i] 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-emitting 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.[ii]
Augment state, local, private, and philanthropic funding mechanisms with a national fund to compensate early retirement of high pollution emitters and assets 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.
[i] U.S. Energy Information Administration, “Electricity Explained,” last updated July 15, 2022, with preliminary data for 2021, https://www.eia.gov/energyexplained/electricity/electricity-in-the-us.php.
[ii] Paul Bodnar, Matthew Gray, Tamara Grbusic, et al., How to Retire Early: Making Accelerated Coal Phaseout Feasible and Just (Basalt, Colo.: Rocky Mountain Institute, 2020), https://rmi.org/insight/how-to-retire-early.