Climate Action and Affordability Are Not Opposed

Climate policy has long been framed as a trade-off between protecting the environment and protecting jobs. At a moment when affordability and the cost of living have become major political issues, this raises new challenges and opportunities for the climate left. The Trump administration has tried to frame renewable energy as expensive and unreliable, arguing that the United States needs to double down on fossil fuels to keep costs down. But it's not just Trump. After Zohran Mamdani's election, centrist politicians have taken up the affordability mantle — and sometimes used it to challenge renewable energy projects. For example, Gov. Kathy Hochul has framed New York's signature climate law as being too costly to implement. People across the political spectrum are putting forward the idea that we can't afford to prioritize renewable energy right now.

New research by Climate and Community Institute (CCI) makes a strong case that a well-managed renewable energy transition doesn't have to contribute to an inflationary crisis and could even offer lower energy prices. In this interview, political scientist and CCI fellow Alyssa Battistoni interviews the organization's research director, Patrick Bigger, and senior fellow Kristina Karlsson to discuss how decarbonization can actually help tackle the affordability crisis, who should bear the costs of the transition, and what new models and alternatives can offer a path forward to getting us off of fossil fuels.

Alyssa Battistoni

Explain the basic idea: How can renewable energy help address the affordability crisis?

Kristina Karlsson

We started from the point that this transition needs to happen for climate reasons. And we're also committed to making sure that it's affordable for working-class people. So if those two pillars are nonnegotiables, the question is: How do you design the transition so that we can fulfill those goals?

At its most basic, we know that renewable energy is extremely low cost. We know that an electrified, renewable-sourced grid will provide long-term, stable, cheap energy to consumers. The question is, how do we get there? We need to build a lot of stuff to get there, so who do we rely on to move that money, and are they going to protect working Americans from the costs of that investment? That's what leads you to a solution that's more of a federal, large-scale transition bill, which will allow us to use the federal government's ability to shepherd those costs onto, for example, the ultrawealthy or fossil fuel profits. An investment package can do that shifting effort, and it can spend the money that we need to spend.

There's a lot of mainstream macroeconomic hand-wringing about what a large-scale fiscal policy could do to inflation, especially in this high-inflation environment. It's important to be clear about what a renewable energy transition bill is actually doing, which is essentially expanding the supply side of our economy. It's building new infrastructure and creating new jobs. Ideally, it's curbing the wasteful consumption of corporations and the ultrawealthy, and taking that money and putting it to productive use. It's not overshooting demand and applying inflationary pressure, which is the way that many critics of large-scale fiscal policy think that this kind of bill will foist costs onto consumers.

And then, you have this large infusion of federal spending, dedicated to high-cost channels to everyday household budgets. That's energy, housing, food. If the investments themselves are designed to relieve those cost pressures, then you're also feeling those savings in a more tangible, immediate way.

Alyssa Battistoni

I appreciate that the report doesn't say that there aren't any potential cost increases associated with renewable electricity. Instead it addresses areas where there might actually be price volatility or where rising costs might be an issue, and more generally some of the difficulties that come with building out renewable energy cheaply. And it shows how these can be addressed.

For example, one issue is energy supply. We hear a lot from the Right about the unreliability of renewable energy and potential for shortages. But there's another supply question that concerns the critical minerals used in renewable energy technologies. The production of these minerals is expanding rapidly, which is controversial in its own right due to the environmental costs of mining. But there are also concerns about the potential for a shortage of some critical minerals as we expand renewable energy or a disruption in supplies.

We're currently seeing a major disruption to oil supplies as a result of the war with Iran. And the Right's case for drilling for more oil on US soil is that we need to have our own fossil fuels in order to avoid energy dependence. You suggest that we can be more optimistic about the future of renewable resources, and that even if there are temporary supply challenges along the way, the cost doesn't have to be borne by working-class people. Can you explain why, and what policies could address potential price volatility as we build out renewable energy capacity?

Kristina Karlsson

I don't want to downplay the potential geopolitical repositioning that this transition to renewables will affect. We can agree that the fossil fuel–reliant global economy has created these hubs of power and supply chain choke points that can be used for reasons that have nothing to do with delivering energy. I can't say that won't happen in terms of the critical minerals that we need to build renewables.

I do think it is important to clarify the difference between our experience of fossil fuels and our experience of the critical minerals that enter into renewables. That's because critical minerals are inputs to building renewable infrastructure at the capital expenditure point.

For example, critical minerals are necessary to create a solar field, but it's not an ongoing fuel cost that you have to consume on a regular, daily basis. Our ties to volatile fossil fuel markets are daily. We are sometimes adjusting to these prices by the minute. Whereas on the consumer side, we're downstream of where these critical minerals come into the renewable supply chain. Therefore, we can decide through policy that we want to take a proactive approach at the point of production, so that we can more easily shield customers from that.

I think about absolute shortages or inability to access critical minerals as more of a risk to the speed of the transition, rather than the potential to pass energy price volatility onto consumers. Because once the infrastructure is built, the energy is functionally free, and so it's really about whether this will prohibit our ability to build at the scale that we need. Not whether we can expect critical minerals to actively alter our daily energy costs.

Patrick Bigger

Bold industrial policies can mitigate those risks to a substantial extent. We're already seeing those play out in the Trump administration for bad reasons, but they do give us an indication of what tools are available.

Let's think about the public taking an equity stake in MP Materials, which is the largest producer of energy transition minerals in the US, or using the Defense Production Act to create stockpiles for these minerals that are important for the energy transition. But in this administration's mind, the point of stockpiling is so they're available for weaponry to conduct our imperial adventures from Iran to Gaza to Venezuela.

We can and should build buffer stocks, not just of energy transition minerals but also for things like food and other social necessities. We can do that if we have a state that is willing to use these tools for socially useful ends instead of the destructive ends that we see this administration deploying them for.

Alyssa Battistoni

The report also addresses questions around generation and transmission of renewable energy itself. On the one hand, renewable energy is often very low-cost or free, and that seems great. But paradoxically, that can actually cause problems, and one of them stems from the profit incentives of utilities. As you say, an astonishing 72 percent of the country is served by investor-owned utilities, which are basically privately owned utilities.

Tell us a bit more about how these models work, why they're set up this way, and what sort of problems come up when these models are facilitating the renewable energy transition.

Kristina Karlsson

Investor-owned utilities are private companies, and they can exist in a few forms. They can either be a vertically integrated monopoly, in which case they own transmission lines, the distribution lines that come to your house, and the electricity generators themselves, which is like a natural gas plant or a solar plant — investor-owned utilities can also only own transmission and distribution and then purchase electricity from other generators on a wholesale electric market. Or they can be both. They can own some of their own generation, and they can buy some generation from other sources. It depends on which sort of market structure they're operating within, and it's a complicated web. But there are some deregulated markets where buying electricity generation happens on a wholesale market, and there are some regions where it's mostly investor-owned, vertically integrated utilities, and their prices are regulated by state public utility commissions.

Their business model is reliant on basically recouping the costs of their investments in capital expenditure with an added state-utility-regulator-guaranteed profit margin. The average profit margin guaranteed across the United States is 9.6 percent, which is insanely high.

Those capital expenditure projects can include things like adding local distribution lines, upgrading or repairing existing transmission lines, or building brand new transmission lines. But nobody is compelling these utilities to participate and be a useful contributor in the renewable transition. Some states have renewable portfolio standards, which require that utilities purchase a certain percentage of their energy generation from renewable sources. But the bigger hurdle is the need to support a renewable, fully electrified grid in terms of transmission lines that cross multiple states and span different regions and are very high voltage. These are huge projects.

Interregional projects are also overseen by federal regulators instead of just local and state regulators. So there's an increased regulatory burden when it comes to bidding on an interregional transmission line project.

There are issues with cost sharing too. Lots of regional transmission organizations don't like to collaborate with each other, so there are fights over who should be covering which costs. States also tend to fight over costs. If you're an investor-owned utility, why would you deal with that when you know you can build a smaller line in your state and get your money and move on? This is why the kinds of lines that we need for the renewable energy transition currently make up about 2 percent of the transmission lines that we've built in the past fifteen years.

That's why investor-owned utilities and their profit imperative make them incompatible with taking on these market structure and regulatory issues. That tells us that investor-owned utilities might be the wrong model, and that the market structure and the regulatory structure is a problem too. Over the history of the expansion of the grid, those regulatory market structures have been designed around this investor-owned model. We're arguing that we need a public utility option as well as deep market reconfiguration to really move this transition at the speed and the scale that we need.

We also need to make sure that we can infuse an actual commitment to affordability, because we could incentivize utilities to build more transmission, but their business model will always rely on passing those costs onto ratepayers. We can make a different decision about the burden of ratepayers versus the state or federal government.

Alyssa Battistoni

I wanted to ask about alternatives, like the public option for renewables and some of the other mechanisms you mention. We've been talking about transmission, but of course we also need to build out renewable energy generation capacity itself. I was surprised but heartened to see that despite the strong anti-renewable line of the Trump administration, clean energy is still dominating the build-out of new energy projects: in 2025, 92 percent of new power plant construction is some kind of renewable energy, which seems like great news.

But are there any risks or downsides to that? Why do we need a public option for renewable generation if private capital is building out renewable capacity despite setbacks?

Kristina Karlsson

Those numbers are exciting. But in the energy mix, renewables still account for about 10 percent of total electricity generation. That's great, but we are still really far behind. And the Biden administration's Inflation Reduction Act investments in renewable transition were in the form of tax credits, which are designed to follow the speed and the scale of private investment behavior.

The argument for public alternatives is that we don't have to necessarily rely on private firms to feel that they are in the most advantageous economic conditions to make that investment. A big part of the reason that renewable investment, even with the presence of the tax credits, didn't take off the way that they could have is because we had high interest rates at the same time. This persistent build-out of renewables will have to span multiple economic realities that weigh on the investment decisions of firms.

There's a case for public options as being useful in solidifying the momentum of the sector, especially as it's still somewhat nascent. And public options are useful in different contexts for competing down prices of private firms. In this case, they're also useful for crowding in private firms by demonstrating that the sector is advancing at scale.

Patrick Bigger

The fundamental issue is that we are still operating under this really perverse, destructive, inefficient, all-of-the-above energy strategy in the United States. That has been a bipartisan consensus since at least since the 1990s. In this scenario, the renewable build-out occurs alongside the expansion of the fossil economy, and they mutually self-reinforce. Sometimes fossil capital is investing in ostensibly green generation; sometimes green generators pivot to fossil fuels when the economics work out. So you're in this halfway house of the transition, where we're not building out renewables fast enough, and we're certainly not retiring fossil fuels fast enough. At the same time, we're doing it in this really inefficient way that is raising costs for everyone, especially for working-class people.

This situation is getting worse as we put more and more socially useless demands on the electricity system on the grid, especially in the form of artificial intelligence data centers that are doing everything from telling the Israeli military who to target to making fake pornography of children. Then we're asking people to bear the cost of the infrastructure that supports that. That's madness.

Only public investment paired with regulation can bolster socially desirable demands that should be driving electricity demand: the electrification of homes, schools, hospitals, transportation, heavy industry. We are going to need additional capacity to do that, but we also have to wind down the negative, socially harmful uses that are actually driving the increased demand for electricity that is prolonging the lifespan and economic viability of fossil-generated assets. We really need the public sector to be able to both support the stuff that we need and to do so in a way that incorporates robust spatial planning. It can take equity into account in a way that markets never can, while also actually regulating what is growing our demand on electricity.

Alyssa Battistoni

We've been talking about how to expand renewable energy, but the flip side is that we also need to wind down fossil fuel use. That has its own challenges at a time when people are really concerned about affordability and the cost of living. Even centrist Democrats like Joe Biden have often tried to bring fuel costs down by expanding fossil fuel production in the United States, whether by licensing more drilling or releasing oil reserves. Meanwhile, past efforts to intentionally increase the cost of fossil fuels via carbon taxes or fuel taxes have often had a big backlash, as most famously seen in the Yellow Vests movement in France.

How can we shut down fossil fuels without imposing higher costs on consumers and causing backlash to climate policy?

Kristina Karlsson

The meat of the answer to that comes in this mid-transition period, where there are different estimates of when peak oil demand happened or will happen, and if actually the market forces globally will apply negative pressure on the fossil fuel sector. That might be happening somewhat on its own.

But you get to a point where you need to manage people's accessibility to energy through this moment when you're building out renewables and winding down fossil fuels, without imposing untenable volatility in that middle moment. One thing you can do is take money from fossil fuel corporations and subsidize people in the prevailing level of energy consumption that's necessary to bridge this gap. You can tax windfall fossil fuel profits, and you can eliminate fossil fuel subsidies. You can use that money to subsidize renewable consumption too on the other end, so that people aren't internalizing their markup on those policies and also shifting away from fossil reliance.

I read Emily Grubert and Joshua Lappen's paper "Fossil energy minimum viable scale," and I was so convinced by the arguments they made about the challenges of actually getting to the scenario where fossil fuels are done. On your way there, you get to a point where these private firms might not stay open at the level of low production and low output that is necessary toward the end of their lives. They might abruptly close down because the unmet profit needed to operate at such a small scale will create these sharp drop-offs instead of a smooth transition to zero. At that point in the process, there's a good case for nationalizing or taking equity stakes in some of these firms as they die, so that we can continue to support the kind of production that's necessary until it no longer is.

Patrick Bigger

I think that's exactly right. And it's not just for maintaining the socially necessary volume of fossil fuel production to finally step away from those hard-to-abate uses. It's also necessary in terms of consolidating a just transition, both for workers in that industry and for communities that are dependent on fossil fuel extraction or transportation or combustion.

We know that as profitability declines, companies will just dissolve themselves. We've seen this time and again, for example, throughout the fracking boom. There's a boom-bust nature to this industry. Companies will wash their hands of their liabilities, both to their workers and in terms of their environmental responsibilities, then reconstitute as new legal entities and go right back to it. It's only through strong regulation, and ultimately nationalization, that you can both ensure that workers and communities are supported through that phase of the transition, and that companies are actually taking their responsibility in terms of having wells, or remediating landscapes that they've harmed.

Alyssa Battistoni

The report also points out that the potentially volatile and disjointed wind down of the fossil fuel sector could actually be very costly for consumers. And that points to a bigger problem: we always hear about the cost of climate action, but we don't really hear about the costs of continued fossil fuel production.

Could you say a bit more about what those costs might be? How can we draw more attention to that side of the scale?

Kristina Karlsson

There are two categories here: the costs of fossil fuels themselves, and the costs of the climate damage and crisis that they create. Right now is a great time to think about how much fossil fuels cost us and our reliance on them in such an extreme energy crisis. What a transition to renewables will do is essentially absent us from this source of volatility and unpredictability in our energy costs, potentially forever. That is a huge change. I haven't calculated how much the recent inflation from this war in Iran, for example, has cost everyone. But I think we can all feel it.

But then, what is fossil fuel reliance and continued extraction actually costing in terms of climate damages? There are estimates for this that keep amending upwards. I saw an International Monetary Fund calculation that said in a current policy scenario, global GDP will be 7 percent lower than if we had implemented an aggressive renewable transition by 2050.

There's a new working paper from Adrien Bilal and Diego R. Känzig that takes a different modeling approach. They say, actually we're orders of magnitude off. They argue that one permanent degree of warming will lead to a 20 percent GDP loss in the long run. When you compare that to estimates of the cost of a global renewable transition — which amount to around 2.5 percent of GDP, maybe on the higher end, closer to 4 percent — it's clear that the costs of transition are nothing compared to the scale of the damages that we are signing ourselves up for.

On the fossil fuel side, we can all feel the cost now, but we also actively subsidize this sector. A recent Oil Change International report said $35 billion a year in the united States, all told.

These trade-offs in quantities of GDP — despite how you might object to that being the measure we use to quantify these trade-offs — definitely show that the cost of mitigation is much lower. And that doesn't take into account the non–financially convertible elements of climate damage, like permanent ecosystem loss or permanent biodiversity loss. These are losses we can't completely convert into GDP, and we need to spend money to avoid them even without a cost-benefit analysis.

Also, we aren't comparing the same kind of costs. The costs that come from climate damages are just financial losses, period. Money spent on renewable transition, though, is more like an investment. This kind of spending has multiplier effects. It's creating jobs; it's increasing consumption and economic activity. If GDP is what you're tracking, you can consider this a positive return on investment. But also, even if that's not what you're tracking, this unquantifiable benefit of spending on climate is also an investment in our future well-being. So I'm always wary of comparing these as similar costs.

Alyssa Battistoni

The report is super clarifying about the economics of public utilities and renewable energy transmission and infrastructure and so on. But as important as they are, they aren't necessarily the sexiest political topics. How do we organize around these kinds of programs? How can we build a green economic populism around such technical issues?

Patrick Bigger

Historically, I would have agreed with you that these are not particularly sexy, organizational issues. But I think we are seeing today that they very much are.

We saw the tremendous amount of energy that went into electing new public service commissioners in Georgia. We see progressives contesting elections for whatever the local electricity regulatory authority is and winning in places like Phoenix. They've been major components in recent electoral fights in Virginia and New Jersey, and if there's any sort of animating political issue nationally right now it's contesting data centers. All of the environmental justice site fights around the country are revolving around data centers right now. So I think electricity is actually very much front and center for folks.

It's the affordability side that's largely driving that, but it's also incumbent on us to reiterate the climate dimensions as far as we can, and when we can. Because the Right is constantly making an argument about climate. We see that the Trump administration is mandating that the Pentagon buy its electricity from coal-fired power plants in order to support what would effectively be otherwise a dead industry. We see that Donald Trump talks all the time about the "Green New Scam." So I think tying these solutions that people very much want for affordability reasons to climate can both reinvigorate climate politics in the United States and add a new dynamism to the affordability fights that are animating politics across the political spectrum.

Kristina Karlsson

It was so useful to go into this literature review knowing that there are two political goals that we're definitely not compromising on: affordability and decarbonization. And if you start from there, you start looking for the other things that you could actually give or "trade-off" in order to make this happen.

I said, "Okay, so if I'm keeping these two as given, what is really causing the potential for cost transfer onto consumers and working people? It's profit-incentivized firms delivering what should otherwise be public goods." That's a really graspable response to this dual injustice that people are experiencing, which is that we have this feeling that we're being screwed by private interests and billionaires, and we know that our energy costs are growing, and we know that climate change is becoming worse.

You can combine these pain points into a cohesive vision for multi-solving a couple of those things: for redistributing power away from private elites, for establishing the governance structures of these institutions. A heavy-handed, publicly managed approach allows us to actually make a point about affordability and impose a timeline and a scale on this transition so that we're not just shepherding a bunch of private companies toward a finish line with no guarantee that we get there.