Human-driven climate change is directly related to more catastrophic events like intensifying droughts, floods, and extreme heat. These effects have disparate impacts on historically marginalized communities, including communities of color, immigrant groups, the working class, and LGBTQ+ communities.
Compounding factors have also led to a lack of energy-efficient and healthy housing and have led to high energy burden (high amount for energy bills relative to income) for these same communities. The result is that people who have contributed the least to climate change are experiencing its worst effects.
Bold action is needed, and decarbonization is among such essential actions. To get there, government and the energy sector need creative solutions and approaches, and exploring alternatives to investor-owned utilities (IOUs) is one path states and localities can take.
Two policy briefs published by the Center in recent months explain that even before the second Trump administration and the 119th Congress launched their broadsides against the Inflation Reduction Act (IRA), the scale and pacing of decarbonization was already lagging at investor-owned utilities. The effective repeal of the IRA means there are now even fewer industry incentives to decarbonize and more carbon pollution on the way.
Most customers in the U.S. are served by investor-owned utilities. Due to their complicated mix of historical industry capture and political power, information asymmetries in the regulatory context, the profit motive of energy production and distribution, and tax policy, IOUs are often disincentivized from advancing an equitable clean energy transition.
That’s why our first brief calls for solutions outside the IOU structure to facilitate a clean, equitable, and just energy transition. It explores alternative models for energy generation and distribution, including:
- Electric cooperatives
- Publicly owned utilities
- Community choice aggregators
The brief outlines the benefits and drawbacks of each approach and addresses legal mechanisms and barriers for adopting these alternatives.
Our second brief zooms in on electric cooperatives, diving deeper into these instruments of energy equity in rural communities.
Electric cooperatives already serve a vital role in bringing electricity to sparsely populated and historically energy burdened regions. A brief history of why finds that the private market failed to address electricity connection in rural areas in the 20th century as there weren’t significant financial incentives for economic scale in sparsely populated areas, leaving service gaps and high costs to customers, and ultimately prompting state intervention.
Still, there are limitations to electric cooperatives. They are often embedded in long-term fossil fuel contracts with substantial debts or are contracted with IOUs with resource mixes that don’t meet decarbonization goals.
However, and particularly in the rural communities they are based in, electric cooperatives can be agents of decarbonization if they embrace funding opportunities to move toward a clean energy future, improve fair representation across elected boards, listen to their member-owners’ desires for clean energy resources, collectively pressure suppliers to adopt cleaner energy resource mixes, or exit distributor contracts entirely.
The electricity sector needs to deeply decarbonize, rapidly and equitably. Check out our policy briefs here and here, and help us spread the word about some of the ways to get there with our one-click social media toolkit.
