Financing Tools for an Equitable Transition to a Clean Economy

The briefing argues that meeting the US NDC target of 50–52 percent emissions reduction by 2030 requires the rapid retirement of fossil fuel assets, which risks placing high costs on ratepayers and frontline communities. It proposes amending Title XVII of the Energy Policy Act of 2005 to establish a Clean Transition Financing Program. This program would use tools like low-cost direct loans, outcome-based impact bonds, and environmental risk insurance to reduce transition costs. Specifically, RMI estimates that a federal credit subsidy of $3 billion to $4 billion could save electricity ratepayers over $10 billion annually by refinancing fossil generation assets.

• Meeting the United States' NDC target of reducing emissions 50–52 percent below 2005 levels by 2030 requires the rapid retirement or transition of long-lived fossil fuel assets across sectors including electricity generation, transportation, industrial equipment, and buildings.
• Regulated electric utilities in the US hold nearly $160 billion in fossil generation assets; RMI estimates that transitioning these assets could leave customers paying $20 billion to $25 billion in annual capital costs for retired or repurposed plants.
• The author proposes amending Title XVII of the Energy Policy Act of 2005 to create a Clean Transition Financing Program under the Department of Energy’s Loan Programs Office (LPO). This program would utilize low-cost direct loans, financing for repurposing transportation infrastructure, outcome-based impact bonds, and environmental risk insurance.
• A federal credit subsidy appropriation of $3 billion to $4 billion for the proposed program could result in annual savings of more than $10 billion for electricity ratepayers regarding the transition of utility generation assets.

APA

RMI (2021). Financing Tools for an Equitable Transition to a Clean Economy. https://rmi.org/resources/financing-tools-for-an-equitable-transition-to-a-clean-economy/

Chicago

RMI. Financing Tools for an Equitable Transition to a Clean Economy. 2021. https://rmi.org/resources/financing-tools-for-an-equitable-transition-to-a-clean-economy/.

Wikipedia

{{cite report |author=RMI |title=Financing Tools for an Equitable Transition to a Clean Economy |date=5 July 2021 |url=https://rmi.org/resources/financing-tools-for-an-equitable-transition-to-a-clean-economy/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2021financing, author = {{RMI}}, title = {{Financing Tools for an Equitable Transition to a Clean Economy}}, institution = {RMI}, year = {2021}, month = jul, url = {https://rmi.org/resources/financing-tools-for-an-equitable-transition-to-a-clean-economy/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }