Fusion energy: Opportunities for federal action to support energy innovation and commercialization

This blog is part of a series that explores the federal policies and actions needed to deploy next-generation geothermal, sources of nuclear energy (both fission and fusion), and carbon capture and storage – technologies the Trump administration indicated as priorities on Earth Day. The policy brief highlighting these technologies can be found here. 

The United States has emerged as the global standard for the private fusion energy sector, with multiple fusion developers building toward deployment in the early-to-mid 2030s. The Trump administration has recognized the importance of sources of nuclear energy to ensure “America leads both in energy production and environmental innovation.” However, the House recently passed legislation that would be detrimental to the future of U.S. leadership in fusion energy and stifle American innovation.  

Despite these setbacks, there are still opportunities for the administration and Congress to maintain – and even further – the United States’ position as a leader in fusion energy. To do so, it will require federal policy action across the value chain, including the preservation and enhancement of technology neutral tax credits, closing science and technology gaps required for commercial fusion energy deployment, and the continuation of essential public-private partnership programs. Investing in fusion energy now is key to unlocking its huge energy potential and maintaining U.S. fusion energy leadership. Failing to do so will allow global competitors to seize the opportunity to dominate the future of energy. 

Fusion energy can bolster American innovation and support U.S. leadership.  

Fusion, the power of the stars, is the process by which lighter atomic nuclei, such as hydrogen, merge to form a heavier nucleus, releasing energy. Commercial deployment of fusion energy could secure permanent U.S. energy independence, stabilize low-carbon grids with firm, clean power, promote energy addition to support growing power needs, and drive economic growth. 

Today, the U.S. private fusion energy industry counts 25 verified companies which have secured over $6 billion in private funding, most of which aim to put fusion energy watts on the grid in the 2030s. Today, multiple U.S. fusion companies are preparing concrete plans to do so.  

• Commonwealth Fusion Systems (CFS) is partnering with the utility Dominion Energy to build its ARC plant, which will be sited in Chesterfield County, Virginia, with plans for grid connection in the early 2030s. 

• Helion Energy is conducting a feasibility study at Chelan County Public Utility District in Malaga, Washington, to build a 50 MW power plant near Rock Island Dam, which would fulfil a Power Purchase Agreement the company has with Microsoft. 

• Type One Energy has entered a Cooperative Agreement with the Tennessee Valley Authority (TVA) to jointly develop plans for Infinity Two, a 350 MWe stellarator fusion power plant targeted for the mid-2030s. 

The success of these projects is essential to securing U.S. fusion energy leadership. Sustained federal support and policy certainty are necessary to ensure they reach commercial deployment. 

Commercializing fusion energy will take federal support to close the science and technology gaps, including funding for demonstration projects and federal tax credits. 

Congress must preserve, amend, and expand clean energy tax credits. The 48E investment tax credit and 45Y production tax credit are central to the business cases of fusion energy companies. These provisions help overcome the “missing middle” investment gap common to breakthrough innovation sectors like fusion, in which pilot plants can be overly costly for early-stage investors, but overly risky for traditional project finance. The tax equity relief these credits provide plays an essential role in bridging this gap to allow fusion energy companies to reach commercial viability. Furthermore, the transferability provision of these tax credits enables pre-revenue fusion energy startups to also benefit from these credits.  

However, the version of the 2025 reconciliation bill which recently passed the House would eliminate 48E and 45Y for all projects except those for which construction begins within 60 days of the enactment of the proposed legislation, and for such projects to be placed into service (i.e., reaching the grid) by the end of 2028. In practice, this makes all fusion energy projects ineligible for this credit, pulling the rug out from under the fusion energy companies driving U.S. leadership in the sector.  

Preserving the existing 48E and 45Y phaseout schedule, and ideally extending these tax credits through 2040, would give U.S. fusion energy companies the runway to fulfill their potential to secure U.S. energy independence, enable energy addition to meet growing power needs, stabilize future grids, and drive economic growth. Furthermore, amending the advanced manufacturing production credit (45X) to include key components of fusion systems would encourage the growth of a world-leading fusion energy supply chain in the United States, creating manufacturing jobs and driving economic growth.  

Federal investment should be focused on closing the science and technology gaps to speed up commercialization, like increasing support for experimental facilities and sustaining funding for existing ones. By directing public sector resources toward closing science and technology gaps required across concepts, industry-wide commercialization challenges can be addressed without the government “picking winners.” This requires coordination between the public and private sector. The Fusion Industry Association’s one-time appropriations request includes $4.3 billion to support the construction of necessary test beds to close these gaps, and to expand public-private partnerships aimed at addressing the key science and technology challenges facing fusion commercialization. This would help direct public sector resources towards commercially relevant R&D. 

Congress should increase resources for the Milestone-Based Fusion Development Program (MBFDP) to match the scale required for demonstration and pilot plants. Fusion energy companies face a chicken-or-the-egg challenge: even with a strong concept, prototype development can stall due to a lack of funding, with many investors requiring proof-of-concept before committing large blocks of capital, but proving a concept requires significant funding upfront. By providing milestone-based support and crowding in private investment, the MBFDP helps private companies secure the resources necessary to build their demonstration and subsequently pilot plants. The Fusion Industry Association’s one-time appropriations request to allot $4.95 billion over the next ten years to support MBFDP would provide necessary scale to support American private fusion companies compete against state-sponsored global competitors in putting fusion energy watts on the grid. 

Fusion energy holds a lot of promise – but Congress and the administration need to provide federal support and certainty so it can achieve its full potential.