Opportunities for Federal Leadership: Energy Innovation, Commercialization, and Deployment 

The Trump administration has signaled its support for energy technologies including carbon capture and storage, sources of nuclear energy, and next-generation geothermal. These technologies can revive American manufacturing, create jobs, support energy security, reduce emissions, and improve public health. Federal investment in energy innovation creates significant opportunities to bolster American leadership and global competitiveness. 

The U.S. government has a legitimate interest in supporting energy innovation for domestic security, jobs, economic development, and a healthier future. To achieve these goals, it must address the full value chain of technology deployment from early-stage research and development through demonstration and ultimately to full commercial deployment. The U.S. Department of Energy is a leading player in energy innovation, with offices supporting each stage of technology development. Adequate funding and staffing are crucial to manage and oversee projects to advance the incentives and conditions necessary to achieve market liftoff. And financial incentives such as federal tax credits provide needed support for demonstration and particularly for deployment (see Figure 1 below). Many of these links in the chain are also necessary to span the “missing middle” investment gap that prevents full commercial take-off of these technologies. 

There are many federal policies that can help unleash carbon capture and storage, sources of nuclear energy (both fission and fusion), and next-generation geothermal technology. 

How to Unlock Carbon Capture and Storage: 

Carbon capture and storage (CCS) is a critical technology for advancing U.S. leadership in power, energy, and industrial innovation. It enables the deployment of clean, firm power needed to meet rising electricity demand from AI data centers and other 24/7 loads. CCS is also essential for maintaining the United States’ competitive edge in global energy and manufacturing markets as demand for low-carbon products accelerates. International mechanisms—such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) and Japan’s upcoming carbon levy—will increasingly impose costs on carbon-intensive imports. When paired with upstream methane abatement, CCS provides U.S. industry—including refiners, chemical manufacturers, and producers of cement, ammonia and hydrogen—with a pathway to reduce emissions, comply with emerging standards, and expand access to global markets. To secure U.S. leadership in the low-carbon economy, it is imperative to protect and strengthen federal CCS policy. 

To unlock carbon capture and storage, industry needs: 

• Continued support for the Department of Energy’s flagship carbon management pilot and demonstration programs. Demonstration grants are essential for proving to investors that first-of-a-kind applications can work and for attracting private capital. Recent demonstration projects funded by the Bipartisan Infrastructure Law include projects in the steel, cement, and chemical sectors, as well as fossil power.     

• Strong and continued support for federal tax incentives. Increasing the value of 45Q credit to at least $120 and retaining transferability would allow for market liftoff for the use of carbon capture in multiple industries, including power generation and low-carbon manufacturing. Also critical is maintaining the Greenhouse Gas Reporting Program (GHGRP) to provide the framework for monitoring, reporting, and verification of stored carbon that is needed to claim 45Q tax credits.  

• Matchmaking with existing infrastructure. New CCS customers including hyperscalers can benefit from CarbonSAFE sites to co-locate data centers near zero-carbon energy and storage-ready infrastructure. 

• Efficient permitting of carbon dioxide pipelines, such as a federal siting pathway for interstate pipelines to align with the federal authority granted to natural gas pipelines under the Natural Gas Act, or state-level reforms. This would address siting challenges that currently delay projects and help translate federal investments into steel in the ground.  

• Efficient permitting processes for Class VI wells. -Geologic storage projects in states without primacy can face lengthy Class VI applications at the EPA so it is critical that enough staff are tasked with reviewing applications.  

• New CO2-specific pipeline safety rules. Several states have passed moratoria on permitting carbon dioxide pipelines until PHMSA updates its safety rules, so PHMSA rules should quickly get into place to allow the permitting of carbon dioxide pipelines to move forward.  

• Continued support for the innovation pipeline—from breakthrough research at national laboratories to the deep technical expertise within federal agencies, particularly the Office of Fossil Energy and Carbon Management (FECM). This includes sustained funding for R&D, pilot, and demonstration programs, as well as the staffing and institutional capacity needed to effectively manage and deliver these initiatives. 

How to Unlock Sources of Nuclear Energy: 

Advanced nuclear fission and fusion energy both have the potential to transform the world’s energy system at scale, and the United States can play a significant role in deployment of this technology.  

Advanced Nuclear Fission:  

Advanced nuclear fission is poised to meet growing energy demand by offering a firm energy supply, either as electricity, high-temperature steam, or both, on a low land footprint. Advanced nuclear fission projects have made significant progress, resulting in a flurry of commercial deals and new demonstration plans. Building off the existing commercial industry, the U.S. is slowly rebuilding its fuel supply capabilities and adjusting the regulatory pathways necessary to unlock advanced nuclear fission deployment, but additional, concerted support is needed from government to unlock demonstration of these technologies at scale. Nuclear has a strong, robust safety record, and innovations in design and operation allow advanced nuclear fission to be considered for new applications across multiple hard-to-abate industries. 

To unlock advanced nuclear fission, industry needs: 

• A centralized entity to institutionalize excellence in construction management and supply chain development. This institution would consolidate best practices in cost, project, and supply chain management, workforce development, reactor design, and allow for enhanced R&D through simplified Cooperative Research and Development Agreements (CRADAs). 

• Enhancement of front-end, cost reduction federal mechanisms. The 48E and 45Y tech-neutral clean electricity investment and production tax credits are critical for advanced nuclear fission projects. These tax credits, including provisions allowing the transferability of credits, should be extended through 2040 to support grid scale deployment of advanced nuclear fission. Authority for the Loan Programs Office should also be enhanced to enable sufficient staffing and institutional management to support new nuclear development and allow for blended federal financing with other DOE grants. 

• Support mechanisms to enable rapid advanced nuclear fission reactor and plant replication and cost reduction. This means supporting deals for multiple units and sites, called orderbooks, to drive down costs through learning by doing. Enabling orderbooks will require support for integrated project delivery and risk management tools to lower up-front risks from cost overruns. As projects commence construction, cost-overrun insurance and tiered risk-sharing across project sponsors (e.g. consortium of technology companies, utilities, merchant generation, etc.) and state and federal governments will be vital. The administration must also set a clear deployment target and develop a comprehensive strategy to unlock these orderbooks and scale advanced nuclear fission. 

• Enhancement of international financing agencies. To deliver on the strong vision the administration has set for U.S. energy dominance, government must sharpen America’s competitive edge by establishing a national interest account to prioritize advanced nuclear fission export projects through EXIM, raising its default cap, and modernizing EXIM’s mission to complement an international advanced nuclear fission deployment strategy. Raising DFC’s contingent liability and loan size cap, as well as easing its country restrictions, would allow for broader impact across the world.   

• A strong, wholesale change in spent fuel policy. This will require a bottom-up approach in which the federal government works with states and communities to identify conditions, locations, and timelines for establishing facilities to store spent nuclear fuel. 

• Funding for a more efficient and effective Nuclear Regulatory Commission. As developers near design completion and seek approval for operating first-of-a-kind reactors, a sufficiently staffed and empowered NRC will enable the safe deployment of new reactors, with the ability to license a high volume of reactors in the future. 

Fusion Energy: 

Commercial fusion energy deployment could secure permanent U.S. energy independence, stabilize future low-carbon grids, and provide a new source of power to meet growing energy demand. Deploying commercial fusion energy will require continued and expanded federal support to fund public-private partnerships to construct demonstration and pilot plants and to close necessary science and technology gaps required for commercialization.  

The future deployment of fusion power plants also offers the opportunity to grow supply chains to drive domestic manufacturing of fusion machine components. American companies are well-positioned to lead and benefit from this growth, with hundreds already engaged in the fusion energy component manufacturing through ITER, the international fusion collaboration in France, and other projects. At a time when manufacturing jobs are often outsourced, building an industrial fusion energy ecosystem will create domestic manufacturing and engineering jobs, benefiting American workers and developing the skilled workforce necessary for fusion power plant deployment.  

With fusion energy startups preparing plans to put pilot plants on the grid, and with the technology’s potential to become a dominant global power source in the second half of the 21st century, ceding leadership in this transformative sector would pose avoidable energy security risks for the United States. In tandem, fusion energy’s strong safety profile and minimal proliferation risk should enable American fusion companies to operate in global energy markets. The potential future market size of the global fusion energy sector suggests that American dominance in fusion energy should be a national strategic priority for economic growth as well as for advanced technologies leadership 

To unlock fusion energy, industry needs: 

• Support for testbeds, including the construction of new experimental facilities and sustained funding for relevant existing ones. This support is necessary to close science and technology gaps required for commercialization. Programs such as the Fusion Innovation Research Engine (FIRE) collaboratives provide testing infrastructure that private firms cannot develop on their own. The Innovation Network for Fusion Energy (INFUSE) facilitates cost-shared partnerships that allow private companies to work with national labs or universities on predefined enabling technology challenges. And the Private Facilities Research (PFR) program allows publicly funded researchers to conduct studies at private fusion research facilities. These programs accelerate the closing of science and technology gaps and incorporate industry to contribute to R&D that would otherwise be fully funded by the public sector. 

• Expansion of the Milestone-Based Fusion Development Program, enacted under the first Trump administration, to accelerate U.S. fusion demonstrations and ultimately pilot plants. 

• Protection of tax credits to support pilot plant construction. The technology neutral tax credits for clean electricity investment (48E) and production (45Y) are central to the business case of American fusion companies, and their preservation will support the success of the American fusion energy industry. The mechanism allowing the transferability of these tax credits also should be protected, as it allows pre-revenue fusion companies to attract necessary project financing. 

• Encourage the growth of a fusion supply chain by amending the 45X Advanced Manufacturing Production Credit to include key components of fusion systems.  

• Funding for programs to advance fusion energy within the Department of Energy, public-private partnerships at national labs and user facilities, and staffing support for these offices. Funding is also needed to support NRC with efficient regulation and licensing. 

How to Unlock Next-Generation Geothermal: 

The United States is currently a world leader in geothermal energy, largely based on innovations in drilling pioneered by the U.S. oil and gas industry. With continued investment and focus, the U.S. can maintain and expand its dominance in geothermal innovation while producing huge amounts of power. Superhot rock geothermal is the highest-temperature, highest-energy-density form of next-generation geothermal, and CATF estimates that just 1% of America’s superhot rock potential could produce 4.3 terawatts of clean firm power – 8 times the United States’ 2022 electricity consumption. Next-generation geothermal can reduce the need for costly storage and excessive transmission infrastructure, deliver high power output from a small land footprint, and open new opportunities for oil and gas companies and their skilled workforce.  

Investments in research, development, and deployment can unlock geothermal resources across the United States. However, next-generation geothermal is an emerging technology that needs support to reach its full potential. There are high upfront costs to drilling a geothermal well, and existing finance structures are not set up to support geothermal energy. Just as early public investment in the shale gas industry helped drive a 700% increase in production and nearly 80% decline in costs, targeted federal support is needed to accelerate the benefits of this exciting new, baseload energy source. 

To unlock next-generation geothermal, industry needs:  

• Funding for superhot rock energy R&D and testbeds. This funding will enable research in key topics (such as deep drilling, materials development, and equipment design) to advance geothermal technologies toward commercial deployment. A Geothermal Center for Excellence should also be created to coordinate research and ensure that learnings are shared across the industry. 

• Cost-share for first-of-a-kind demonstrations of next-generation geothermal energy around the country. This support will de-risk deployment of early-stage projects and will collect and share critical subsurface data, accelerating the timeline for commercial-scale deployment in new and untested regions. 

• Preservation of the technology neutral investment tax credit (ITC) under section 48E. This credit is crucial to the financial sustainability of early-stage geothermal projects while the industry is still reaching full-scale deployment. The ITC reduces the risk of innovation and unlocks private finance, spurring the development of next-generation geothermal technologies. The ITC’s transferability provision is also crucial, ensuring that startups without significant tax liability can still benefit from the credit. 

• Funding for the Geothermal Technologies Office and Loan Programs Office at DOE, for national labs that work on geothermal, and for agencies that handle geothermal permitting and environmental review (particularly the Department of the Interior’s Bureau of Land Management), with staffing support for institutional management. Appropriate staffing at all of these agencies is crucial to ensure that geothermal research and project deployment proceeds smoothly and efficiently. 

Key Takeaways 

Sustained federal investment and a predictable policy environment for these three clean energy technologies are essential to bringing them to widespread deployment.  This investment is needed to support the full value chain of technology deployment from early-stage research and development through demonstration and ultimately to full commercial deployment. The U.S. Department of Energy is a leading player in energy innovation, with offices supporting each stage of technology development. Adequate funding and staffing are crucial to manage and oversee projects to advance the incentives and conditions necessary to achieve market liftoff. And financial incentives such as federal tax credits provide needed support for demonstration and particularly for deployment. Long-term needs include enabling regulations, licensing, and infrastructure support to achieve large-scale demonstration and commercialization. Loans, cost-overrun insurance, and demand support mechanisms like orderbooks will also be needed to commercialize innovative energy technologies ready to scale.  

Unlike other sectors, early-stage large-scale infrastructure energy technology projects require a capital investment that is too large for venture capital but too risky for institutional investors (e.g. banks). This gap halts technology progress. To overcome this “missing middle” and support the full value chain of technology deployment, policies need to improve investment conditions necessary to achieve “systemic bankability,” enabling  take-off i.e., large-scale private investment and widespread deployment. Gaps in investment conditions can also guide resource allocation for federal programs and offices to ensure federal incentives like grants, loans, and tax credits are used effectively. 

To close the energy innovation gap completely, the government must also allocate sufficient funding, staffing, and management capabilities to advance federal programs and incentives.  

If the Trump administration and Congress are serious about bolstering U.S. energy innovation and global competitiveness, now is the time to make the necessary investments clean energy technologies that can help get us there.