State Policy Options for Fusion Energy Deployment

Executive Summary 

Advancements in plasma science and enabling technologies over the past decade have reshaped fusion energy’s commercial deployment timeline from a far-off reality to a realistic prospect in the decade ahead. From scientific breakthroughs such as the achievement of energy breakeven at Lawrence Livermore National Laboratory, to industrial advancements such as the development of mass-manufactured high-temperature superconducting tape and AI-assisted tools, fusion energy has the potential to be not only scientifically feasible, but also economically viable. What’s more, the market is taking notice. Twenty-nine fusion energy startups in the U.S. have now cumulatively attracted more than three quarters of the more than $10 billion of private funding raised globally, with the vast majority having been invested in the last five years. Today, more than 75 percent of industry respondents to the Fusion Industry Association’s yearly survey believe they will put their first electrons on the grid by the first half of the 2030s. 

As fusion energy moves from the laboratory to the grid, state policies will be increasingly important in determining how and where the industry takes shape in the United States. Already, several states, such as Virginia, Washington, New Jersey, Massachusetts, California, Wisconsin, and Connecticut, have introduced or passed fusion energy-related legislation. The state policy and regulatory environments of today will determine where a company puts its machines on the grid tomorrow. Ensuring that fusion energy receives targeted policy support where needed, while ensuring that broader clean energy tools are technology-neutral and inclusive of fusion energy, will be essential in creating an effective business environment for commercial fusion energy deployment over the course of the coming decade.  

There is no one size-fits-all policy that will work for all states in the same way. Nor do states need to adopt all of these policy tools to attract the fusion energy industry. Some of the policies included may not make sense for certain states due to their specific political, regulatory and policy structures. However, by giving careful consideration to the policies listed in this brief and determining which may work for its own specific circumstances, a state can position itself to support the future deployment of fusion energy and become an attractive location for early deployment. This is best done by engaging with the fusion ecosystem, electric utilities, fusion developers, and other key stakeholders in the given state. This brief provides states with policy options to create the conditions to attract and deploy fusion energy projects. 

Regulatory Tools 

• Strengthening State Regulatory Capacity. States can strengthen their regulatory readiness and responsiveness by becoming an Agreement State, i.e., a state with delegated authority from the Nuclear Regulatory Commission to regulate most uses of radioactive materials, including those associated with fusion energy. If already an Agreement State, the state can ensure its implementing agency, i.e. the designated state office that the NRC relinquishes portions of its licensing and regulatory authority to, is adequately resourced to effectively engage with fusion energy developers throughout the licensing process for fusion energy machines. 

• Ensuring Efficient Permitting Processes. Creating efficient permitting processes for the eventual commercial deployment of fusion energy machines can allow states to reduce uncertainty for fusion energy developers. 

• Ensuring Efficient Siting Processes. States can ease siting processes for fusion energy machines using typical steps used to incentivize other large projects, such as feasibility studies, site certification programs, reduced property taxes, and waived permitting fees. In particular, former fossil fuel sites present strong opportunities for fusion development by offering existing high-capacity grid connections for reuse. States can support these “fusion brightfields” with build-ready programs, remediation incentives, and liability protections. 

• Clearing interconnection Queues. States can press grid operators to clear interconnection backlogs, already a barrier to clean energy deployment more broadly, in order for fusion projects to deliver power when commercially ready. 

Legislative and Programmatic Tools 

• Defining Fusion Energy Explicitly in State Statutes. States can explicitly define fusion energy in statutes to reduce uncertainty and ensure alignment with appropriate regulatory frameworks. Furthermore, defining fusion energy in state statutes as a clean energy source can further enable fusion energy to benefit from broader clean energy incentives. 

• Including Fusion Energy in Clean Energy Standards (CES) and Renewable Portfolio Standards (RPS). States can adopt or amend electricity procurement targets to include fusion energy machines as eligible energy sources. 

• Creating Fusion Energy Tax Incentives. Offering targeted or technology-neutral tax credits can de-risk private investment and help to attract and retain fusion energy startups and component manufacturers. 

• Funding and Financing Tools for Fusion Energy. Ensuring fusion energy developers have access to financing tools to bridge early-stage commercialization gaps may encourage them to site in a state. 

• Establishing Innovation Hubs and Cultivating a Fusion Energy Workforce. Concentrated “fusion hubs” around universities and national laboratories can foster entrepreneurship, strengthen supply chains, and develop the skilled workforce fusion energy ecosystems will require. 

• Promoting Public Acceptance. Clear communication of fusion energy’s anticipated benefits and operational safety profile will be important to ensure community involvement and support for siting and deployment. 

While fusion energy machines will be novel technologies, states already have many of the necessary policy tools to support their eventual deployment. Fusion energy will require targeted policy measures in certain areas, but ensuring that it is eligible for policies already in place for other energy sources as appropriate will be essential for states seeking to capture the benefits of fusion energy’s abundant, firm, zero-carbon power.  

Introduction 

Fusion energy is the basic power of the universe. Under extreme temperatures and pressures, lighter atomic nuclei, such as hydrogen, can merge to form a heavier nucleus and release energy, according to Einstein’s equation E=mc². When commercially deployed, fusion energy’s zero-carbon profile and abundant, firm energy production will help address both emissions reductions and energy security challenges. 

The United States leads the world in private fusion energy development, with 29 verified fusion energy startups that are cumulatively responsible for at least three quarters of the more than $10 billion in funding raised by private fusion energy startups globally. Multiple U.S. companies are building demonstration plants intended to demonstrate energy breakeven (when the energy produced by the reaction is greater than the energy required to incite it, a necessary condition for fusion energy machines to be net-producers of electricity) and have begun construction at power plant sites. At the federal level, a bipartisan policy consensus has emerged in support of the emerging domestic fusion energy industry. The Milestone-Based Fusion Development Program provides funding to select fusion energy companies, contingent on achieving specific pre-negotiated project objectives. The FIRE Collaboratives program convenes experts on teams to tackle science and technology gaps and bridge gaps between the Office of Fusion Energy Sciences basic science research program and the needs of the commercial fusion industry. The INFUSE program facilitates targeted collaborations where private companies work with national laboratories or universities on predefined enabling technology challenges. The Clean Energy Production and Investment Credits (45Y and 48E) include fusion energy as an eligible resource, helping to de-risk private investment and support project financing. 

As fusion energy approaches commercialization, state policies will be increasingly important in determining where fusion energy companies will successfully site their machines to put electrons on the grid. This policy brief details the current state of the fusion energy industry, the potential benefits of commercial fusion energy for states and communities, safety considerations, and provides a toolkit of regulatory and policy options to help interested states position themselves to support fusion energy deployment within their borders.  

The State of Fusion Energy Deployment 

Over the past decade, rapid advancements in fusion energy technology development have created a credible path to commercial deployment in the near-to-medium term (5–15 years). Scientific breakthroughs in fusion energy machine operation include the achievement of energy breakeven at the U.S. National Ignition Facility. Concurrently, significant improvements in the enabling technologies and design tools for fusion energy production are improving the economics and timelines of commercialization. The commercial-scale availability of high-temperature superconducting tapes are enabling certain fusion energy designs with significantly stronger magnetic fields, making more compact and cost-effective fusion energy machines possible. Meanwhile, new analysis tools such as high-performance computing and artificial intelligence are shortening design cycles. 

Investors are responding to this demonstrated progress. Today, the U.S. private fusion energy sector counts 29 verified companies that have secured more than three quarters of the more than $10 billion in total of private funding raised globally. The majority of these private fusion energy companies project that they will produce electricity before 2035. This momentum has been accompanied by concrete steps taken by multiple fusion energy startups to put electrons on the grid:  

• Commonwealth Fusion Systems (CFS) is completing construction of a demonstration device (SPARC), projected to be the first magnetic confinement fusion energy machine to achieve energy breakeven in 2027. CFS also announced in 2024 that it would site its first power plant, ARC, in Chesterfield County, Virginia, with plans for grid connection in the early 2030s. CFS also announced for that project a 200 MW offtake agreement with Google as well as a power purchase agreement with Eni reportedly exceeding $1 billion.  

• Helion Energy has broken ground on the site for its first plant, named Orion. They project the installation will go online in 2028, targeting a power generation of 50 MWe or greater after a one-year ramp-up period, to fulfill a power purchase agreement with Microsoft signed in 2023. Helion has also signed an energy development agreement with Nucor for a 500MW fusion power plant to support a steelmaking facility. 

• Type One Energy announced plans to site its Infinity One prototype at the retired Bull Run Fossil Plant in Tennessee, and has also entered a Cooperative Agreement with the Tennessee Valley Authority (TVA) to jointly develop plans for Infinity Two, a 350 MWe stellarator fusion energy machine targeted for the mid-2030s. TVA issued a Letter of Intent in September 2025 expressing interest in deploying  “Infinity Two” once it reaches commercial readiness. 

Taken together, these developments among others indicate that fusion energy developers are making progress towards delivering the first commercial fusion energy machines.  

Benefits of Fusion Energy 

Abundant, Firm, Zero-Emission Energy 

Abundant clean energy production will be essential to reducing emissions while meeting rising energy demand. Fusion energy will be a zero-emissions energy source, and future fusion energy machines are anticipated to be firm sources of power, and therefore a strong candidate to replace some of the current firm energy generation supplied by fossil fuels. Some fusion energy machine designs are also intended to function as a dispatchable power source. Studies by energy system researchers and grid operators suggest that variable renewable energy sources like solar and wind need complementary support from firm power sources, even when they are paired with long-term storage solutions, to enhance overall grid reliability. Fusion energy’s clean and firm profile, siting flexibility, and intrinsic safety could therefore also make it an attractive firm zero-carbon complement to renewable energy sources. 

Energy Security 

The United States is operating at an energy surplus for the first time in decades through the shale gas boom and the addition of roughly 280 gigawatts of renewable energy nameplate capacity. Fusion energy offers the possibility to make that surplus permanent. The abundance of fusion’s fuel inputs—with deuterium extracted from seawater and tritium planned to be produced in situ at gain ratios through interactions of fusion neutrons with lithium—would allow for sufficient fuel resources to meet energy needs for the foreseeable future.¹ Other potential and more advanced fusion energy fuel inputs, such as deuterium-deuterium (D-D), deuterium-helium-3 (D–³He),  or proton-boron-11 (p–¹¹B), may also be abundant.² This abundance of fuels would enable states that deploy fusion energy to establish energy security for the long term with self-sufficient, clean, and firm power. 

Fusion Energy Can Support AI Infrastructure  

Across the U.S., states will be facing increases in energy demand due to the combination of diminishing returns from efficiency gains, overall economic growth, and above all, the deployment of data centers to support AI development. The intensity of data-center related demand growth varies by state and region, as data centers tend to cluster. Virginia, for example, is already seeing a quarter of its electricity demand come from data centers. In order for states to grasp the economic opportunity of AI development within their borders, they may need to deploy new energy capacity to meet projected load growth. 

Hyperscalers and AI companies alike argue that AI growth will require an energy breakthrough to meet growing demand, and some have identified fusion energy as an ideal solution to this challenge. A recent Clean Air Task Force (CATF) report reached the same conclusion, finding that fusion energy, once deployed, may be particularly well suited to power data centers because it can deliver zero-carbon, firm power with a strong safety profile that may allow siting near population centers. States with strong fusion energy business and regulatory environments could therefore gain a leg up in ensuring a stable supply of clean firm energy to attract and grow AI industries. 

Economic Growth and Job Creation 

Beyond the future economic benefits of abundant, clean, firm energy, the fusion energy industry is already directly creating jobs and stimulating economic activity. The 2025 Fusion Industry Association report found that fusion energy startups employ 4,600 people today, more than four times the level in 2021. Employment across the supply chain is more than twice that, at over 9,300 jobs created, three times as many as in 2021. Looking ahead, companies estimate that at least 18,000 direct employees will be needed to develop pilot plants, with additional workforce requirements expected as the industry scales to a fleet of commercial machines. 

Fusion energy deployment also presents an opportunity to strengthen manufacturing sectors. Many states are already engaged in the fusion energy supply chain, with hundreds of firms producing components for ITER and other fusion energy projects in the U.S. and around the world. Local pilot plant construction will amplify these opportunities, driving demand for advanced parts and services. At a time when many manufacturing jobs are outsourced, building a fusion energy industry within a state offers a pathway to create durable, high-quality manufacturing and engineering employment pathways. Furthermore, the spillover benefits of fusion energy development can create unexpected boons for local economies. Throughout the history of fusion research and development, spinout technologies have consistently emerged with broad industrial applications. Today, these are taking the forms of lower cost and higher performance high-temperature superconducting magnets for different industrial applications, power management systems and storage for clean energy systems, and new radioisotope therapies for cancer and other medical diagnostics and treatments. As a result, while the fusion energy market will ultimately be national and global, states that foster fusion hubs—whether through natural growth or deliberate policy—can anchor jobs, investment, and spinout companies in their communities, amplifying local economic benefits. 

Lead Market Development 

States that lead in developing innovative technologies often benefit from the lead market phenomenon. Lead markets are created when a country, region, or locality introduces incentives such as innovative policies that encourage early adoption of a technology before it is economically competitive elsewhere. By doing so, the region develops manufacturing capacity and expertise, building a comparative advantage in production, ultimately securing a production and export edge once prices fall to competitive levels elsewhere. States can utilize their existing fusion energy infrastructure, such as national laboratories and universities with fusion programs, to build out this competitive edge. 

In fusion energy, states that create lead markets during initial commercialization phases could position themselves to be major players in a potentially emerging market. A study by the MIT Energy Initiative and the MIT Plasma Science and Fusion Center modeled scenarios for fusion energy’s share of global electricity demand, ranging from just below 10 percent to around 50 percent by the end of this century, with the amount depending on then-applicable overnight capital costs. A state able to create a lead market in fusion energy may position itself for outsized returns in a market with high growth potential. 

Safety of Fusion Energy Machines 

Commercial deployment of fusion energy will have key safety advantages. The significantly reduced radiological risk compared with certain other generation sources and no air pollutants emitted are key expected benefits of future commercial fusion energy production. The radiological hazards of fusion energy and the regulatory framework used to regulate and license fusion machines are not novel, and are currently safely managed and employed by state regulators for other industries. One key safety advantage of the fusion process is that a “runaway chain reaction,” a concern in fission power, is impossible for fusion reactions.  

Fusion energy machines are expected to produce and use radioactive materials during operation (e.g., radioactive tritium as a fuel and neutron activated radioactive materials). The hazards of these radioactive materials, as well as the strategies to control and confine them, will differ fundamentally from fission power plants and are more like the hazards posed by other industrial and medical uses of radioactive materials. For this reason, in 2023, the Nuclear Regulatory Commission (NRC) decided to regulate fusion energy machines under its 10 CFR Part 30 byproduct materials framework, a different regulatory framework than the one used for nuclear fission reactors (10 CFR Part 50 and 10 CFR Part 52).  

The byproduct material regulatory framework enables NRC Agreement States (states with the delegated authority to regulate most uses of radioactive materials) to regulate the radioactive materials and radiological hazards connected with the operation of fusion machines. Agreement States are well versed in the regulatory frameworks and overarching hazards connected with fusion energy because of their experience regulating other industrial and medical uses of radioactive materials. Fusion energy machines, however, are still first-of-a-kind projects, and there is significant diversity of designs amongst developers. These technology- and project-specific differences highlight the importance of state regulators engaging any fusion energy developers interested in siting in their state early on. Early engagement allows regulators to build a strong working relationship with developers and gain a clear understanding of the technology. This enables the regulator to operate based on proportional, technology-inclusive, and performance-based principles that appropriately address radioactive materials handling, the disposal of byproduct material waste management, and other safety concerns. 

The licensing process conducted by implementing agencies of Agreement States, or the designated state office that the NRC relinquishes portions of its licensing and regulatory authority to, will enable a thorough evaluation of radiological risks connected with the operation of a fusion energy machine and culminate with a decision on the issuance of a radiological license. To ensure public safety and build acceptance of fusion energy deployment, states will then need to refine their inspection and monitoring strategies over time to ensure the safe operation of fusion energy machines throughout the lifecycle of their operations, just as implementing agencies do with other radioactive materials they regulate. 

Implementing agencies need specialized skills to license and regulate fusion energy machines. The Nuclear Regulatory Commission provides training programs and coordinates support for state offices. The federal government should continue supporting and strengthening these training programs to ensure effective regulation at the state level through the Agreement State program. 

A Fusion Energy Toolkit 

Regulatory Tools 

For fusion energy startups and their investors to have confidence in timely deployment, states must ensure their regulatory frameworks for fusion energy machines are clear and predictable. Licensing, permitting, siting, and grid connection should not create unnecessary delays. While the radiological licensing process for fusion machines will have some unique requirements, many of the regulatory challenges fusion developers may encounter are similar to those faced by other clean energy technologies. States can address fusion energy’s specific needs while also integrating fusion energy into their broader clean energy visions. In particular, states can ensure that fusion energy is eligible for the same regulatory and permitting advantages developed to support other zero-emissions energy resources. The regulatory initiatives outlined below provide states with options to create an effective, efficient, and predictable regulatory and business environment for fusion energy deployment. 

Strengthen Existing Capacity in State Radiological Health Offices As Appropriate 

In 2023, the Nuclear Regulatory Commission (NRC) decided to regulate fusion energy machines under its 10 CFR Part 30 byproduct materials framework. This is a different regulatory framework than the one used for nuclear fission reactors. Congress endorsed this regulatory approach for fusion energy in the bipartisan ADVANCE Act in 2024.³ 

This choice of federal framework is important because it allows states to lead on fusion energy regulation under the NRC Agreement State Program as part of the National Materials Program (NMP). The NMP is the broad collective framework within which both the NRC and Agreement States function in carrying out their respective regulatory programs for radioactive material. The Agreement State Program is authorized by the Atomic Energy Act and enables states to enter into agreements with the NRC to assume regulatory authority over public safety for most radioactive materials. As a result of the 2023 NRC decision to regulate fusion energy machines under the 10 CFR Part 30 byproduct materials framework, Agreement States now have radiological licensing authority over fusion energy systems, amongst their other regulatory responsibilities for radioactive materials. The NRC is responsible for radiological licensing for states that are not Agreement States. Today, 40 states are Agreement States. 

Agreement State Status 

As a first step, states should obtain Agreement State status to better support the licensing process for fusion energy machines. Regulatory readiness and responsiveness are major factors in siting decisions across industries. Agreement States will have significantly more control over regulatory readiness and responsiveness than a state that defers radiological licensing authority over fusion energy to the NRC. In order to effectively license fusion machines, and in accordance with the obligations of the Agreement State and National Materials Program, states will need to ensure compatibility with federal level regulations being developed by the US Nuclear Regulatory Commission for fusion machines. Already, some Agreement States have gained experience in licensing and regulating smaller-scale fusion research devices, allowing regulators within the implementing agency to gain real-world experience in understanding hazards, risks, and appropriate controls in advance of licensing commercial fusion energy machines.  

Agreement State Agency Staffing 

States can streamline operations within their designated implementing agency to support their fusion energy regulatory capacity. Less than a month after Commonwealth Fusion Systems chose Virginia as the site of its ARC power plant, the state created a dedicated “Fusion Program Director” role reporting directly to senior leadership at the Virginia Department of Health. Establishing clear responsibilities and a designated point of contact within an implementing agency may make it more efficient and easier for fusion energy developers to engage with the regulator ahead of starting and filing its licensing application. 

A well-resourced implementing agency enables effective, efficient, and predictable regulatory support for fusion energy developers. Pre-application engagement fosters mutual understanding by helping the developer grasp the safety case that must be demonstrated to the regulator, and enabling the implementing agency to understand the proposed fusion energy machine and relevant safety considerations. When a license application is filed, the implementing agency will therefore already be familiar with fusion and the applicant, and have the capacity to effectively and efficiently review it.  

Initial Funding of the Implementing Agency  

While the licensing process of fusion energy machines will become self-funding when the industry matures through fee-based funding once applications are filed, implementing agencies may need additional resources to develop initial capacity to ensure that they can efficiently evaluate the license applications of fusion energy machines. If a limited number of new applications are expected, especially early on, then a state may be best served by contracting out technical support for application reviews. This strategy is also helpful for enabling near-term reviews of applications while implementing agency staff are hired and trained to support application reviews. In the short term, cost recovery mechanisms, such as the ability for a private developer to pre-pay into an escrow fund for implementing agency use, would provide the regulator the resources to bring in independent subject matter experts. Without this form of cost pass-through, it may be more difficult for implementing agencies to utilize contracted technical support and therefore efficiently engage with fusion energy developers’ licensing applications and evaluate the safety of the facility based on proportional, technology-inclusive, and performance-based requirements.  

States may also need to add staff with specialized skillsets to provide effective, efficient, and predictable licensing for fusion energy machines, particularly as industry matures. They can begin to develop this capacity for fusion energy licensing by appropriating small amounts of funding. Tennessee, for example, allocated a comparatively modest additional $2,000,000—approximately 0.003 percent of its nearly $60 billion state budget—and added five full-time staff positions to build a fusion energy regulatory framework for the state, enabling the Radiological Health Division to work effectively with Type One Energy, a Tennessee fusion energy company, as well as other future fusion energy developers. 

Evaluation of the Implementing Agency’s Structure 

In many Agreement States, byproduct materials and X-ray technologies are licensed and regulated within the same agency. This structure is helpful for the licensing and regulation of fusion energy machines, as they involve both types of hazards. Handling both byproduct materials and X-ray technologies under the same agency helps provide regulatory clarity and avoid conflicts among different parts of state government. Washington’s Office of Radiological Protection, for example, has noted that the centralization of radiation controls in one office has helped ensure that fusion companies have a centralized point of contact for the issuance of licenses, registrations, and ongoing oversight.  

Some states, however, do have jurisdictional splits in their regulation of byproduct materials and X-rays. To avoid regulatory confusion, states can unify radiation-related activities under the same agency. They also can implement coordination mechanisms to minimize the impact of jurisdictional splits. The Conference of Radiation Control Program Directors (CPRCD) recommends, for example, that any inspections should be performed jointly by X-ray and radioactive materials programs. For non-Agreement States, jurisdictional splits will be even more pronounced between the NRC and state agencies, underscoring the importance of becoming an Agreement State to ensure clear regulation for fusion energy developers. 

Permitting Reforms 

Policymakers can apply lessons from permitting processes for other technologies to enable fusion energy for future commercial fusion energy machines.  

Permitting Efficiency 

Across clean energy sectors, permitting processes are a major barrier to deployment. Many states have taken steps to make their processes more efficient. Some have established (or are considering) “fast-track” permitting mechanisms for clean energy projects. For example, Colorado Governor Jared Polis issued an executive order prioritizing clean energy projects in permitting queues. New York and California have also implemented permitting shot clocks for clean energy installations. In California, for instance, AB 205, passed in 2022, established a 270-day review timeline, although projects have not in practice always received decisions within the window. Ongoing efforts in California are attempting to strengthen the effectiveness of these permitting “shot clock” mechanisms.  

In many states, projects over a certain capacity or size, or projects using specific types of technology, automatically qualify for state-level review and are preempted from local siting authorities. Qualifying thresholds or technology types can differ depending on the state, and offer greater or less local control over project siting, permitting, and approvals, as detailed in CATF’s 2024 “Laws in Order” report cataloguing which government entity or entities in each state or territory have the jurisdictional authority to make siting and permitting decisions on renewable energy installations.   

Permitting Pathways 

Some states with state-level permitting and siting processes have created “one-stop shops,” designating a specific agency authority to manage all necessary permits and regulatory approvals for clean energy projects. This includes coordinating reviews and tasks from other agencies and enforcing “shot clocks” mentioned above. 

Centralizing review and approval of permits at the state level can help increase approval process predictability and provide greater visibility into the review process. However, many of these “one-stop” shops in states are quite new, and improvements in permitting processing time are still being evaluated. And at times, centralized processes can be slow and apply inconsistent standards. A more flexible approach is to provide developers with vetted and clear approval pathways that work best for them and their project types. Washington has taken this approach through recent legislation that allowed certain clean energy developers to opt into their preferred permitting pathway, either a centralized state-led permitting process through the state’s Energy Facility Site Evaluation Council (EFSEC) or the more local/county-level permitting track. Following this legislation, Washington passed a second bill, House Bill 1018, that clarified fusion energy developers have this same choice available to them. 

To assist developers not using a centralized, state-level permitting pathway, a state can designate a clear point of contact who understands the specific local and state requirements for environmental and building permits for developers to engage with. For example, state transportation departments often designate a single point of contact to guide environmental reviews and permitting processes for transportation projects, which has reduced project delay and increased transparency for developers in the sector. 

Eligibility of Fusion Energy in Permitting Reforms 

Washington’s example provides a model for other states. Most permitting reforms for clean energy deployment do not currently include fusion energy in their mandate. To use these reforms to attract and support a fusion energy industry, states can add statutory language to existing programs or ensure fusion energy is explicitly defined as eligible in new programs, especially those that fusion energy developers see as helpful to accelerating commercial fusion energy deployment. This may be needed either in the specific statute creating the permitting tool, or in some states, by simply statutorily defining fusion energy as a source of zero-emissions energy in state law so it is automatically eligible for any permitting procedure designed for “clean energy.” 

Siting Fusion Energy Machines 

Energy developers need clear pathways to identify a suitable site for project development and quickly move towards being shovel-ready. States have many available tools to ease siting procedures that can be applied towards fusion energy deployment. States can conduct feasibility studies to identify sites appropriate for fusion energy, reducing site search times for fusion energy companies. Wisconsin incorporated this into its fusion energy siting legislation. Site certification models, in which the state conducts or provides communities grants to conduct a full site evaluation ahead of any construction to ensure that the site is project-ready, can reduce obstacles for fusion energy developers to begin construction. Site-readiness measures like reduced property taxes or waived permitting fees can further incentivize developers considering siting themselves in a given state. States can also provide model ordinances, which have been developed in many states as non-obligatory guides for local jurisdictions to use recommended zoning rules and siting standards for renewable energy and storage projects. Similar model ordinances for fusion energy could create a clearer process for local authorities to use as a guide. Finally, by providing clear opportunities for community engagement, such as through public comment and hearings, the state allows the developer to communicate the benefits of fusion energy development in their area. While the responsibility for public engagement fundamentally lies with the developer, the state can help boost community buy-in by facilitating this process. Developer consideration of community benefit frameworks can ensure that benefits of hosting infrastructure actually accrue to local communities. 

“Fusion Brightfields” 

In particular, former fossil fuel sites, especially coal plants, may be ideal sites for fusion energy machines. These facilities often come along with existing high-capacity grid connections, enabling the reuse of transmission infrastructure to avoid associated costs and delays. Some fusion energy developers have decided to reuse retired fossil fuel infrastructure for the prototype or power plant development. These efforts are part of a broader “brownfields to brightfields” movement that focuses on repurposing contaminated industrial sites for clean energy development. 

• Type One Energy is developing its Infinity One prototype at the former Bull Run Fossil Plant in Tennessee.  

• Zap Energy is conducting a feasibility study for a fusion pilot plant sited at the Big Hanaford Power Plant in Washington State. 

• The STEP prototype will be located at the former West Burton coal station in the UK.  

Brownfields to brightfields in fusion energy would benefit fusion energy companies, states, and communities. Fusion energy companies would gain access to well-equipped sites; states would benefit from the revitalization of formerly contaminated land and the clean, firm, abundant energy supply fusion facilities would offer; and communities may see economic benefits and a cleaner local environment.  

However, brownfield to brightfield projects in other clean energy sectors have often faced significant hurdles. Liability issues, complex and time-consuming permitting and environmental review processes, and expensive site remediation have reduced private sector interest. In response, some states have built policy tools to overcome these issues to make brightfields to brownfields possible for renewable energy production. Many of them can be adapted for fusion energy siting. Examples of policy tools include: 

• Some brownfield-specific site certification models, such as New York’s Build-Ready program, enable the state to conduct site certification of the brownfield and subsequently auction or lease the remediated land to a developer. States can include fusion energy developers in build-ready programs. 

• States can support site-prep readiness at brownfield sites through grants or incentives for brightfield development, allowing fusion energy companies to be reimbursed for their cleanup work that benefits both themselves and the surrounding community.  

• Already, most states offer matching funds from EPA grants to assist in costs of brownfield remediation. Increasing the state matching capacity could make such programs more attractive.  

• States can limit legal liability for pre-existing contamination from the brownfield site. All fifty states have some sort of brownfield liability protection, but they vary in strength. “Covenants not to sue”, for example, are strong legal protections that shield the remediator from liability for contamination caused by previous activity. States can also statutorily protect fusion energy companies from liability, as some states have done specifically for renewables. 

These tools can be used individually or together to ease siting procedures. EPA project data shows that states with several policies promoting the reuse of contaminated sites generally see the greatest number of brightfield projects on those properties.  

Interconnection Queues 

Interconnection refers to the process a power project must go through to physically and operationally connect to the grid. Of particular concern are long interconnection queues, which are a growing barrier to clean energy deployment nationwide. Long queue times derive from time-consuming interconnection studies and failure of the interconnection queue process to prioritize the most complete applications, among other things. Since these queues are controlled by regional transmission organizations, independent system operators, or transmission-owning utilities under Federal Energy Regulatory Commission rules, states have limited ability to clear queues or reform queue processes.  

Solutions to interconnection backlogs are therefore largely beyond the scope of this paper (although a recent Clean Air Task Force report offers a detailed overview and provides actionable recommendations to reduce interconnection backlogs.) Still, interconnection queues remain one of the largest barriers to clean energy deployment. Even with attractive incentive packages, if developers cannot connect to the grid in a timely manner, states will be less likely to lead in bringing commercial fusion power online. Progress on interconnection timelines will be necessary for accelerated deployment of fusion energy machines. While implementation of FERC Order 2023 continues, state governors, public utility commissions, and legislatures should use available tools to press grid operators to continue to address interconnection backlogs for clean energy, including fusion energy.   

Legislative and Programmatic Tools 

Defining Fusion Energy in Statute 

Several U.S. states do not define “nuclear” in statute, and most have not updated their laws to define fusion energy. However, states have various regulatory regimes, financial incentives, reporting requirements, and other operational provisions and regulations that may require clarification of these terms. To reduce confusion between traditional nuclear fission and fusion and to clarify which provisions and regulations apply to fusion technologies, states can define “fusion energy” and/or “fusion energy machine” in statute.  

Virginia, for example, includes fusion energy in its statutory list of carbon-free energy sources and then provides that, “As used in this section, “fusion energy” means the energy generated through the process of fusing together atomic nuclei.” The definition of fusion machine should remain technology-neutral and aligned with the language included within the federal ADVANCE Act. 

Clean Energy Standards and Renewable Portfolio Standards 

Many states have adopted  Clean Electricity Standards (CES), Renewable Portfolio Standards (RPS), or both, as tools to reduce greenhouse gas emissions and drive clean energy investment. While both aim to decarbonize the electricity sector, they differ in structure and scope. An RPS typically credits only renewable energy sources, while a CES incorporates a broader suite of clean energy technologies.  

Eligibility of Fusion Energy 

Many states do not yet include fusion energy in their CES and/or RPS frameworks. CESs generally set a standard in one of two ways: (1) requiring a percentage of electricity provided to come from zero-emissions sources or (2) requiring percentage reductions in carbon dioxide (CO₂) emissions from a baseline year. In the former, the policy must specify which resources qualify as “clean.” The latter’s technology-neutral nature may be simpler and provide more compliance flexibility because it does not require the state to specify which resources qualify; all zero-emission resources would help reduce emissions. Most states that define their CES in terms of the percentage of clean electricity provided to customers do not currently include fusion energy in their definitions of clean energy sources, as fusion energy was not considered commercially viable when most of these standards were developed. Similarly, an RPS must specify which resources qualify as “renewable”. 

States can ensure fusion energy qualifies under their existing CES or RPS standards, as appropriate. It may already qualify, but if a CES or RPS requires a percentage of electricity provided to come from zero-emissions sources and lists the eligible resources, fusion energy could be explicitly added as an eligible resource. States can work with utilities, fusion energy developers, and other stakeholders to assess the impact of any changes on long-term planning, system operation, and electricity rates. 

Design Considerations of the Standard 

There are several functional considerations in the construction of CES policies that can help maximize impact on fusion energy deployment. Certain advanced CES design features, for example, could benefit fusion energy deployment. A clean capacity standard requires the procurement of a specific amount of firm capacity from low-emission resources. This helps bring clean firm technologies like fusion energy onto the grid sooner than a typical sales-based CES, which often allows targets to be met with renewables alone until the later years of the program when requirements become more stringent. Similarly, an hourly retail sales requirement, such as a mandate for 24/7 clean electricity or a clean energy requirement during the highest 1,000 marginal emissions hours of the year, would incentivize clean firm power deployment by requiring demand always be met by clean electricity (i.e., times when renewables cannot meet demand) or during the most polluting hours of the year.  

Furthermore, most CES policies based on retail electricity sales exclude “behind-the-meter” power sources that are not connected to the grid. However, there is growing interest in using fusion energy behind the meter to power data centers. Recent private-sector deals, such as Helion’s agreement with Nucor to supply 500 MW of power directly to a steelmaking facility, highlight the potential role of fusion energy to operate behind the meter to support AI infrastructure. This can occur and still allow the energy resource to be called on for grid reliability, through proper tariff designs and state regulatory supports. If behind-the-meter resources comprise a significant percentage of a state’s electricity use, then the state could broaden a CES’s applicability to non-retail sales or customers. 

Fusion Energy Tax Incentives  

Tax Credits for Fusion Energy Development 

State tax incentives are another tool that can be used to attract and support fusion energy developers. At the federal level, the Investment Tax Credit (ITC) and the Production Tax Credit (PTC) apply in a technology-neutral manner to all facilities generating zero-emission electricity, including fusion energy. However, tax credits at the state level can stack on top of any available federal incentives, as well as create a more certain business environment for developers and investors in the current context of contentious negotiations over clean energy tax provisions at the federal level. A potential model is the New York State’s Green CHIPS program, legislation that adds a five percent state investment tax credit for semiconductor companies on top of federal incentives authorized in the federal CHIPS act, encouraging semiconductor companies to locate in the state. A state-level fusion energy ITC could follow this model, layering an additional investment credit on top of the 48E federal tax credit to attract fusion energy companies. Green CHIPS also increases the state’s R&D tax credit from 6 percent to 8 percent for eligible companies because of the strategic importance of semiconductor manufacturing. States could pass similar legislation to boost R&D tax credits for fusion energy. States could also pass technology-neutral tax credits implicitly including fusion energy as well as other qualifying clean energy sources. 

Tax Credits for Fusion Energy Component Manufacturing 

States can also create state tax-related incentives for fusion energy component manufacturing, which in turn stimulate the creation of high-tech manufacturing jobs. Many states already have experience in this field through procurement for the ITER project, a multinational fusion research effort, and for fusion energy start-ups constructing their demonstration machines. At the federal level, the 45X tax credit incentivizes the domestic production of clean energy components by providing per-unit tax credits for eligible technologies. The Fusion Advanced Manufacturing Parity Act that was introduced in the House of Representatives with bipartisan sponsorship on September 17^th, 2025, would make the production of fusion energy components eligible for the 45X tax credit. However, since fusion energy components are not yet eligible, states have an opportunity to step in and fill the gap with targeted local incentives. 

Many states already have clean energy manufacturing programs that could support a rapid expansion of already-present fusion energy manufacturing sectors to boom. For example, fusion energy component manufacturers in California may qualify for the state’s program that provides exemptions from state and local sales and use taxes on eligible clean energy manufacturing equipment.³ Other states have similar tax exemption programs that could be amended to explicitly include fusion energy component manufacturing. In New Mexico, for example, the Advanced Energy Equipment Tax Credit provides an additional state incentive on top of eligible federal 45X components, aiming to position the state as a clean energy manufacturing hub. Expanding such a program’s eligibility to include fusion energy components would allow a state to move ahead of the federal government and become a hub for fusion energy component manufacturing.  

Funding and Financing Mechanisms  

Clean Energy Funds and Green Banks 

States with clean energy infrastructure financing tools can support early-phase financing by driving down capital costs and taking key risks out of the project development process. States that have clean energy funds and/or green banks, which are dedicated financing mechanisms to support clean energy projects, may be able to utilize them to support fusion energy deployment. Some existing clean energy funds and green banks may already be set in a way that can support fusion energy. For example, the New Mexico’s Advanced Energy Award Pilot Program awards funds to proposals in advanced energy innovation and commercialization from New Mexico small businesses engaged in research and development. Other states could adopt similar programs to drive fusion energy development forward, or expand the scope of existing ones.  

States can ensure fusion energy developers can access broader clean energy funds and green banks to support fusion energy development. For example, Washington enacted HB 1924 in March 2024, which recognized fusion energy as a promising clean energy technology to be supported as part of the state’s energy strategy; accordingly, the state in July 2025 provided a grant to Avalanche Energy’s FusionWERX project, a testing facility for advanced fusion technologies, offering access to private companies, universities, national laboratories, and public-private consortia, through its Green Jobs program. More broadly, clarifying green bank or clean energy fund mandates and including fusion energy as a carbon-free energy resource in state statutes can enable companies to leverage established clean energy programs.  

Nuclear Energy Funds 

A few states have also created “nuclear energy funds.” Although fusion energy and fission energy are fundamentally different energy sources and should be treated as such, particularly from a regulatory perspective, a state could make fusion energy eligible for nuclear energy funds. For example, in Tennessee, fusion energy projects are eligible for support under the state’s Nuclear Energy Fund, and the fusion energy startup Type One Energy’s Infinity prototype was the first recipient of funds from the initiative.  

Establishing a Fusion Energy Fund 

Alternatively, policymakers could create a fusion energy-specific fund to prioritize the development of a fusion energy industry within their state. Other states have already established funds for specific energy sources aligned with their conditions and goals; for example, Massachusetts’ Offshore Wind Industry Investment Trust Fund and Texas’ Advanced Nuclear Development Fund. If a state views fusion energy as similarly relevant to its energy and economic development goals, it could establish a comparable fusion energy fund. This fund could attract fusion energy deployment and help grow the state’s fusion energy industry.  

Such a fund could take different forms. Some may be tailored to directly support commercial projects, while others could provide broader incentives, including for research and development. California’s SB 80, for example, which was signed into law on October 3^rd, 2025, would establish a financial incentive program supporting projects that “advance research and development into fusion energy, accelerate the deployment of new research and technology capabilities that support the commercialization of fusion energy, or achieve the initiative’s goal of delivering the world’s first fusion energy pilot project in the state by the 2040s”. States should design any fusion energy-specific fund around their specific objectives for developing a fusion energy industry. 

Discretionary Investment Credit 

Another model for state support is a discretionary investment credit, which is a flexible tax incentive that allows states to target strategic projects with tailored support. Pennsylvania Governor Josh Shapiro’s Lightning Plan, for example, includes a Reliable Energy Investment Tax Credit in recognition of the necessity of adding clean firm energy and would offer up to $100 million per facility. The Lightning Plan’s proposed support could be larger than the current federal public-private partnership program cost-shares for fusion energy and could be a powerful siting incentive for eligible fusion energy facilities. 

Matching Grants 

Many states use matching grants to boost the impact of federal dollars and support key businesses. A majority of states already have Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) matching programs, which match federal awards to help small businesses advance research, development, and commercialization. A state could apply the same model to match funds from federal fusion energy public-private partnership awards, such as those from the INFUSE or Milestone-Based Fusion Development Program. As with SBIR/STTR matching programs, states could set a maximum match amount based on their budget and risk tolerance. This would send a strong signal to investors, fusion energy developers, and the federal government that a state is committed to supporting fusion energy. 

Future Engagement with a Public-Private Consortium Framework (PPCF) 

In 2024, the Department of Energy launched a Request for Information (RFI) concerning a Public Private Consortium Framework. DOE’s proposed framework envisioned the operation of small-to-medium test stands by regional teams around the country to supplement the Fusion Energy Sciences program in order to achieve the Bold Decadal Vision launched in 2022. These would contribute to closing key enabling technology gaps needed for the commercialization of fusion energy, such as in materials science and fuel cycles. 

In DOE’s RFI summary publication, the Office of Science proposed a model in which state and local government funding, along with private and philanthropic funding, could be used to amplify federal dollars to achieve the spending levels required to close necessary fusion materials and technology gaps to enable commercialization in the near term. The Fusion Industry Association endorsed this non-federal match approach in its response to the RFI, noting that a cost-share model with such a layered funding approach, if sufficiently ambitious and designed alongside rather than crowding out current DOE fusion energy programs, could help advance fusion research by building facilities and test stands that could support the deployment and scaling of commercial fusion plants. This layered approach would enable state funding to seed federal dollars, closing necessary science and technology gaps while promoting local economic activity and supply chain development, as well as potentially instantiating new or enhancing existing fusion energy hubs. The PPCF has not yet been formally launched, but states can monitor developments and prepare to engage with the program when launched to build out fusion infrastructure locally in partnership with DOE.  

Strategic Statewide Fusion Energy Plan 

Integrated Planning 

States can develop strategic statewide plans for fusion energy deployment to provide certainty for fusion energy developers that their projects will remain aligned with state planning priorities over the full course of facility siting, construction, and operation. A strategic, cross-agency plan can identify ways to make permitting more efficient, align funding and infrastructure planning, and create market certainty. Clear targets and early signals can lower project risk, accelerate financing, and help unlock the full value of fusion energy as a clean, firm resource to meet state reliability and decarbonization goals. For example, California’s AB 1172 requires the California Energy Commission to include fusion energy in its 2027 Integrated Energy Policy Report, a first step towards a statewide strategic fusion energy plan.  

While no state has yet developed a fully fleshed-out model for a strategic statewide fusion energy plan, other industries provide examples to borrow from. The Department of Energy’s next-generation geothermal plan is an illustrative example of how to develop a strategic, cross-agency plan for deployment of an innovative, clean firm energy resource. States should review their existing strategic plans for deployment of other energy resources to draw on as models for a strategic statewide plan. 

Fusion Energy as a “Priority Industry” 

As part of this planning process, states can prioritize fusion energy as part of their economic development strategies. Many states have an Economic Development Department (EDD) or similar agency that serves as the administrator of industry support, implementing the tools and programs that enable targeted growth. Making fusion energy a priority for these EDDs can establish the foundation for future action. For example, designating fusion energy as a priority industry can lead to dedicated recruitment efforts by EDDs, including tailored incentive packages, tax exemptions, site marketing, and proactive outreach. They can also support existing companies in their state and contribute to a fusion energy ecosystem. In practice, this designation could be a first step enabling a range of downstream actions—such as legislation establishing tax credits, discretionary grant programs, workforce development support, and financing mechanisms—to be applied to the sector. 

It should be noted that, given the capital costs estimated for first-of-a-kind fusion energy plants, grants will need to be reflective of the scale of the project to have significant impact for large firms pursuing pilot plants. Small grants may ultimately be less decisive as compared to enabling factors such as regulatory certainty, siting reforms, and tax credits, though they can still be important for smaller fusion energy companies or supply chain developers at earlier stages of development.  

Innovation Hubs and Workforce Development 

Fusion Hubs 

Innovative industries like fusion energy can be supported by “hubs,” collections of industrial facilities built within concentrated physical spaces where research institutions, companies, suppliers, and investors can collaborate and grow together. The National Governors Association has identified such hubs as critical drivers of states’ economic growth. In particular, universities and their surrounding areas are natural fits to establish an entrepreneurial environment. Current fusion hubs with significant fusion research, manufacturing activity, and startup development in the United States include Boston, Seattle, the San Francisco Bay Area, and Knoxville. In some cases, these have been the result of “spinouts,” or fusion energy companies that have been incorporated based on work done at university or national labs. However, these states have retained these hubs by supporting their respective fusion energy companies through many of the incentives, regulatory structures, and financing mechanisms discussed earlier in this paper. States can also proactively incubate fusion innovation hubs with enabling legislation. 

National Laboratories 

States which host national laboratories can make them key parts of their fusion hubs, although a state can still build a fusion hub without a national laboratory. Many states host national labs conducting fusion-relevant research. These can be leveraged to support a state’s fusion energy industry through technology transfer programs. For example, New Mexico’s Technology Readiness Initiative provides funding for businesses to collaborate directly with scientists and engineers at Los Alamos and Sandia National Laboratories, both of which have longstanding fusion research programs. These partnerships support the growth of fusion hubs, and states with strong national lab presences could adopt similar models to drive economic development and accelerate the growth of a fusion energy industry. 

The Role of the University 

Universities and other post-secondary institutions are typically the epicenters of fusion hubs, and will help train the next generation of scientists, engineers, and technicians needed to operate future fusion energy machines. At least 57 universities across the United States have some form of plasma or fusion education program that could serve as the foundation for future hubs. However, they need substantial expansion. At present, the projected demand for talent from private fusion companies far exceeds the capacity of universities to provide it.  

Today, most university fusion research programs remain focused on plasma physics and PhDs, with insufficient emphasis on engineering and master’s-level training. As the field transitions from theory toward the practical engineering required to build fusion demonstration and pilot plants, universities that can build and adapt their programs accordingly to include the qualification of fusion technicians will give their states a critical competitive advantage in workforce development to support a commercial fusion energy industry and attract fusion energy developers. Pacific Fusion, in announcing its $1 billion Research and Manufacturing Campus in Albuquerque, pointed to New Mexico’s strong fusion workforce, rooted in decades of research at Los Alamos and Sandia National Laboratories, as a central factor in its decision to locate there. 

Workforce Development Levers 

According to the Fusion Industry Association’s 2024 Fusion Skills Report, state governments have a multitude of levers to promote workforce development at post-secondary institutions. They can collaborate with local universities, vocational trade schools, and community colleges to invest in new courses, short skill-specific training programs, apprenticeship programs, internships, and workforce accelerators tailored to fusion energy industry needs. Schools in proximity to fusion energy companies could form academic partnerships to co-develop courses and training for the future workforce. This would include fusion-specific courses, but also courses in other areas necessary for fusion energy development such as machine learning and AI, nuclear engineering, and project management. State Boards of Regents can ensure that public university fusion research programs, where they exist, have adequate budgetary resources to scale training with industry demand.  

Promoting Public Acceptance 

States, in conjunction with developers and other key stakeholders, can help boost public acceptance and understanding of fusion energy. Although public sentiment toward fusion energy is generally positive, understanding of the technology remains low, and confusion with nuclear fission persists. The responsibility for public engagement lies primarily with the developer. Companies like Helion Energy and Commonwealth Fusion Systems have led extensive outreach efforts ahead of siting their first plants. States can support this effort by partnering with developers on outreach—helping prepare educational materials, participating in events, and identifying public concerns through FAQs or town halls. They should also work through and with trusted local stakeholders, such as academia and local community groups. This collaboration can help build trust, preempt misinformation, and lay the groundwork for smooth project development and make a state a supportive environment for commercial fusion energy deployment. 

Conclusion 

This policy brief has outlined tools states can utilize to support the deployment of fusion energy and capture its anticipated economic, environmental, and security benefits. Fusion energy is moving from scientific possibility to commercial reality, and state governments have a critical role to play in shaping whether this industry takes root within their borders. 

Fusion energy presents unique policy considerations, but most of the tools required to accelerate deployment are already well understood from broader clean energy experience. States that act now to ensure fusion is explicitly eligible for existing clean energy tools, while also building targeted incentives to place fusion energy on a level playing field with more established energy sources as the industry matures, will be best positioned to become bastions of fusion energy development. This report provides a starting point for state policymakers to consider how to build effective policy frameworks for the deployment of fusion energy in their state.