Filling the Fiscal Gap: Why the Private Sector Must Anchor the Energy Transition

Whose Movement Is It?, a series co-produced by NPQ and the Environmental Justice Oral History Project, is a call to action for those at the forefront of environmental justice decision-making, drawing on insights, hopes, and visions for the future from some of the foundational women organizers of the environmental justice movement.

Susan Hendershot spent years building the rare federal architecture created for environmental justice communities looking to reduce their energy burdens: a seat on the White House Environmental Justice Advisory Council (WHEJAC), the presidency of Interfaith Power & Light, and now her role directing climate community engagement at Self-Help, a community development lender. That architecture was designed to ensure that the benefits of the clean energy economy—lower energy costs, cleaner air, new infrastructure—reached the communities that had been disproportionately excluded from them. In early 2025, Hendershot and advocates like her watched much of it disappear: the WHEJAC was dissolved, and the Greenhouse Gas Reduction Fund, the $27 billion “green bank” meant to funnel private capital into disadvantaged communities, was frozen by the Trump administration.

But the dismantling didn’t end there. The Biden-era Justice40 Initiative, a directive steering 40 percent of the benefits of federal climate investment toward historically overburdened communities, was rescinded, and hundreds of environmental justice grants across the Department of Energy (DOE) and the Environmental Protection Agency (EPA) were frozen or canceled outright.

With the federal government’s position on climate and environmental justice reversing itself every four years, the current moment calls for a different kind of institutional commitment—one with the capital and the staying power to survive a change in administration. Clean energy developers have both. The question is whether they will use them to fund a fair transition, or simply a fast one.

A Sector with a Dual Role

Manufacturing and industrial production are already among the largest sources of US greenhouse gas emissions, and unlike transportation or electricity generation, industrial emissions are projected to keep climbing even as other sectors decarbonize.

The private sector’s relationship to environmental harm long predates this moment. Coal extraction in Appalachia, oil and gas transport through rural and underserved communities, and petrochemical production in the Gulf South are not relics of history—they are the industrial backbone of the US economy today. Manufacturing and industrial production are already among the largest sources of US-produced greenhouse gas emissions, and unlike transportation or electricity generation, industrial emissions are projected to keep climbing even as other sectors decarbonize. That trajectory carries a price tag: one University of Chicago analysis estimated the long-term social cost of corporate carbon emissions could exceed $87 trillion—more than the entire market value of the US corporate sector. Climate disasters alone cost the global economy roughly $145 billion last year, and one estimate from Boston Consulting Group projects global economic output could shrink by 15 to 34 percent if average temperatures rise 3°C (37.4°F) by 2100.

That math has started to change corporate behavior, independent of who occupies the White House. Clean energy has gotten cheaper than fossil generation in most markets, and companies motivated by cost savings, investor pressure, and long-term price stability are moving capital accordingly. A 2025 study in the Journal of Cleaner Production found that a one percent increase in ESG-linked investment corresponded with a 0.15 percent rise in short-term private investment and a 0.26 percent rise in long-term investment—evidence that sustainability metrics are shaping where capital actually flows, not just how it’s marketed. Microsoft’s Climate Innovation Fund has turned $800 million in climate investments into a portfolio now worth $12 billion, a 15:1 leverage ratio the company touts as proof that decarbonization and returns aren’t in tension.

But a purely market-driven transition can just as easily reproduce the harms it claims to solve.

In 2024, Microsoft signed a 20-year, 835-megawatt power purchase agreement with Constellation Energy to restart Three Mile Island Unit 1—rebranded the Crane Clean Energy Center—to feed its AI data centers with carbon-free power. It is, by most measures, a climate win. That said, residents near the plant, including Amish and Mennonite communities who don’t use cell phones or digital alerts, have raised pointed concerns to federal regulators about emergency evacuation planning, spent fuel storage, and water withdrawals from the Susquehanna River—concerns that were not resolved before the deal was signed. It is a clear illustration of the private sector’s dual role: it can drive environmental injustice and, with its financial and institutional weight, be a genuine partner in repairing it. The open question is how developers close that gap.

From Extraction to Ownership

Denise Fairchild found an answer early in her career, working as an urban planning intern in the Bronx, where she saw how environmental injustice gets built into a city: residents burdened with polluted air and high energy costs, with almost no say in how their neighborhood’s energy future was decided. That experience led her to define “energy democracy,” the idea that communities should be owners and decision-makers in their own energy systems, not simply the sites where someone else’s infrastructure gets built. Community-led ownership models, she argues, are how you “build the new”—shifting power away from extractive systems and toward the people who live with the consequences.

Coal extraction in Appalachia, oil and gas transport through rural and underserved communities, and petrochemical production in the Gulf South are not relics of history—they are the industrial backbone of the US economy today.

For developers, that model isn’t just more equitable—it’s more stable. Community benefit agreements (CBAs), which formalize local ownership stakes, jobs, and revenue-sharing in exchange for community support, reduce the political opposition and permitting delays that kill projects outright. A Lawrence Berkeley National Laboratory survey of developers found that canceled solar and wind projects lose an average of millions of dollars in sunk costs, with community opposition among the leading causes. A CBA is insurance against that outcome for a developer, and for a community, it’s the difference between being an afterthought and being a partner with an actual stake in what gets built.

The model is already spreading. Martha’s Vineyard’s community benefits agreement with Vineyard Wind—signed in 2015—commits the developer to $200,000 per year to subsidize electricity for income-eligible households, plus solar and battery storage investments on the island. Nantucket has since negotiated its own agreement directly addressing the project’s impact on the town. Neither is perfect—residents on both islands have had to push publicly for the developer to honor its commitments—but both show that CBAs give communities continued leverage long after a project is approved, not just a one-time concession to win support.

Hendershot’s position has fundamentally changed; the federal funding she spent her career securing was significantly delayed. Fortunately, earlier this month, a federal judge rejected the Trump Administration‘s attempt to reclaim those funds; after nearly two years, the federal incentives created by the Greenhouse Gas Reduction Fund and similar programs are opening back up again for communities and energy developers alike.

This is the moment for the private sector to step in—not out of charity, but because the framework for doing it responsibly and profitably already exists. CBAs funnel investment back to the people who have carried the costs of energy development while seeing the fewest of its returns; they reduce developer risk and build the public support that keeps projects moving instead of stalling in court or in the street. The private sector has the capital and the means to carry this work forward. What remains to be seen is whether it will choose to.