Policy
The Rules That Shape Sustainability
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Scientific breakthroughs are essential for addressing climate change, but innovation alone is rarely enough to bring new technologies into widespread use. Many sustainable technologies face economic, technical, and manufacturing challenges, but they are also heavily influenced by public policy. Government decisions can determine how quickly new technologies are developed, tested, and deployed by shaping markets, reducing financial risk, and establishing the regulations that guide commercialization.
Policy creates the environment in which sustainable innovations can succeed.
Funding Research and Development
Many early-stage technologies are too risky for private investors, especially before they have demonstrated commercial potential. Governments help bridge this gap by funding research at universities, national laboratories, and private companies.
Federal agencies such as the Department of Energy (DOE), the National Science Foundation (NSF), and the Advanced Research Projects Agency-Energy (ARPA-E) support research ranging from fundamental scientific discoveries to prototype development [1]. These investments allow researchers to explore technologies that may take years or even decades to become commercially viable [2].
However, changes in government priorities can disrupt this innovation pipeline. In 2025, the federal administration reduced or canceled funding for some Department of Energy clean energy programs, creating uncertainty for researchers and startups developing emerging technologies. The DOE terminated "321 funding awards across 223 projects, a move it characterizes as saving US taxpayers $7.56 billion" [4]. "The projects getting the axe include renewable energy generation, hydrogen production, grid storage and modernization, carbon capture, and electric vehicle infrastructure" [3].
For early-stage companies that rely on government grants to survive the gap between research and commercialization, inconsistent funding can delay projects, slow hiring, and make it more difficult to bring new technologies to market.
Without public funding, many of today's emerging clean energy technologies would never progress beyond the laboratory.
Creating Economic Incentives
Governments can also encourage adoption by making sustainable technologies more financially attractive.
Tax credits, grants, rebates, and loan guarantees help lower the cost of developing or purchasing new technologies. These incentives reduce financial risk for companies while encouraging consumers and businesses to adopt cleaner alternatives [7].
Policy can also influence markets by placing a price on greenhouse gas emissions through mechanisms such as carbon pricing or emissions trading systems. By increasing the cost of high-emission activities, these policies improve the competitiveness of lower-carbon technologies [7].
Although incentives are often temporary, they can help emerging technologies reach larger production volumes where manufacturing costs naturally decline.
U.S. Inflation Reduction Act
The Inflation Reduction Act (IRA), signed into law by President Joe Biden in 2022, demonstrated how policy-driven economic incentives can accelerate the commercialization of sustainable technologies. The legislation provided hundreds of billions of dollars in incentives for renewable energy, electric vehicles, battery manufacturing, carbon capture, hydrogen, and domestic critical mineral production [5]. By lowering upfront costs through tax credits and grants, the IRA encouraged companies to invest in large-scale clean energy manufacturing and helped technologies move from research and development toward widespread deployment.
However, changes in federal administration have created uncertainty for the clean energy industry. Under President Donald Trump’s administration in 2025, several IRA incentives were reduced, phased out, or had their timelines shortened, including tax credits for electric vehicles and residential clean energy improvements [6]. While many clean energy incentives remain, these policy changes demonstrate how uncertainty can discourage long-term investment because companies are less willing to commit billions of dollars to projects when future financial support is unclear.
Regulations and Standards
Governments establish regulations that ensure new technologies are safe, reliable, and environmentally responsible.
For example, batteries must meet transportation and fire safety standards before widespread use. Carbon capture projects require environmental review and long-term monitoring plans. Hydrogen production, transportation, and storage must comply with strict safety regulations.
While regulations are essential for protecting public health and the environment, obtaining permits and meeting regulatory requirements can also slow deployment. If regulations are too restrictive or permitting processes take many years, promising technologies may struggle to reach the market. However, if regulations are too limited, new technologies may pose safety, environmental, or reliability risks. Finding the right balance between safety and innovation remains an ongoing challenge [8].
Hydropower
Hydropower development demonstrates how policy and regulatory frameworks can influence the ability of sustainable technologies to scale. Before a new hydropower facility can be constructed, developers must "navigate a series of federal, state, Tribal, and local approvals to receive authorization for construction" [8].
Figure 1: Impoundment hydropower plant [10]
At the federal level, projects typically require authorization from agencies such as the Federal Energy Regulatory Commission, which oversees licensing for non-federal hydropower projects. Developers must also comply with environmental regulations, including assessments of impacts on aquatic ecosystems, wildlife, water quality, and surrounding communities. In addition, Tribal governments may be involved in the process to address impacts on Tribal lands, cultural resources, and water rights [9].
These policies help ensure that hydropower projects are developed responsibly, but the lengthy and complex permitting process can slow deployment and increase costs, creating a challenge for expanding renewable energy infrastructure at the scale needed to meet climate goals.
Infrastructure and Long-Term Planning
Some sustainable technologies require entirely new infrastructure before they can be widely adopted.
Electric vehicles need charging networks. Hydrogen technologies require production facilities, pipelines, and fueling stations. Carbon capture may require pipelines and geological storage sites. Renewable energy deployment often depends on expanding and modernizing the electric grid [11][12].
"The rapid adoption of new technologies such as electric cars and heat pumps means electricity is expanding into realms previously dominated by fossil fuels, increasing the demands on grids. Meanwhile, countries are adding renewable energy projects at a fast pace – requiring more power lines to connect them and high-functioning electricity grids to ensure reliable supplies for end customers" [11].
Figure 2: Depiction of how grid energy storage technologies, like pumped-hydro and batteries, store electricity generated from renewable sources so it can be used later when needed [13]
International Policy
Climate change is a global challenge, meaning that policies in one country often influence technology development around the world.
Governments may collaborate on research partnerships, establish international emissions goals, or develop agreements that encourage investment in clean technologies. At the same time, countries also compete to build domestic clean energy industries by supporting manufacturing, attracting investment, and securing critical supply chains for developing technologies such as electric vehicles and batteries. "Lithium demand rose by nearly 30%, significantly exceeding the 10% annual growth rate seen in the 2010s. Demand for nickel, cobalt, graphite and rare earths increased by 6‑8% in 2024" [14].
The Paris Agreement
The Paris Agreement is an international climate treaty adopted in 2015 that aims to limit global temperature rise by reducing greenhouse gas emissions and strengthening countries’ efforts to transition toward a low-carbon economy. [15]
Figure 3: Map of the status of the Paris Agreement in countries worldwide [20]
The treaty, created under the United Nations, aims to [15]:
Substantially reduce global greenhouse gas emissions to hold global temperature increase to well below 2°C above pre-industrial levels and pursue efforts to limit it to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change
Periodically assess the collective progress towards achieving the purpose of this agreement and its long-term goals
Provide financing to developing countries to mitigate climate change, strengthen resilience and enhance abilities to adapt to climate impacts.
Rather than imposing identical requirements on all nations, the agreement allows each country to create its own climate targets, known as Nationally Determined Contributions (NDCs), which are updated over time to increase ambition. By establishing a global framework for emissions reductions, climate adaptation, and financial support for developing countries, the Paris Agreement encourages governments to implement policies that accelerate the deployment and scaling of sustainable technologies [15].
However, its effectiveness depends on long-term political commitment and policy stability. The United States has withdrawn from the Paris Agreement twice: first under President Donald Trump in 2020, before rejoining under President Joe Biden in 2021, and most recently, following an executive order signed by President Trump on January 20, 2025, the second U.S. withdrawal officially became effective on January 27, 2026. These shifts demonstrate how changes in political leadership can create uncertainty for climate policies and affect long-term investment in clean energy technologies [16].
Germany’s Energiewende
Germany’s Energiewende, or “energy transition,” is an example of a national sustainability policy that influenced renewable energy adoption in many other countries.
Figure 3: Bar graph depicting the decline of fossil fuel usage and increase in renewable energy source usage over the past 2 decades [19]
Figure 4: Graph highlighting the increases in electricity generation from renewable energy sources over the past 3 decades [19]
Beginning in the early 2000s, Germany implemented policies such as the Renewable Energy Sources Act (EEG), which provided long-term financial incentives for renewable energy producers through mechanisms like feed-in tariffs. These policies guaranteed renewable energy developers a stable market, encouraging investment in solar and wind power and helping drive down technology costs through large-scale deployment [17][18].
Germany’s rapid expansion of renewable energy demonstrated that government support could accelerate the commercialization of clean technologies and helped inspire similar renewable energy incentive programs in countries including Japan, China, and members of the European Union.
Why Policy Matters
Many of the sustainable technologies being developed today, including advanced batteries, carbon capture systems, hydrogen production methods, and next-generation nuclear reactors, depend on more than scientific breakthroughs. They require funding, infrastructure, regulations, and market conditions that allow new ideas to compete with established technologies.
Policy helps create those conditions. By supporting research, reducing financial risk, encouraging investment, and establishing clear rules for deployment, governments play a critical role in determining whether promising laboratory discoveries become technologies that benefit society on a global scale.
References
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Bettenhausen, C. (2025). US energy projects in limbo after Trump administration revokes $7.5 billion in funding. Chemical & Engineering News. https://doi.org/10.1021/cen-201008-News
Energy Department Announces Termination of 223 Projects, Saving Over $7.5 Billion. (2025). In Energy.gov. https://www.energy.gov/articles/energy-department-announces-termination-223-projects-saving-over-75-billion
INFLATION REDUCTION ACT OF 2022. (2022). In Energy.gov. https://www.energy.gov/edf/inflation-reduction-act-2022
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