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By Roxana Shafiee, Harvard University; Harvard Kennedy School 

Heat pumps can reduce carbon emissions associated with heating buildings, and many states have set aggressive targets to increase their use in the coming decades. But while heat pumps are often cheaper choices for new buildings, getting homeowners to install them in existing homes isn’t so easy.

Current energy prices, including the rising cost of electricity, mean that homeowners may experience higher heating bills by replacing their current heating systems with heat pumps – at least in some regions of the country.

Heat pumps, which use electricity to move heat from the outside in, are used in only 14% of U.S. households. They are common primarily in warm southern states such as Florida where winter heating needs are relatively low. In the Northeast, where winters are colder and longer, only about 5% of households use a heat pump.

In our new study, my co-author Dan Schrag and I examined how heat pump adoption would change annual heating bills for the average-size household in each county across the U.S. We wanted to understand where heat pumps may already be cost-effective and where other factors may be preventing households from making the switch.

Wide variation in home heating

Across the U.S., people heat their homes with a range of fuels, mainly because of differences in climate, pricing and infrastructure. In colder regions – northern states and states across the Rocky Mountains – most people use natural gas or propane to provide reliable winter heating. In California, most households also use natural gas for heating.

In warmer, southern states, including Florida and Texas, where electricity prices are cheaper, most households use electricity for heating – either in electric furnaces, baseboard resistance heating or to run heat pumps. In the Pacific northwest, where electricity prices are low due to abundant hydropower, electricity is also a dominant heating fuel.

The type of community also affects homes’ fuel choices. Homes in cities are more likely to use natural gas relative to rural areas, where natural gas distribution networks are not as well developed. In rural areas, homes are more likely to use heating oil and propane, which can be stored on property in tanks. Oil is also more commonly used in the Northeast, where properties are older – particularly in New England, where a third of households still rely on oil for heating.

Why heat pumps?

Instead of generating heat by burning fuels such as natural gas that directly emit carbon, heat pumps use electricity to move heat from one place to another. Air-source heat pumps extract the heat of outside air, and ground-source heat pumps, sometimes called geothermal heat pumps, extract heat stored in the ground.

Heat pump efficiency depends on the local climate: A heat pump operated in Florida will provide more heat per unit of electricity used than one in colder northern states such as Minnesota or Massachusetts.

But they are highly efficient: An air-source heat pump can reduce household heating energy use by roughly 30% to 50% relative to existing fossil-based systems and up to 75% relative to inefficient electric systems such as baseboard heaters.

Heat pumps can also reduce emissions of greenhouse gases, although that depends on how their electricity is generated – whether from fossil fuels or cleaner energy, such as wind and solar.

Heat pumps can lower heating bills

We found that for households currently using oil, propane or non-heat pump forms of electric heating – such as electric furnaces or baseboard resistive heaters – installing a heat pump would reduce heating bills across all parts of the country.

The amount a household can save on energy costs with a heat pump depends on region and heating type, averaging between $200 and $500 a year for the average-size household currently using propane or oil.

However, savings can be significantly greater: We found the greatest opportunity for savings in households using inefficient forms of electric heating in northern regions. High electricity prices in the Northeast, for example, mean that heat pumps can save consumers up to $3,000 a year over what they would pay to heat with an electric furnace or to use baseboard heating.

A challenge in converting homes using natural gas

Unfortunately for the households that use natural gas in colder, northern regions – making up around half of the country’s annual heating needs – installing a heat pump could raise their annual heating bills. Our analysis shows that bills could increase by as much as $1,200 per year in northern regions, where electricity costs are as much as five times greater than natural gas per kilowatt-hour.

Even households that install ground-source heat pumps, the most efficient type of heat pump, would still see bill increases in regions with the highest electricity prices relative to natural gas.

Installation costs

In parts of the country where households would see their energy costs drop after installing a heat pump, the savings would eventually offset the upfront costs. But those costs can be significant and discourage people from buying.

On average, it costs $17,000 to install an air-source heat pump and typically at least $30,000 to install a ground-source heat pump.

Some homes may also need upgrades to their electrical systems, which can increase the total installation price even more, by tens of thousands of dollars in some cases, if costly service upgrades are required.

In places where air conditioning is typical, homes may be able to offset some costs by using heat pumps to replace their air conditioning units as well as their heating systems. For instance, a new program in California aims to encourage homeowners who are installing central air conditioning or replacing broken AC systems to get energy-efficient heat pumps that provide both heating and cooling.

Rising costs of electricity

A main finding of our analysis was that the cost of electricity is key to encouraging people to install heat pumps.

Electricity prices have risen sharply across the U.S. in recent years, driven by factors such as extreme weather, aging infrastructure and increasing demand for electric power. New data center demand has added further pressure and raised questions about who bears these costs.

Heat pump installations will also increase electricity demand on the grid: The full electrification of home heating across the country would increase peak electricity demand by about 70%. But heat pumps – when used in concert with other technologies such as hot-water storage – can provide opportunities for grid balancing and be paired with discounted or time-of-use rate structures to reduce overall operating costs. In some states, regulators have ordered utilities to discount electricity costs for homes that use heat pumps.

But ultimately, encouraging households to embrace heat pumps and broader economy-wide electrification, including electric vehicles, will require more than just technological fixes and a lot more electricity – it will require lower power prices.

About the Author:

Roxana Shafiee, Environmental Fellow, Center for the Environment, Harvard University; Harvard Kennedy School

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Hengrui Liu, Tufts University and Kelly Sims Gallagher, Tufts University 

At the 2026 Detroit Auto Show, the spotlight quietly shifted. Electric vehicles, once framed as the inevitable future of the industry, were no longer the centerpiece. Instead, automakers emphasized hybrids, updated gasoline models and incremental efficiency improvements.

The show, held in January, reflected an industry recalibration happening in real time: Ford and General Motors had recently announced US$19.5 billion and $6 billion in EV-related write-downs, respectively, reflecting the losses they expect as they unwind or delay parts of their electric vehicle plans.

The message from Detroit was unmistakable: The United States is pulling back from a transition that much of the world is accelerating.

That retreat carries consequences far beyond showroom floors.

In China, Europe and a growing number of emerging markets, including Vietnam and Indonesia, electric vehicles now make up a higher share of new passenger vehicle sales than in the United States.

That means the U.S. pullback on EV production is not simply a climate problem – gasoline-powered vehicles are a major contributor to climate change – it is also an industrial competitiveness problem, with direct implications for the future of U.S. automakers, suppliers and autoworkers. Slower EV production and slower adoption in the U.S. can keep prices higher, delay improvements in batteries and software, and increase the risk that the next generation of automotive value creation will happen elsewhere.

Where EVs are taking over

In 2025, global EV registrations rose 20% to 20.7 million. Analysts with Benchmark Mineral Intelligence reported that China reached 12.9 million EV registrations, up 17% from the previous year; Europe recorded 4.3 million, up 33%; and the rest of the world added 1.7 million, up 48%.

By contrast, U.S. EV sales growth was essentially flat in 2025, at about 1%. U.S. automaker Tesla experienced declines in both scale and profitability – its vehicle deliveries fell 9% compared to 2024, the company’s net profit was down 46%, and CEO Elon Musk said it would put more of its focus on artificial intelligence and robotics.

Market share tells a similar story and also challenges the assumption that vehicle electrification would take time to expand from wealthy countries to emerging markets.

In 39 countries, EVs now exceed 10% of new car sales, including in Vietnam, Thailand and Indonesia, which reached 38%, 21% and 15%, respectively, in 2025, energy analysts at Ember report.

In the U.S., EVs accounted for less than 10% of new vehicle sales, by Ember’s estimates.

U.S. President Donald Trump came back into office in 2025 promising to end policies that supported EV production and sales and boost fossil fuels. But while the U.S. was curtailing federal consumer incentives, governments elsewhere largely continued a transition to electric vehicles.

Europe softened its goal for all vehicles to have zero emissions by 2035 at the urging of automakers, but its new target is still a 90% cut in automobiles’ carbon dioxide emissions by 2035.

Germany launched a program offering subsidies worth 1,500 to 6,000 euros per electric vehicle, aimed at small- and medium-income households.

In developing economies, EV policy has largely been sustained through industrial policies. In Brazil, the MOVER program offers tax credits explicitly linked to domestic EV production, research and development, and efficiency targets. South Africa is introducing a 150% investment allowance for EV and battery manufacturing, giving them a tax break starting in March 2026. Thailand has implemented subsidies and reduced excise tax tied to mandatory local production and export commitments.

In China, the EV industry has entered a phase of regulatory maturity. After a decade of subsidies and state-led investment that helped domestic firms undercut global competitors, the government’s focus is no longer on explosive growth at home.

With their domestic market saturated and competition fierce, Chinese automakers are pushing aggressively into global markets. Beijing has reinforced this shift by ending its full tax exemption for EV purchases and replacing it with a tapered 5% tax on EV buyers.

Consequences for US automakers

EV manufacturing is governed by steep learning curves and scale economies, meaning the more vehicles a company builds, the better it gets at making them faster and cheaper. Low domestic production and sales can mean higher costs for parts and weaker bargaining power for automakers in global supply chains.

The competitive landscape is already changing. In 2025, China exported 2.65 million EVs, doubling its 2024 exports, according to the China Association of Automobile Manufacturers. And BYD surpassed Tesla as the world’s largest EV maker in 2025.

The U.S. risks becoming a follower in the industry it once defined.

Some people argue that American consumers simply prefer trucks and hybrids. Others point to Chinese subsidies and overcapacity as distortions that justify U.S. industry caution. These concerns deserve consideration, but they do not outweigh the fundamental fact that, globally, the EV share of auto sales continues to rise.

What can the US do?

For U.S. automakers and workers to compete in this market, the government, in our view, will have to stop treating EVs as an ideological matter and start governing it like an industrial transition.

That starts with restoring regulatory credibility, something that seems unlikely right now as the Trump administration moves to roll back vehicle emissions standards. Performance standards are the quiet engine of industrial investment. When standards are predictable and enforced, manufacturers can plan, suppliers can invest in new businesses, and workers can train for reliable demand.

Governments at state and local levels and industry can also take important steps.

Focus on affordability and equity: The federal clean-vehicle tax credit that effectively gave EV buyers a discount expired in September 2025. An alternative is targeted, point-of-sale support for lower- and middle-income buyers. By moving away from blanket credits in favor of targeted incentives – a model already used in California and Pennsylvania – governments can ensure public funds are directed toward people who are currently priced out of the EV market. Additionally, interest-rate buydowns that allow buyers to reduce their loan payments and “green loan” programs can help, typically funded through state and local governments, utility companies or federal grants.

Keep building out the charging network: A federal judge ruled on Jan. 23, 2026, that the Trump administration violated the law when it suspended a $5 billion program for expanding the nation’s EV charger network. That expansion effort can be improved by shifting the focus from the number of ports installed to the number of working chargers, as California did in 2025. Enforcing reliability and clearing bottlenecks, such as electricity connections and payment systems, could help boost the number of functioning sites.

Use fleet procurement as a stabilizer for U.S. sales: When states, cities and companies provide a predictable volume of vehicle purchases, that helps manufacturers plan future investments. For example, Amazon’s 2019 order of 100,000 Rivian electric delivery vehicles to be delivered over the following decade gave the startup automaker the boost it needed.

Treat workforce transition as core infrastructure: This means giving workers skills they can carry from job to job, helping suppliers retool instead of shutting down, and coordinating training with employers’ needs. Done right, these investments turn economic change into a source of stable jobs and broad public support. Done poorly, they risk a political backlash.

The scene at the Detroit Auto Show should be a warning, not a verdict. The global auto industry is accelerating its EV transition. The question for the United States is whether it will shape that future – and ensure the technologies and jobs of the next automotive era are in the U.S. – or import it.

About the Author:

Hengrui Liu, Postdoctoral Scholar in Economics and Public Policy, The Fletcher School, Tufts University and Kelly Sims Gallagher, Professor of Energy and Environmental Policy, Director of the Climate Policy Lab and Center for International Environment and Resource Policy, The Fletcher School, Tufts University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Jennifer Morgan, Tufts University 

Two years ago, countries around the world set a goal of “transitioning away from fossil fuels in energy systems in a just, orderly and equitable manner.” The plan included tripling renewable energy capacity and doubling energy efficiency gains by 2030 – important steps for slowing climate change since the energy sector makes up about 75% of the global carbon dioxide emissions that are heating up the planet.

The world is making progress: More than 90% of new power capacity added in 2024 came from renewable energy sources, and 2025 saw similar growth.

However, fossil fuel production is also still expanding. And the United States, the world’s leading producer of both oil and natural gas, is now aggressively pressuring countries to keep buying and burning fossil fuels.

The energy transition was not meant to be a main topic when world leaders and negotiators met at the 2025 United Nations climate summit, COP30, in November in Belém, Brazil. But it took center stage from the start to the very end, bringing attention to the real-world geopolitical energy debate underway and the stakes at hand.

Brazilian President Luiz Inácio Lula da Silva began the conference by calling for the creation of a formal road map, essentially a strategic process in which countries could participate to “overcome dependence on fossil fuels.” It would take the global decision to transition away from fossil fuels from words to action.

More than 80 countries said they supported the idea, ranging from vulnerable small island nations like Vanuatu that are losing land and lives from sea level rise and more intense storms, to countries like Kenya that see business opportunities in clean energy, to Australia, a large fossil-fuel-producing country.

Opposition, led by the Arab Group’s oil- and gas-producing countries, kept any mention of a “road map” energy transition plan out of the final agreement from the climate conference, but supporters are pushing ahead.

I was in Belém for COP30, and I follow developments closely as former special climate envoy and head of delegation for Germany and senior fellow at the Fletcher School at Tufts University. The fight over whether there should even be a road map shows how much countries that depend on fossil fuels are working to slow down the transition, and how others are positioning themselves to benefit from the growth of renewables. And it is a key area to watch in 2026.

The battle between electro-states and petro-states

Brazilian diplomat and COP30 President André Aranha Corrêa do Lago has committed to lead an effort in 2026 to create two road maps: one on halting and reversing deforestation and another on transitioning away from fossil fuels in energy systems in a just, orderly and equitable manner.

What those road maps will look like is still unclear. They are likely to be centered on a process for countries to discuss and debate how to reverse deforestation and phase out fossil fuels.

Over the coming months, Corrêa plans to convene high-level meetings among global leaders, including fossil fuel producers and consumers, international organizations, industries, workers, scholars and advocacy groups.

For the road map to both be accepted and be useful, the process will need to address the global market issues of supply and demand, as well as equity. For example, in some fossil fuel-producing countries, oil, gas or coal revenues are the main source of income. What can the road ahead look like for those countries that will need to diversify their economies?

Nigeria is an interesting case study for weighing that question.

Oil exports consistently provide the bulk of Nigeria’s revenue, accounting for around 80% to over 90% of total government revenue and foreign exchange earnings. At the same time, roughly 39% of Nigeria’s population has no access to electricity, which is the highest proportion of people without electricity of any nation. And Nigeria possesses abundant renewable energy resources across the country, which are largely untapped: solar, hydro, geothermal and wind, providing new opportunities.

What a road map might look like

In Belém, representatives talked about creating a road map that would be science-based and aligned with the Paris climate agreement, and would include various pathways to achieve a just transition for fossil-fuel-dependent regions.

Some inspiration for helping fossil-fuel-producing countries transition to cleaner energy could come from Brazil and Norway.

In Brazil, Lula asked his ministries to prepare guidelines for developing a road map for gradually reducing Brazil’s dependency on fossil fuels and find a way to financially support the changes.

His decree specifically mentions creating an energy transition fund, which could be supported by government revenues from oil and gas exploration. While Brazil supports moving away from fossil fuels, it is also still a large oil producer and recently approved new exploratory drilling near the mouth of the Amazon River.

Norway, a major oil and gas producer, is establishing a formal transition commission to study and plan its economy’s shift away from fossil fuels, particularly focusing on how the workforce and the natural resources of Norway can be used more effectively to create new and different jobs.

Both countries are just getting started, but their work could help point the way for other countries and inform a global road map process.

The European Union has implemented a series of policies and laws aimed at reducing fossil fuel demand. It has a target for 42.5% of its energy to come from renewable sources by 2030. And its EU Emissions Trading System, which steadily reduces the emissions that companies can emit, will soon be expanded to cover housing and transportation. The Emissions Trading System already includes power generation, energy-intensive industry and civil aviation.

Fossil fuel and renewable energy growth ahead

In the U.S., the Trump administration has made clear through its policymaking and diplomacy that it is pursuing the opposite approach: to keep fossil fuels as the main energy source for decades to come.

The International Energy Agency still expects to see renewable energy grow faster than any other major energy source in all scenarios going forward, as renewable energy’s lower costs make it an attractive option in many countries. Globally, the agency expects investment in renewable energy in 2025 to be twice that of fossil fuels.

At the same time, however, fossil fuel investments are also rising with fast-growing energy demand.

The IEA’s World Energy Outlook described a surge in new funding for liquefied natural gas, or LNG, projects in 2025. It now expects a 50% increase in global LNG supply by 2030, about half of that from the U.S. However, the World Energy Outlook notes that “questions still linger about where all the new LNG will go” once it’s produced.

What to watch for

The Belém road map dialogue and how it balances countries’ needs will reflect on the world’s ability to handle climate change.

Corrêa plans to report on its progress at the next annual U.N. climate conference, COP31, in late 2026. The conference will be hosted by Turkey, but Australia, which supported the call for a road map, will be leading the negotiations.

With more time to discuss and prepare, COP31 may just bring a transition away from fossil fuels back into the global negotiations.

About the Author:

Jennifer Morgan, Senior Fellow, Center for International Environment and Resource Policy and Climate Policy Lab, Tufts University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Barbara Kates-Garnick, Tufts University 

Everyone – politicians and the public – is talking about energy costs. In particular, they’re talking about data centers that drive artificial intelligence systems and their increasing energy demand, electricity costs and strain on the nation’s already overloaded energy grid.

As a former state energy official and utility executive, I know that many of the underlying questions involving energy affordability are very complex and have been festering for decades, in part because of how many groups are involved. Energy projects are expensive and take a long time to build. Where to build them is often also a difficult, even controversial, question. Consumers, regulators, utilities and developers all value energy reliability but have different interests, cost sensitivities and time frames in mind.

The problem of high energy prices is not new, but it is urgent. And it comes at a time when the U.S. is deeply divided on its approaches to energy policy and the politics of solving collective problems.

Rising costs

From September 2024 to September 2025, average U.S. residential electricity prices have risen 7.4%, from 16.8 to 18 cents per kilowatt-hour. Government analysts expect prices will continue to rise and outpace inflation in 2026.

With household earnings basically flat when adjusted for inflation, these increases hit consumers hard. They take up higher percentages of household expenses – especially for lower-income households. Electricity prices have effects throughout the economy, both directly on consumers’ budgets and indirectly by raising operating costs for business and industry, which pass them along to customers by raising prices for goods and services.

The problem

By 2030, energy analysts expect U.S. electricity demand to rise about 25%, and McKinsey estimates that data centers’ energy use could nearly triple from current levels by that year, using as much as 11.7% of all electricity in the U.S. – more than double their current share.

The nation’s current electricity grid is not ready to supply all that energy. And even if the electricity could be generated, transmission lines are aging and not up to carrying all that power. Their capacity would need to be expanded by about 60% by 2050.

Orders of key generating equipment often face multiyear delays. And construction of new and expanded transmission lines has been very slow.

A Brattle Group analysis estimates all that new and upgraded equipment could cost between US$760 billion and $1.4 trillion in the next 25 years.

The reasons

The enormous scale of the work needed is a result of a lack of investment over time and delays in the investments that have been made.

For instance, since at least 2011 there has been an effort to bring Canadian hydropower to the New England electricity grid. Political opposition to cutting a path for a transmission line through forestland meant the project was subjected to a statewide referendum in Maine – and then a court case that overturned the referendum results. During those delays, inflation raised the estimated price of the project by half, from $1 billion to $1.5 billion – an added cost that will be paid by Massachusetts electricity customers.

That multiyear effort is just one example of how the vast web of companies that generate power, transmit it from power plants to communities, and distribute it to homes and businesses complicates attempts to make changes to the power grid.

State and federal government agencies have roles in these processes. States’ public utilities commissions oversee the utility companies that distribute power to customers. The Federal Energy Regulatory Commission oversees connections of power generators to the grid and the transmission lines that move electricity across state lines.

Often, those efforts aren’t aligned with each other, leading to delays over jurisdiction and decision-making.

For instance, as new generators prepare to operate, whether they are solar farms or gas-fired power plants, they need permission from FERC to connect to the transmission grid. The commission typically requests technical engineering studies to determine how the project would affect the existing system. Delays in this process increase the timeline and cost of development and postpone adding new capacity to the grid.

The costs

A key question for regulators and consumers alike is who should pay for adding more electricity to the grid and making the system more reliable.

Utilities traditionally charge customers for the costs of generating and delivering power. And it’s not clear how much power the data centers will ultimately require.

Some large data centers have taken to paying to build their own on-site power plants, though often they can supply energy to the grid as well.

In some states, efforts have begun to address public concern about electricity bills. In November 2025, two utility commissioners in Georgia, who had consistently approved electricity rate hikes over the previous two years, were voted out of office in a landslide.

New Jersey’s Gov.-elect Mikie Sherrill has pledged to declare a utility-price emergency and freeze costs for a year.

In New York, Gov. Kathy Hochul has paused implementation of state law, driven by environmental concerns, requiring that all new buildings over seven stories tall only use electricity and not natural gas or other energy sources. Hochul has said that requirement would increase electricity demand too much, raising prices and making the grid less stable.

In Massachusetts, Gov. Maura Healey has filed legislation seeking to provide energy affordability, including eliminating some charges from utility bills, capping bill increases and barring utility companies from charging customers for advertisement costs.

The solutions

Clearly, there are no quick fixes or easy solutions to this complex situation.

However, innovation in regulation, combined with new technologies and even AI itself, may enable creative regulatory and technical solutions. For instance, devices that can be programmed to use energy efficiently, time-sensitive pricing and demand monitoring to smooth out peaks and valleys in electricity use can potentially ease both grid load and customers’ bills. But those solutions will work only if all the players are willing to cooperate.

There are a lot of ideas about how to lower the public’s burden of paying for data centers’ power. New ideas like this need careful scrutiny and possible revisions to ensure they are effective at lowering costs and increasing reliability.

As the country grapples with the effort to upgrade the grid, perform long-deferred maintenance and build new power plants, consumers’ costs are likely to continue to rise, further increasing pressure on Americans. Existing regulations and government oversight may no longer lower electricity costs immediately or help people plan for the rising costs over the long term.

About the Author:

Barbara Kates-Garnick, Professor of Practice in Energy Policy, The Fletcher School, Tufts University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Skip York, Rice University 

As the Trump administration makes announcement after announcement about its efforts to promote the U.S. fossil fuel industry, the industry isn’t exactly jumping at new opportunities.

Some high-profile oil and gas industry leaders and organizations have objected to changes to long-standing government policy positions that give companies firm ground on which to make their plans.

And the financial picture around oil and gas drilling is moving against the Trump administration’s hopes. Though politicians may tout new opportunities to drill offshore or in Arctic Alaska, the commercial payoff is not clear and even unlikely.

Having worked in and studied the energy industry for decades, I’ve seen a number of discoveries that companies struggled to moved forward with because either the discovery was not large enough to be commercially profitable or the geology was too difficult to make development plausible. Market conditions are the prime drivers of U.S. energy investment – not moves by politicians seeking to seem supportive of the industry.

Market fundamentals trump policy announcements

The general decline in oil prices from 2022 through late 2025 has reduced the attractiveness of many drilling investments.

And opening the East and West coasts to drilling may sound significant, but these regions have unconfirmed reserves. That means a lot of subsurface work, such as seismic surveys, stratigraphic mapping and reservoir characterization – potentially taking years – would need to be done before any drilling would begin.

Offshore drilling also faces enormous opposition.

On the West Coast, California Gov. Gavin Newsom and California Attorney General Rob Bonta have made forceful statements against any new California offshore oil drilling. They have said any effort is economically unnecessary, environmentally reckless and “dead on arrival” politically in the state.

California local governments, environmental groups, business alliances and coastal communities also oppose drilling and have vowed to use legal and political tools to block them.

There is opposition on the East Coast, too. More than 250 East Coast local governments have passed resolutions against drilling.

Governors on both sides of the aisle, including Democrat Josh Stein of North Carolina and Republicans Brian Kemp of Georgia and Henry McMaster of South Carolina, have spoken out against drilling off their coasts.

Arctic drilling is even harder

Drilling for oil and gas in the Arctic National Wildlife Refuge and the Beaufort Sea off Prudhoe Bay in Alaska would be a massive undertaking. These projects require years of development and are subject to future reversals in federal policy – just as Trump has lifted long-standing drilling bans in those areas, at least for now.

In addition, Alaska is one of the most expensive and technically challenging places to drill. Specialized equipment, infrastructure for frozen landscapes, and risk mitigation for extreme weather drive costs far above other regions. These projects also face logistical challenges, such as pipelines running hundreds of miles through remote, icy terrain.

Natural gas from Alaska would likely be sold to Asian buyers, who increasingly have alternative sources of supply from Australia, Canada, Qatar and even the U.S. Gulf Coast. As production rises in those places, the entrance of Alaskan natural gas into the market raises the risk for global oversupply, which could depress prices and reduce profitability.

Despite political support from the Trump administration, the oil and gas companies would need financing to pay for the drilling. And those loans won’t come if the oil companies don’t have agreements with buyers for the petroleum products that are produced. Major oil companies have withdrawn from Alaska and signaled skepticism about attractive long-term returns.

Trump has helped some

In the first 10 months of the second Trump administration, the president has signed at least 13 executive orders pertaining to the energy industry. Most of them focus on streamlining U.S. energy regulation and removing barriers to the development and procurement of domestic energy resources. However, the broad nature of some of these orders may fall short of establishing the stable regulatory environment necessary for the development of capital-intensive energy projects with long time horizons.

Those efforts have reversed the Biden administration’s go-slow approach to oil drilling, reducing – though not completely eliminating – the backlog of requests for onshore and offshore drilling permits that accumulated during Biden’s presidency.

Delays in permit approvals increase project costs, risk and uncertainty. Delays can increase the chances that a project ultimately is downsized – as happened with ConocoPhillips’ Willow project in Alaska – or canceled altogether. Longer timelines increase financing and carrying costs, because capital is tied up without generating revenue and developers must pay interest on the debt while waiting for approvals. Delays also lead to higher project costs, eroding project economics and sometimes preventing the project from turning a profit.

Investment follows economics, not politics

Unlike in some countries, such as with Saudi Arabia’s Aramco, Norway’s Equinor or China’s CHN Energy, the U.S. does not have a national oil or gas company. All of the major energy producers in the U.S. are privately owned and answer to shareholders, not the government.

Executive orders or political slogans may set a tone or direction, but they cannot override the fundamental requirement for profitability. Investments can’t be mandated by presidential decree: Projects must make economic sense. Without that, whether due to low prices, high costs, uncertain demand or changing regulations, companies will not proceed.

Even if federal policies open new areas for drilling or relieve some regulatory restrictions, companies will invest only if they see a clear path to profit over the long term.

With most energy investments costing large amounts of money over many years, the industry likely wants a sense of policy stability from the Trump administration. That could include lowering barriers to profitable investments by accelerating the approval process for supporting infrastructure, such as transmission power lines, pipelines, storage capacity and other logistics, rather than relying on sweeping announcements that lack market traction.

About the Author:

Skip York, Nonresident Fellow in Energy and Global Oil, Baker Institute for Public Policy, Rice University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Jason Gray, University of California, Los Angeles 

The world is losing vast swaths of forests to agriculture, logging, mining and fires every year — more than 20 million acres in 2024 alone, roughly the size of South Carolina.

That’s bad news because tropical forests in particular regulate rainfall, shelter plant and animal species and act as a thermostat for the planet by storing carbon, keeping it out of the atmosphere where it would heat up the planet. The United Nations estimates that deforestation and forest degradation globally contribute about 11% of total greenhouse gas emissions.

Over the years, countries have committed to reverse that forest loss, and many organizations, governments, and Indigenous and local communities have worked hard to advance those goals. Many of their efforts have been at least partly successful.

For instance, Brazil credits stronger law enforcement and better monitoring at the state and national levels for helping reduce illegal land clearing and deforestation in the Amazon. The deforestation rate there fell by 31% from 2023 to 2024.

Funding from governments and the private sector is helping communities restore land that has already been cleared. Other programs protect forests through payments for ecosystem services, such as paying landowners to maintain existing forests and the benefits those forests provide. These programs provide money to a government, community or landowner based on verified results that the forest is being protected over time.

And yet, despite these and many other efforts, the world is falling short on its commitments to protect tropical forests. The planet lost 6.7 million hectares of tropical forest, nearly 26,000 square miles (67,000 square kilometers), in 2024 alone.

Law enforcement is not enough by itself. When enforcement is weakened, as happened in Brazil from 2019 to 2023, illegal land clearing and forest loss ramp back up. Programs that pay landowners to keep forests standing also have drawbacks. Research has shown they might only temporarily reduce deforestation if they don’t continue payments long term.

The problem is that deforestation is often driven by economic factors such as global demand for crops, cattle and minerals such as gold and copper. This demand provides significant incentives to farmers, companies and governments to continue clearing forests.

The amount of money committed to protecting forests globally is about US$5.7 billion per year – a fraction of the tens of billions of dollars banks and investors put into the companies that drive deforestation.

Simply put, the scale of the deforestation problem is massive, and new efforts are needed to truly reverse the economic drivers or causes of deforestation.

In order to increase the amount of funding to protect tropical forests, Brazil launched a global program on Nov. 6, 2025, ahead of the annual U.N. climate conference, called the Tropical Forest Forever Facility, or TFFF. It is an innovative approach that combines money from countries and private investors to compensate countries for preserving tropical forests.

As an environmental law scholar who works in climate policy development, including to protect tropical forests, I believe the design of the program has real promise. But I also see room to improve it by bringing in states and provinces to ensure money reaches programs closer to the ground that will pay off for the environment.

What makes the Tropical Forest Forever Facility different?

The Tropical Forest Forever Facility seeks to tackle the deforestation problem by focusing on the issue of scale – both geographic and economic.

First, it will measure results across entire countries rather than at the smaller landowner level. That can help reduce deforestation more broadly within countries and influence national policies that currently contribute to deforestation. It focuses on the amount of forest area protected rather than estimating the amount of carbon in the trees.

Second, it seeks to raise billions of dollars. This is important to counter the economic incentives for clearing forests for agriculture, livestock and timber.

The mechanics of raising these funds is intriguing – Brazil is seeking an initial $25 billion from national governments and foundations, and then another $100 billion from investors. These funds would be invested in securities – think the stock and bond markets – and returns on those investments, after a percentage is paid to investors, would be paid to countries that demonstrate successful forest protection.

These countries would be expected to invest their results-based payments into forest conservation initiatives, in particular to support communities doing the protection work on the ground, including ensuring that at least 20% directly supports local communities and Indigenous peoples whose territories often have the lowest rates of deforestation thanks to their efforts.

Finally, the Tropical Forest Forever Facility recognizes that, like past efforts, it is not a silver bullet. It is being designed to complement other programs and policies, including carbon market approaches that raise money for forest protection by selling carbon credits to governments and companies that need to lower their emissions.

What has been the reaction so far?

The new forest investment fund is attracting interest because of its size, ambition and design.

Brazil and Indonesia were the first to contribute, committing $1 billion each. Norway added $3 billion on Nov. 7, and several other countries also committed to support it.

The Tropical Forest Forever Facility still has a long way to go toward its $125 billion goal, but it will likely draw additional commitments during the U.N. climate conference, COP30, being held Nov. 10-21, 2025, in Brazil. World leaders and negotiators are meeting in the Amazon for the first time.

How can the Tropical Forest Forever Facility be improved?

The Tropical Forest Forever Facility’s design has drawn some criticism, both for how the money is raised and for routing the money through national governments. While the fund’s design could draw more investors, if its investments don’t have strong returns in a given year, the fund might not receive any money, likely leaving a gap in expected payments for the programs and communities protecting forests.

Many existing international funding programs also provide money solely to national governments, as the Amazon Fund and the U.N.’s Global Environment Facility do. However, a lot of the actual work to reduce deforestation, from policy innovation to implementation and enforcement, takes place at the state and provincial levels.

One way to improve the Tropical Forest Forever Facility’s implementation would be to include state- and provincial-level governments in decisions about how payments will be used and ensure those funds make it to the people taking action in their territories.

The Governors’ Climate and Forests Task Force, a group of 45 states and provinces from 11 countries, has been giving feedback on how to incorporate that recommendation.

The task force developed a Blueprint for a New Forest Economy, which can help connect efforts such as the Tropical Forest Forever Facility to state- and community-level forest protection initiatives so funding reaches projects that can pay off for forest protection.

The Tropical Forest Forever Facility is an example of the type of innovative mechanism that could accelerate action globally. But to truly succeed, it will need to be coordinated with state and provincial governments, communities and others doing the work on the ground. The world’s forests – and people – depend on it.

About the Author:

Jason Gray, Environmental Attorney, Emmett Institute on Climate Change and the Environment, University of California, Los Angeles

This article is republished from The Conversation under a Creative Commons license. Read the original article.