What Can Federal Place-Based Economic Policies Teach Us about the Energy Transition?

Place-based policies designed to support fossil fuel–dependent communities are emerging in the United States and abroad. However, there has been little analysis to understand which, if any, existing place-based economic development policies can serve as models in the energy transition. In this analysis, we review the empirical evidence on the effectiveness of three major federally funded place-based economic development programs, then assess their relevance to the energy transition. We find that existing policies, depending on their design details, can be effective in directing investment and improving local economic outcomes in targeted locations. However, these programs can contribute to neighborhood gentrification, and economic benefits may flow primarily to residents living outside the targeted community. Adapting any of these policies to an energy transition context would require changes in eligibility criteria, geographic targeting, selection mechanisms, and more. We offer several conceptual models for how such policies could be structured but caution that much additional research and community engagement will be needed to determine which mix of interventions is likely to be most effective in ensuring an equitable transition toward a clean energy future.