Published on July 27, 2023

What is Standing in the Way of Energy Transition. And what isn’t.


The signing of the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA) have unlocked federal resources that have the potential to accelerate the energy transition to renewables. Predictably, ESG and the move towards renewables has become a central point of contention leading up to the Presidential Election. Many states have adopted or are working to pass legislation limiting ESG investing but these efforts largely have not impacted the energy transition to renewables, rather the real hurdles have more to do with existing energy infrastructure. In this insight, we will examine the current energy composition of the United States, the goals set by the current administration, what hurdles exist in the energy transition.

Where are We Now?

The composition of energy sources paints a picture of a country still very reliant on fossil fuel-related energy generation. Renewables only make up 12% of U.S. energy sources, while petroleum and natural gas accounting for more than 2/3 of energy sources.

Examining the past decade and the energy transition tells a little bit of a more encouraging story. In the period of 2011-2022 electricity from coal has dropped 52% while electricity from renewables grew 72% over the same period. This data (from the Brookings institute) strips out transportation and therefore does not consider gas-powered transportation, but the point still stands that the renewables are growing quickly.

Changing Composition of Net Generation, 2011-22

What Is Standing In The Way Of Energy Transition: Changing Composition Of Net Generation

Source: Ten economic facts about electricity and the clean energy transition | Brookings

Where are we Going?

The stated goal of the Biden administration is that they would like to eliminate fossil fuels as a form of power in the U.S. by 2035, that is that all energy on the power grid to be produced from renewables or nuclear power. This is certainly an ambitious goal but based on the spending outline from the IRA and IIJA the target seems attainable. Of course, another variable is how this target changes if Biden or another Democrat is not reelected. It is unlikely that a new administration could easily make changes to how IRA and IIJA funds are allocated; however, they could more easily adjust the long-term target for the energy transition to renewables.

Potential Hurdles standing in the way of the Energy Transition

There are technological advances that need to be made in order to ensure the feasibility of renewables. Production of energy from renewables is no longer the issue but instead, utilities and policy makers need to focus on the technology of storage and transportation of energy, to ensure that renewable energy produced is used and can be delivered to the end consumers. Listed below are the 3 specific areas that could create hurdles for the energy transition.

The Grid - There is a need to modernize the energy grid. Currently, the U.S. operates on three grids, there is roughly one grid for the east, one for the west, and then finally, a grid based around Texas utilities, that serves nearly all of Texas.

Electric Power Regions and Interconnections in the US, 2021

What Is Standing In The Way Of Energy Transition: Electric Power Regions And Interconnections

Source: Ten economic facts about electricity and the clean energy transition | Brookings

Energy Storage – Currently there are storage solutions that have helped manage supply and demand mismatches for many types of renewable energy. For example, there exist batteries that can easily store solar energy so that a household can continue to use that solar energy for several hours once the sun has set. What does not yet exist is longer-term storage solutions that would allow a household to store energy for longer periods, for example, if there was a prolonged period of overcast weather or other weather events.

Sourcing Materials – There are supply chain challenges that come along with renewable energy sources as well. When compared to legacy energy production methods, renewables require more mineral content and more diverse minerals. Consistently sourcing this content can be challenging and more expensive when bringing the energy production to scale. Conversely, once the renewable energy infrastructure is built, then it is less expensive and challenging over the life of the energy asset. In essence, renewable energy is more reliant on initial capital investment, rather than operational expenses.

The Anti-ESG Movement

The energy transition is at its core a movement that needs to be a marriage between investment and policy. While the two parties seem to be fairly far apart in their support for the energy transition to renewables, survey data suggests that a majority of Americans do believe in moving towards a more diverse mix of energy production and integrating more renewables into the American energy portfolio.

Unfortunately, like many topics debated by our representatives in Washington and in state houses, the loudest voices are seemingly coming from the extremes. With much anti-ESG and pro-fossil fuel legislation being codified into policy and pending in states, and an anti-ESG bill that was vetoed by President Biden earlier this year, it is short sided to believe that policy will continue to be supportive of renewable energy.

The good news is the economics of renewables have become compelling on their own even without subsidies. According to the World Economic Forum, the price of solar power has fallen by 80% since 2010, from $ 378 to $68 per megawatt hour of electricity-- cheaper than nuclear and coal. In essence, renewable energy is becoming less expensive in dollars compared to using fossil fuels.

Moreover, the capital behind both infrastructure projects and corporations continues to be supportive of greener policies and transitioning towards renewables, according to a survey of Asset Managers in 2022 from Russell Investments, 82% of U.S.-based asset managers systematically incorporate ESG information in their investment process. The percentage approaches 100% in the United Kingdom and Europe. Other related industries are following suit. For example, the world’s second largest reinsurer, Swiss Re Group, has said it won’t insure any new oil and gas projects unless they provide plans to make their operations carbon neutral.

So, while certain policymakers might be working hard to defund federal programs that allow and, in some cases, encourage the energy transition, it appears that we are at an inflection point, where the cost savings associated with renewables and the broad private sector support will continue to push the energy transition forward.


When opening a newspaper, it is easy to walk away pessimistic that the U.S. is not on the path to a more renewable based energy portfolio, but digging into the data and trends tell a different and more optimistic story. While technological and infrastructure hurdles do exist, there seems to be real momentum around energy transition. This transition will provide compelling investment opportunities for managers that manage infrastructure assets and are on the cutting edge of renewable technological advances. This is a broad and far-reaching trend and can be invested in many ways. Some managers on our platform have selectively integrated ESG considerations into their investment processes, while others might be more focused on the potential value opportunities that may exist in legacy technologies as a result of ESG integration.


  1. Business backlash pushing GOP to weaken anti-ESG proposals | AP News
  2. Americans Largely Favor U.S. Taking Steps To Become Carbon Neutral by 2050 | Pew Research Center
  3. State ESG laws in 2023: The landscape fractures - Thomson Reuters Institute
  4. The Promise and Pitfalls of the Clean Energy Transition | Wilson Center
  5. Biden Vetoes Anti-ESG Investing Legislation (
  6. Texas to ban insurance companies from weighing ESG policies to set rates | The Texas Tribune
  7. US renewable energy transition | Deloitte Insights

Many of the managers on our platform are investing in renewable technology and integrating ESG considerations into their investment processes.

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