Zane Kinsky is a Clean Energy Leadership Institute 2025 Fellow.
A new era of electrification — powered by data centers, electric vehicles and ambitious climate goals — is testing the limits of our energy system to a degree not seen in decades. Over the next 10 years, the U.S. energy system is facing a $578 billion shortfall in investment.
The Federal Highway Program may offer the blueprint for closing that gap: a new federal trust fund.
The irony of looking for infrastructure solutions in our highways does not escape me. The United States’ surface transportation system is perhaps most infamous for its perpetual state of underinvestment and chronic disrepair. These days, there are even those who have declared the entire Federal Highway Program “dead” and are advocating for its dissolution.
But let’s go back to 1956. An evolving and growing economy, spurred by technological developments, was straining a national system of insufficiently connected infrastructure networks. New threats to national security had exposed the risks of these regional divides and it became clear that should a single critical corridor collapse, it might bring an entire region to its knees. Sound familiar?
Congress, in response to these developments and at the behest of President Dwight D. Eisenhower, created the Highway Trust Fund and funded it with a one-cent tax increase on gasoline and diesel. By authorizing a multi-year funding stream, states and investors suddenly enjoyed new financial certainty that mitigated the risk of ambitious highway projects. By the turn of the 21st century, the U.S. had completed the over 40,000-mile interstate system.
The trust fund worked. Well, at least at first, and certainly not without hiccups. The interstate system took decades longer and billions more than expected to build. And for a variety of reasons — including that Congress never indexed the fees to inflation nor raised them within my lifetime — the trust fund is now insolvent.
Nonetheless, the trust fund met the moment of 1956 and successfully ushered in a new era of nationalized, interregional transportation. It worked because, underpinning the trust fund, was the principle of “the user pays” — those who use the infrastructure should pay for it.
In the 19th century, localities and states were responsible for funding their own roads. But the Federal Highway Program recognized that, as the economy grew and longer travel became more commonplace, roads were increasingly providing value to people across the country. Roads were no longer seen as a collection of separately managed assets, but a federal network in which each asset gained value as an interconnected part of a greater whole.
Our electrical system is currently facing the same inflection point, and will require a similar reckoning. The first U.S. power grids sprang up naturally to allow for economies of scale. From there, larger and larger regional grids grew and interconnected until they eventually formed the three U.S. regions we know and love today: the Western Interconnection, the Eastern Interconnection and the Texas Interconnection.
These massive interstate (minus Texas) systems now power every sector of the U.S. economy. Accordingly, failures within any region are felt throughout, often by those living within the other two interconnections. But if the impacts of the U.S. grid are national, why is its financing largely regional?
We only need to look to the 2021 Texas power crisis to see the risks of our current system on full display. After winter storms strained the Texas grid to the point of failure, days of sweeping power outages followed. A key factor in the catastrophe was the isolation of the Texas grid, which remains largely severed from the national grid to avoid federal oversight. As a result, when Texas power generation systems sputtered due to insufficient winterization, the Electric Reliability Council of Texas could not import enough power to balance the grid. More than 200 people died and the Texas economy suffered, conservatively, an $80 billion loss.
But the outages weren’t just a problem for Texas. Since the tragedy, the federal government has provided millions in emergency relief and grid resilience funding to the state to aid recovery and prevent future grid failures.
Additionally, in 2021, Texas accounted for one-third of the United States’ operable crude oil refining capacity and three-quarters of its chemical production capacity. After the blackout, 80% of the U.S. basic organic chemical production capacity dropped offline; Gulf Coast crude oil production fell roughly 50%. Those holes skyrocketed prices throughout the U.S., and supply chains were still recovering late into 2021.
In contrast, other states have repeatedly leveraged strong interconnections, combined with flexible demand and resiliency technologies, to keep power online, even in the most challenging conditions. During a brutal 2022 heatwave, California leveraged the geographic diversity of the cooler, northern areas of the Western Interconnection — a grid seven times larger than Texas’ — to balance its power system and emerge largely unscathed.
A federal trust fund for energy infrastructure would facilitate these types of expansions and the maintenance of our grid, helping to avoid some of the worst impacts of climate change and increased demand. A federal funding stream, not subject to the yearly uncertainty and chaos of the congressional appropriations cycle, would advance critical interregional transmission projects necessary to unlock desperately needed grid-strengthening benefits.
The specifics of such a program could vary, as long as it is sustained by a user-based fee. For example, a one-cent-per-kwh fee, collected by utilities and deposited into the federal trust fund, could raise $40 billion a year. That’s enough to fund 70% of our ten-year energy infrastructure investment gap. This fee would only add an average of $9 to each household’s monthly energy bill, an amount that would proportionally return up to $16 in total U.S. energy cost savings.
Like the highway program, these funds could be deployed through a mix of competitive and formula programs to fund a portfolio of priorities, including generation, transmission and resiliency.
Like the interstate system, building out our grid will be expensive and take time — individual transmission projects can take longer than ten years. The success of this undertaking will require confronting that the U.S. energy system is already national, whether or not we acknowledge it in our financing. A federal trust fund is one way to do so, and would also provide the long-term certainty missing from other funding streams. That’s why it is high time to consider a trust fund, to once again, facilitate the next large-scale buildout of U.S. infrastructure.
