Understanding Energy Justice Challenges Through a Regulatory and Institutional Lens

Abstract

While energy justice articles abound, few consider the underlying institutional and regulatory foundations of energy justice challenges. In this article, I present and analyze these foundations through a discussion of the core and underlying tenets of energy justice, the historical developments in energy markets that have led to the present focus on justice, and energy justice metrics that decision-makers employ. I then present two case studies—energy insecurity and legacy fossil fuel community transitions—to illustrate the complex institutional foundations, and several potential solutions, of energy justice challenges.

JEL Classification: D02, Institutions: Design, Formation, Operations, and Impact; A12, Relation of Economics to Other Disciplines

Keywords

energy justice institutions governance technological change energy insecurity coal transitions

1. Introduction

What is energy justice? This question has gained traction increasingly in recent years as the focus of both scholarly and practitioner research. Researchers have explored the topic conceptually (see, e.g., Carley and Konisky 2020; Heffron and McCauley 2017; Sovacool et al. 2016; Welton and Eisen 2019); theoretically, including through a philosophical (Pellegrini-Masini et al. 2020) and political economy (Newell and Mulvaney 2013) lenses; empirically (see, e.g., Davis and Hausman 2022; Memmott et al. 2024); and from the perspective of designed targeted metrics and evaluation (Baker et al. 2023; Carley, Evans, Graff, and Konisky 2018; Goforth et al. 2025). Yet, there is a notable lack of attention paid to the underlying regulatory and institutional foundations of energy justice, and how these foundations are both threatened by and reinforced in the current energy transition environment of rapid technological change.

This gap in the literature forms the objective of the present analysis. In this article, I apply prisms of law and economics analysis to understand the dimensions of energy justice challenges, both generally and across two specific case studies: energy insecurity and legacy fossil fuel community transitions. The five prisms include neoclassical economics, innovation and dynamism, institutions and economic organization, public choice economics, and the innovator’s dilemma.

At their core, the five prisms are about the design and operation of markets, economic theory, and regulatory decision-making, all of which is implicated in a focus on institutions and governance. More specifically for the sake of the present analysis, institutions in the energy space may include the following: (1) market design and structure (e.g., wholesale and retail power markets, including both vertically integrated markets and competitive power markets); (2) regulatory bodies that operate in these markets (e.g., public utility commissions, who determine rates and adjudicate utility practices); (3) rules and other regulations for those who operate in energy markets (e.g., wholesale market bidding procedures or rules for market participation and compensation requirements for distributed energy resources); and (4) legal and policy frameworks (e.g., renewable portfolio standards, carbon pricing, or, in the transportation sector, fuel economy standards). As this list makes clear, energy systems are shaped inherently by institutional arrangements and regulatory frameworks.

While the contribution in the present article is simple—that is, to explore the underlying institutional and regulatory scope of energy justice concepts—this analysis provides insights that can help one understand both the foundations of energy justice challenges as well as seek potential solutions. In doing so, this article moves beyond mere classification and definition and into a realm of explanation, with an appreciation for the deeper and broader intellectual roots of energy justice concepts than is often conveyed.

I begin by providing a standard set of definitions of energy justice, before subsequently discussing the historic context in which energy justice considerations have come to the fore, pulling mostly from the history of electricity markets. This historic context helps lay the foundation for how and why the current regulatory environment does not fully mitigate or, in some cases, even perpetuates energy justice challenges. I then discuss energy justice metrics to give a sense of how decision-makers can measure and track energy justice issues. In the remainder of the analysis, I present two case studies of modern energy justice challenges. For each, I identify the underlying regulatory and institutional dynamics that have created these challenges and then conclude with a cursory set of policy and other solutions. I briefly conclude in the final section.

2. The Fundamentals and Roots of Energy Justice

Energy justice refers to an “energy system that fairly disseminates both the benefits and costs of energy services, and one that contributes to more representative and impartial energy decision-making” (Sovacool et al. 2016, 4). At its core, this definition incorporates explicitly tenets of distributive and procedural justice. Distributive justice is about the distribution—geographically and across different socio-demographic groups—of both benefits and burdens associated with energy systems. The objective of distributive justice is to ensure that no burdens, risks, or hazards are distributed disproportionately across individuals or groups in ways that unduly hurt certain populations, or that entities that share some of these burdens are also able to access the benefits (Carley and Konisky 2020). Examples of burdens include exposure to air or water pollution, or health or personal safety risks associated with mining; examples of benefits include access to residential, clean energy technologies that lower energy bills, or job opportunities in growing energy industries.

Procedural justice is about energy decision-making processes and, specifically, the ability of individuals and groups to be actively involved and have a voice in decision-making processes. The objective of procedural justice is to ensure that anyone who chooses to be involved substantively can do so. Examples of procedural justice include when local communities are involved in planning for large-scale energy infrastructure (e.g., transmission lines) or technology (e.g., carbon capture and storage projects) siting, or when energy consumers can advocate for themselves or through a consumer advocate, with bearing, during a rate case that could yield higher prices. The design of markets, including the regulatory rules and procedures contained within markets, have fundamental bearing on who can participate and who is excluded, and who has power.

Recognition and restorative justice are also assumed implicitly in this definition as well. These tenets of energy justice emphasize the need to recognize the wellbeing and dignity of all people, consider how energy systems of both past and present may compromise one’s wellbeing, and use available levers to address such challenges. Energy justice and the corresponding notion of a “just transition” are based on principles that “offer alternatives to the failures of markets to address the long tail of historical decisions, providing a broader conception of the public interest that incorporates longer-term notions of fairness, wellbeing, and restorative justice” (Chan and Klass 2025, 3). “Longer-term” here is inclusive of past injustices and disproportionate burdens on certain populations, as well as burdens that may be held by future generations.

Energy justice is a adjacent to a longer-standing conception of environmental justice, which has focused historically on the distribution of environmental harms borne by different populations, such as water and ground contamination, and exposure to air pollution, as well as procedural opportunities, or lack thereof, for such populations. Such conditions are increasingly understood to be more harmful than previously thought, especially for low-income and traditionally disadvantaged populations who are located closer to sources of pollution (Jbaily et al. 2022). Energy justice encompasses these topics—in so far as the environmental pollution is connected to an energy system or market—but also goes beyond considerations of environmental justice to consider the social, political, and economic structures of energy, including issues associated with labor conditions, technological access, and the burdens of waste disposal.

While energy justice aligns with environmental justice in its underlying tenets, albeit with noted deviations in focus, energy justice is also rooted fundamentally in long-standing, historical notions of justice. In Aristotle’s Nicomachean Ethics, justice is fundamental to allowing one access to the benefits and burdens of society. Aristotle also offered notions of universal justice, in which justice concerns extend to everyone, no matter their background or status, and ensure “the individual rights to be free from harm to life, liberty, and property, which are the foundation of the rule of law and equality before the law” (Sovacool et al. 2024). These ideas also align with Plato’s notion of commutative justice, or the understanding that each individual is given their due. In other words, energy justice is a longstanding prioritization of individual rights and equality, as guaranteed by the rule of law, as well as human dignity and wellbeing, and in a manner that is topically connected to energy systems.¹

Underlying energy injustices are institutions and regulatory foundations, which are historically not neutral across society and geographies. Institutions shape distributive justice when markets, laws, and regulations spread benefits or burdens unfairly across groups or individuals. For example, electricity market and rate design dictates how the cost of maintaining and modernizing the grid is spread across rate payers, with regressive outcomes. Institutions also shape procedural and recognition justice through, for example, one’s ability to participate in public utility commission proceedings or when new energy technologies such as carbon capture and storage are placed in communities that have historically hosted oil and gas development or other heavy industry.

Accompanying the pursuit of energy justice at any jurisdictional scale, the literature contends, is a set of normative conditions (Sovacool et al. 2016) outlined in Table 1. These conditions incorporate distributive, procedural, and restorative tenets, but also further suggest a consideration of the mission and structure of regulatory and institutional arrangements that surround energy systems. One may not subscribe to all these objectives nor will actors necessarily be able to prioritize all these at once. The main point here, however, is that actors who uphold the objectives of energy justice, according to this set of conditions, should prioritize the wellbeing of individuals and communities, and not just those who are already well off. In other words, if one accepts these objectives as important, the pursuit of energy justice requires that governmental and market actors seek to address inequities connected to energy systems through the levers that they have available to them.

Table 1.

Energy Justice Normative Conditions.

Normative condition	Brief explanation
Affordability	Energy costs should not place undue burdens on households.
Availability	Everyone should have access to modern energy.
Due process	Energy operations should not infringe on human rights and personal liberty.
Transparency and accountability	Information about energy systems and decisions should be accessible to all; decision-making processes should be open and inclusive.
Sustainability	Energy resources should be consumed at a pace that is commensurate with nature’s cycles.
Intragenerational equity	No matter what one’s background, beliefs, and orientation, they should all have the right to energy systems and benefits.
Intergenerational equity	Future generations should enjoy the same rights and benefits as current generations.
Responsibility	All entities hold the responsibility of achieving these objectives.

Note. Table is adapted from Sovacool et al. (2016), with author’s own renditions of explanations.

3. Energy Justice Through History

An appreciation for the inception and growth of the energy justice concept, as a branch of traditional notions of justice, requires an understanding of where we are in the arc of modern energy history.² Starting around the industrial revolution and until recently, electric systems have been primarily the same breed: large, centralized, typically carbon-intensive facilities—with the exclusion of nuclear and hydroelectricity—that send electricity through transmission and distribution lines to the end-user. In the transportation sector, albeit less a focus of the present analysis, operations have similarly concentrated around the standard internal combustion engine. The regulation of these systems aligned with the structure of these technologies. Electricity technologies historically rendered electricity markets natural monopolies. For each jurisdiction, it was more efficient for a single company to own all infrastructure due to declining average costs over a wide range of outputs. With the objective of minimizing monopoly power, regulated markets guaranteed utilities the ability to recover their expenses and earn a reasonable rate of return on their assets. The core regulatory objectives were reliability and affordability through reasonable and nondiscriminatory rates, with a normative focus on economic surplus, efficiency, and safety.

While the structure of electricity market operations has evolved over time, due in large part to natural gas innovations—where less than 15 percent of customers now live within fully deregulated markets with consumer choice, and in which regional transmission operators control wholesale markets spanning two-thirds of the population (Chan and Klass 2025)—the central objectives of electricity regulation and market design has remained the same. That is, until recently, as two major trends have affected energy markets fundamentally and raised questions about the adequacy of former institutional and governmental arrangements within this space, as well as questions about the need for a broader set of regulatory objectives beyond just reliability and affordability.

First, scientific evidence of climate change has mounted and is now irrefutable (Intergovernmental Panel on Climate Change [IPCC] 2023). Scientific research also underscores the strong connection between energy production and climate change (IPCC 2023). There are significant physical and social consequences of climate change, which the underlying market structures, rules, and regulations can exacerbate. Climate change brings increasing and intensifying climate disasters and extreme heat and cold events. The impacts of these events, however, can fall disproportionately on certain populations due to pre-existing institutional arrangements. As several examples, under conditions of regressive electricity rates, the costs of grid hardening falls disproportionately on low-income households. Protocols to prioritize critical infrastructure, which tend to reside in higher income neighborhoods, could mean that low-income neighborhoods are often the last to have their power restored during a blackout. And historic rules on disconnection protections that do not provide special provisions to households with vulnerable members (e.g., those with medical conditions or children, respectively) could have extreme health implications for these households, including death.

Second, and relatedly, the last decade has been marked by phenomenal energy technology innovation. Accompanied by several public policies aimed at addressing climate mitigation, and a rapidly decreasing cost of renewable sources of generation such as wind and solar, the energy industry has started to shift its investment toward lower-carbon energy sources (Davis et al. 2023). As of 2023, wind accounted for over 10 percent and solar for nearly 4 percent of the total utility-scale electricity mix (U.S. Energy Information Administration [EIA] 2024). Energy innovations, and their corresponding cost decreases, also extend beyond centralized applications and include a suite of smaller-scale, decentralized residential and industrial technologies such as battery storage, residential solar, and smart thermostats. Over just the last decade, both battery and residential solar costs have declined by roughly 90 percent (Roser 2020); and battery costs have declined over 99 percent over the past thirty years (Walter et al. 2024). There has been simultaneous innovation in digitalization of electricity markets and technologies.

The accumulation of these technological developments does not just present advances in generation sources but also includes advances in consumer interfaces and end-use products, and affects how consumers interact with their products (i.e., human behavior) and which energy sources these products pull from (e.g., switching from gas to electricity). In short, recent technological innovation has fundamentally shifted how we make, store, and consume energy, which market actors exist, and how market actors interact. In addition, such technological innovation yields different outcomes for different people, as some have access to the benefits of innovation while others may bear the burdens; and ultimately technological development may serve to reinforce societal inequities (Sovacool, Barnacle et al. 2022).³

These two trends both reinforce the need for considering energy justice. Climate change is a driver of stress on energy and social systems that requires regulatory and institutional frameworks with objectives that extend beyond just reliability and affordability; and technological innovation is a driver of system transformation that requires revising or creating new institutional and regulatory frameworks, including market rules and procedures, and in a manner that accounts for the human and distributional aspects of energy technologies.

In most regions of the country, a traditional vertically integrated utility model under rate of return regulation may no longer the best suited approach to handle this rapidly evolving market and technological landscape, with new market entrants, technologies that operate behind the meter and in a completely different fashion than large, centralized applications, and policies and regulations to simultaneously address climate and social vulnerabilities. These technological changes may require institutional design and actions that are less protective of incumbent companies and instead structure—and in some cases redesign—markets so that they are more supportive of competition and a range of market actors. Responding to such multi-faceted innovation also requires a wider set of criteria for decision-making, and new regulatory structures that are responsive to market conditions and capable of pursuing such objectives (Kiesling et al. 2025). In short, institutional and regulatory frameworks are not only under strain from technological and market changes, as well as climate impacts, but also play a central role in shaping energy justice outcomes and processes.

Fueled by dynamic technological innovation and global climate challenges, energy justice encompasses issues of who has access to low-carbon energy technologies; whether markets are accessible to everyone, what form that access takes, the distribution of power in energy decision-making and power dynamics among market actors, social and cultural challenges facing energy communities, both new and old, and the incidence of burdens associated with energy systems, such as the siting of energy infrastructure.

4. Energy Justice Metrics

Underlying these various questions about equity and justice, and as part of the process of identifying, addressing, mitigating them, are a set of metrics. Metrics are an important part of decision-making and institutional design—they determine what counts and what does not, how conditions are measured, and which conditions are given consideration. Metrics also dictate how institutions set priorities and allocate resources, and one can use metrics to monitor progress and assess success in achieving objectives.

Various actors, both constrained and enabled by the institutional structures in which they operate, use a set of metrics to make decisions and measure outcomes. Such metrics may only encompass objectives of efficiency or reliability, for example, such as the case of most public utility commissions, or may be more expansive and include some of these measures that capture energy justice concepts.

In Table 2, I present a range of example metrics. For a more extensive presentation of such, including a guiding framework and discussion of limitations of these metrics, refer to Baker et al. (2023).

Table 2.

Example Energy Justice Metrics.

Metric concept or theme	Example metrics
Pollution or toxin exposure	Concentration of coal dust in the air; concentration of heavy metals; measures of air pollution around power plants or highways; dioxins present in the air at e-waste sites
Energy insecurity/poverty	Percent of population with access to the electricity grid; energy burden (% of total income spent on energy bills); energy-limiting behavior such as through measures of temperature inflection points (Cong et al. 2022); count of disconnections; total arrearages; self-reported incidence of inability to pay bills; measure of how actual electricity bill across residential customer classes will change with new rates, rather than a measure of average change (Gilliam and Yozwiak 2018).
Ownership or access	Heterogeneity by socio-demographic characteristics in who owns companies, who lives near solar installation companies or car dealerships that carry electric vehicles, who has taken advantage of tax credits for low-carbon technologies; percentage of public ownership over land
Labor conditions in energy-related industries	Counts of child labor; counts of accidents involving employees; counts of safety or pollution regulation violations
Inclusive processes that involve energy decisions	Representation of advisory and decision-making bodies; percent of local input that is included in final planning; funding to enable participation by under-represented groups in decision-making processes

One can use these metrics to identify individuals, households, or communities that face disparate incidence of harms, or lack of access to benefits or opportunities for representation. In some cases, a single metric may suffice for decision-making or analysis. In others, one may not be able to capture the full scope of the justice challenge without using several metrics at once, such as the case of energy insecurity, as discussed in greater depth in the case study below. In other cases, one may need to use various configurations of indices or composite scores that combine several of these equity metrics, or complement these metrics with other socio-demographic characteristics. For example, researchers have devised measures of vulnerability to disruptions from the energy transition, such as through increased energy rates (Carley, Evans, Graff, and Konisky 2018) or fossil fuel industry employment (Raimi et al. 2022). They measure vulnerability as a composite score that combines exposure (i.e., economic or other shock), sensitivity (i.e., accounting for which populations are most susceptible to being affected by the shock), and adaptive capacity (i.e., what support or coping mechanisms may provide resilience to the exposure). As another example, one can combine several of these metrics into mapping tools that one can use to identify which populations or locations may require additional recognition, support, or investment.

A more simplified set of metrics could generate an accounting of who wins and who loses in any given energy decision, with an objective to spread benefits across all populations and to minimize a concentration of costs in any given location or demographic group.

There are notable limitations to the applications of these and related metrics, particularly in pursuit of energy justice. In brief, I offer five related challenges. First, dependable metrics require accurate, complete, and reliable data; in other words, the outputs are only as good as the inputs. Second, no single metric tells a complete story, and energy justice challenges are often highly complex and involve significant history. Third, any weighting of metrics inherently introduces subjectivity, which, along with the normative assumptions of energy justice, has the potential to lead to contestable decisions or outcomes. Fourth, the scale of the data underlying any metric needs to align with the scale of the challenge; and energy justice challenges are both highly global and highly local at the same time, thereby making it difficult to capture the true scale of any specific challenge and the corresponding metrics. Fifth, the use of metrics highlights what can be inherent tradeoffs between efficiency and equity. An approach to any situation that relies on efficiency and an objective to maximize total surplus is in contention, for example, with an approach by which one imposes subjective weights for different subpopulations.

5. Modern Energy Justice Challenges

Next, I present two examples of energy justice challenges, along with an analysis of the institutional and market arrangements of each.

5.1. Case 1: Energy Insecurity

Energy insecurity, otherwise referred to as energy poverty, is when an individual or household struggles to secure their energy needs. Energy insecurity is measured in a variety of ways. No single metric can convey a complete story about the incidence of the problem, nor the specific circumstances facing energy insecure households. A household may not have access to energy, such as the case of approximately 750 million people around the world who do not have a physical connection to modern grid infrastructure (IEA 2024). Or a household may not be able to afford their energy bills to maintain thermal comfort. In the United States, approximately one in four households struggle to pay their energy bills (U.S. EIA 2024) and roughly 3 million are disconnected on an annual basis (Carley and Konisky 2025a), with significantly higher rates in communities of color (Cicala 2021).⁴ Yet, energy (e.g., electricity, gas, and cooking fuels) is arguably an essential and enabling good. Some argue, albeit with likely controversy, energy should be recognized as a basic right by the government given how essential it is to life (Bednar and Reames 2020).

Climate change is exacerbating energy insecurity through two mechanisms. First, more frequent hot or cold weather requires that one turn up their air conditioning or heat, respectively, or instead severely curtail their energy use (Barreca et al. 2022; Cong et al. 2022). Second, utilities are increasingly needing to “harden” their infrastructure to be resilient to extreme weather events and the grid hardening expenditures are passed on to the consumer in the form of higher energy bills (Hughes et al. 2024; Leibowicz et al. 2022).

Energy insecurity is primarily a challenge of distributive justice, with the uneven distribution of energy insecurity and utility disconnection burdens, and procedural justice, concerning who has the power to advocate on their own behalf and in their own best interest.

No study to date, to the author’s knowledge, has taken up the question of what the root cause of energy insecurity is, and what contributes to disparate incidence of insecurity across the population. Absent any empirical evidence accordingly, I will posit that the persistently high rate of energy insecurity in the U.S. and around the world, is likely due to two major factors. First, income inequality provides wealthier households the ability to cover the—rising (U.S. EIA 2025)—costs of energy services but does not for lower-income households. Income inequality is one of the primary explanations for environmental justice (Banzhaf et al. 2019) and seems to appropriately extend to the energy justice challenge of energy insecurity. Because energy is not formally recognized as an essential need and thereby guaranteed by the government, it operates as any other private good does, in which one’s willingness to pay is based on their preferences and their income; and without the income to cover costs, one is rendered energy insecure.

Second, besides the simple fact that the monthly cost of energy is beyond the budget of millions of American energy insecure households, an additional explanation for energy insecurity is rooted in the institutions and market design of energy markets. In short, institutions both create and reinforce energy insecurity.

Despite a plethora of actors in electricity and gas markets, no single entity typically makes equity a high priority.⁵ As discussed previously, public utility commissions regulate electricity and gas sales according to guiding principles of efficiency and reliability. Equity, justice, and distributional issues were not prioritized at the origins of utility regulation beyond the imperative to ensure affordability and universal electrification. Utilities also do not operate with an objective of equity; they seek to sell their products or, when they do not receive their payments, they disconnect.⁶ And even though affordability is generally a priority in electricity markets, not all market actors seek to minimize total system cost when making decisions, such as decisions involving the interconnection queue.

Energy customers and utilities transact on a regular basis, yet transactions between a household and a utility company when facing the threat of disconnection include significant information challenges. For example, a customer may struggle to comprehend their energy bill due to the complexity of pricing structures (e.g., with riders, demand charges, and the like), or face uncertainty about when exactly they will be disconnected—in both dollar value and time duration—if they fail to pay their bill in full. If utility companies do not share information with their customers about their utility disconnection protections or their disconnection procedures, respectively, then this asymmetric information can lead to sub-optimal behavior and result in utility disconnections (Carley et al. 2023).

The case of energy insecurity also underscores how Schumpeterian dynamics yield different outcomes for different people. Rapidly emerging clean energy technologies such as residential solar, efficient and electric stoves, heat pumps, and electric vehicles could help energy insecure households the most by reducing their energy bills, yet these benefits are less available to such households due to structural barriers and high transaction costs. For example, one may not own their home and thereby cannot put solar panels on their roof; or they may not have a garage and thereby be able to install a residential electric vehicle charger. Low-income households are also more commonly credit constrained and thereby are not eligible for loans or may not have a high enough tax liability to take advantage of electric vehicle tax credits. Examples of transaction costs that inhibit technology uptake include the access that one may have to solar panel installers or electric vehicle sellers, which have been documented as less commonly available for low-income and other disadvantaged communities (Sovacool, Newell et al. 2022), or the difficulty of engaging with a landlord on questions related to the installation of air conditioning, solar panel, or smart meters.

Research shows that clean energy technologies are less commonly owned by lower-income households (see, e.g., Borenstein and Davis 2016; Sunter et al. 2019),⁷ yet all households that pay electricity rates and income tax contribute money toward clean energy incentives. In fact, one study reveals a wealth transfer from medium- and lower-income households to higher-income households in the California Electric Vehicle Rebate Program (Ku and Graham 2022).

The design of electricity and gas rates may also reinforce energy insecurity. As more households replace grid electricity with their own generation sources (e.g., residential solar), or as more households switch from gas to electrification (Davis and Hausman 2022), the remaining customers connected to the grid or gas lines, respectively, need to cover an increasingly larger share of the fixed infrastructure costs. These market dynamics have the potential to continually increase the cost of energy for those who cannot afford to install their own technology or switch to electrification. In these cases, institutional governance and market design has yet to catch up with the new requirements and, specifically, modified rate design needed for these emerging technologies.

The practice of utility disconnections is also at least partly explained by institutional and regulatory dynamics. For example, utility disconnections are necessary—albeit arguably⁸—to avoid the moral hazard of people deciding not to pay their bills due to a lack of consequences. Disconnections also help reduce the degree of cross-subsidization among customers, since unpaid debt is typically passed to other customers through rate recovery.

Despite a long-standing history otherwise, public utility commissions and other energy market actors are increasingly becoming attentive to these dynamics and expanding their purview beyond mere monopoly control to also include equity, justice, and a consideration of wellbeing (Chan and Klass 2025). Yet significant progress is still needed to address these disparities in both benefits and burdens, while simultaneously reducing barriers to innovation (Kiesling et al. 2025) and doing so at a pace that is commensurate with the warming planet.

Addressing energy insecurity not only requires an expanded set of objectives and metrics, it also requires policy solutions and regulatory modifications. One set of policy solutions is to target improved rate design and market competitiveness, which has the potential to address both inefficiencies and inequities in electricity and gas markets. Generally, such an approach could seek to make rates less regressive and more time and spatially dynamic, while tackling regulatory capture. As another example, market-based climate policy instruments, such as a carbon taxes with progressive redistribution of revenues, are another dual efficiency- and equity-oriented set of policy interventions.

Policies and regulatory efforts can add processes that facilitate greater inclusion of traditionally underrepresented voices, such as in utility rate cases run by public utility commissions. One recent example of the government seeking more inclusion in decision-making processes is the Office of Public Participation created under the Biden administration at the Federal Energy Regulatory Commission.

Addressing energy insecurity also requires additional, targeted policy and regulatory supports, as well as modifications to existing practices to account for the interaction between climate change and energy insecurity (Carley and Konisky 2025b). Example policies include required rates for energy insecure households such as percentage of income payment plans; weatherization and energy efficiency subsidization; community solar programs and incentives; targeted tax incentives for clean and efficient technologies that attract the marginal consumer rather than those who would have purchased the technology anyway; emergency bill assistance or less specific cash transfers; and state protections on disconnections during particularly hot or cold times and for more vulnerable populations (e.g., children or medically compromised).

5.2. Case 2: Legacy Coal Communities

A second example of a modern energy justice challenge is the plight of coal communities in the United States as well as across the world. This case is one again of both distributive and procedural justice dimensions.

Coal generation in the United States declined from 177,800 at its height in 1985 to 40,200 as of mid-2025 (Federal Reserve Bank of St. Louis 2025). As coal production has dropped, so too has the demand for coal as a commodity,⁹ which has directly and negatively affected coal producing regions (Cha 2021). Rapidly changing technological progress in the form of natural gas, wind, and solar development, and the simultaneous shuttering of local coal operations, has left these communities without a prominent local employer and significantly less tax revenue.

Understanding the complexities of coal community transitions requires a bit of historic context. Several coal mining regions in the U.S. are either mono-economies or are economies that are heavily reliant on the coal company as one of the primary producers—and thus tax revenue generators—in the region. To some degree, the reason for this is geography, in which coal regions typically have an abundance of coal while other resources or economic opportunities are less ample. This leads to economic conditions that are highly specialized around coal operations.

This history also features transaction costs and market power. Through the decades, coal companies have worked to reduce transaction costs to maximize economic opportunity, and in so doing build a concentration of power. For example, coal companies have co-located with coal power generators and, through long-term contracts and vertical integration, sought to minimize both transaction and transportation costs. Joskow (1985) highlighted this kind of arrangement in his classic coal mine-mouth power plant example, which he demonstrated empirically to be quite common across coal regions in the United States. One such coal mine-mouth location is Kemmerer, Wyoming, where a coal power plant and a coal mining company are located near each other and bound through decades-long contracts.¹⁰

In some regions of the U.S., particularly in Appalachia, coal companies have also long had a stronghold on the local economy, dating back to the late 1800s and early 1900s (Bell 2016). Coal companies during this time recruited workers from across the country to join the booming coal industry, with an allure of well-paying jobs. The companies owned all operations in these communities—the grocery store, housing, all amenities (e.g., water, sewage, schools, streets)—and even imposed their own currency (Bell 2016). Such monopsony rendered the local workers and community members particularly reliant on the coal companies for employment and general economic opportunities, but also for social wellbeing. These conditions made the local economy particularly vulnerable to price and market fluctuations, which served to reinforce economic dependence, while simultaneously crowding out other economic opportunities.

These various market conditions have not only had long-term economic implications, but they have required surrounding communities to accept heavy tradeoffs: they could access well-paying jobs, when available, but potentially at the sacrifice of compromised public health (e.g., in the form of black lung disease), degraded environment, or contaminated drinking water, among other coal mining burdens (Carley, Evans, and Konisky 2018; Cortes-Ramirez et al. 2018). As a growing number of coal companies have declared bankruptcy in recent years and closed coal mining operations, such tradeoffs no longer exist for the surrounding communities; specifically, jobs are no longer part of the equation. Yet, it is not just coal miners that are affected. Those who live in coal and other extraction-oriented communities are also negatively affected financially (Blonz et al. 2023) and in some cases also socially (Carley, Evans, and Konisky 2018).

Coal communities across the U.S., as well as others across the world, are grappling with these economic and social challenges in real time, including one community, Centralia, Washington, that is considered an energy transition success case (O’Leary and Hunkler 2021). Centralia was previously a coal community; its largest employers were a coal mining company and a coal power plant, co-located similarly to the coal-mine mouth example above of Kemmerer. In 2006, the coal mining company shut down and laid off its 600 workers. In 2011, the coal power plant company announced that they would soon retire the plant in 2025, which would result in an eventual lay off of 300 more employees (O’Leary and Hunkler 2021). Upon announcement, however, the company committed to funding a transition plan and establishing a transition fund, an agreement that they reached in coordination with state legislators, and local environmental and labor groups, respectively. The fund has provided millions in grants—with an eventual $55 million in total grants by the end of the program—to weatherization of homes, energy efficiency investments, clean energy technologies, and workforce retraining and compensation for former coal workers. Analysts have linked these investments to an increase in manufacturing, construction, and transportation jobs, local business partnerships, and general economic growth (O’Leary and Hunkler 2021). In just the first 3 years of administering the fund, Centralia added 2,800 new jobs on top of the existing 24,000 job base (O’Leary and Hunkler 2021). These developments were all in absence of any major new employer moving into the region; rather, local businesses, the community, and the government all worked together to build and execute this economic development strategy. The fund has also invested in technologies and energy efficiency that has reduced residents’ energy bills and thereby helped them better afford energy services.

It is not clear what led the company to willingly donate these funds, and thus how to replicate this kind of industry-sponsored but community-run development model, though the company is still actively working in the region with several natural gas units that they added to the power plant site. Perhaps more importantly for the sake of this article though, the case of Centralia provides evidence of polycentricity at work (Ostrom 2010a, 2010b), with overlapping jurisdictions of governance and markets working together to create new opportunities and address emerging challenges associated with the energy transition. This case also demonstrates an accounting for the underlying social structures that both inform and interact with the economic, political, and other dynamics. Centralia features what scholars deem an effective “just transition” process of “community investments that respond to local priorities and needs while being aligned with regional and national development planning,” which, in turn can “enhance trust and ownership over the transition process” (Jordan and Tenzing 2024). Alternatively phrased, Centralia has invested in programs and efforts that empower the local community and give them more agency over their energy and economic future, and in a manner that aligns with the energy justice principles and objectives outlined above.

Like the case of energy insecurity, addressing challenges associated with transitioning coal communities requires multiple layers of public policy and regulatory reform. The case of Centralia introduces ideas of polycentricity, workforce training programs, and household and community investments. Additional policy options may include, but are not limited to, subsidized migration or unconditional cash transfers that cover relocation costs for coal miners and coal mining communities (see, e.g., Bryan et al. 2023; Lagakos et al. 2023); and new industrial development that is pursued in collaboration with the involved local communities.

6. Conclusion

Applying a lens of institutions and governance, and through the application of two case studies, in this article I have argued that the notion of energy justice requires an appreciation for the current state of energy history and an expanded set of objectives and metrics used by institutional actors. Most importantly, it requires an understanding of the underlying institutional and regulatory layers in shaping corresponding challenges as well as addressing them. As I have argued, institutional arrangement governs who can participate in energy markets, how they compete and interact, and who ultimately bears the costs and who gains from energy market decisions.

Designing solutions for these challenges is no small feat. In some cases, one must expand the scope of institutions and governance beyond technological innovation and economic efficiency to include a focus on the human and community side of energy systems. In examples covered in this article, this may require more decentralization of decision-making; in others it requires greater inclusion of a polycentric set of actors, including those who are most affected. And in others it requires expanding the objectives of already established organizations to include a broader social equity mandate guided by the tenets and principles of energy justice.

Solutions also require new or modified policies, regulations, and market design. In this article, I provided specific examples of targeted policies for energy insecurity and coal community transitions, such as disconnection protections, bill assistance, workforce training, and relocation funding. Institutions and regulations should not only mitigate market failures, including distortions from historic market design, but should also support well-functioning and competitive markets that can advance equity objectives alongside other long-standing objectives, such as efficiency.

These various approaches, however, are challenging. Institutional change is inherently slow and typically incremental. And bringing more people to the proverbial table, while desirable in concept, raises an incredible number of questions about how to effectively engage people, who should have a voice and at what point in the process, and how can everyone be involved productively and in a manner that does not perpetually yield stalemates.

Footnotes

ORCID iD

Sanya Carley

Funding

The author received no financial support for the research, authorship, and/or publication of this article.

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

1

To the author’s knowledge, no studies to date have discussed energy justice in the context of objective functions (e.g., utilitarian, min max).

2

This account of energy history is, of course, a vast oversimplification, intended for this purpose to explain why markets are regulated in the ways that they are. For a more extensive review of the history of energy systems and how they have interacted with and shaped society, see .

3

To make conditions even more complicated, energy transitions rarely mean an abandonment entirely of former energy technologies; more often, they are simply an addition of new technologies. Thus, in the current transition, these new innovations are added on top of centralized and fossil-intensive portfolios.

4

This estimate is likely significantly smaller than actual disconnections, since approximately 10 percent of all utilities report their disconnection data with a service territory footprint of under 50 percent of the total population.

5

Yet another complicating factor is the multitude of actors in this space, and their overlapping jurisdiction of issues, in which each can claim to be absolved of the need to prioritize equity in the form of energy insecurity mitigation.

6

An exception here may be those utilities that are publicly or cooperatively owned, which are, by design, not dictated by a profit maximization objective. Despite theoretically being better able to tackle challenges such as climate change mitigation through a focus on the public interest (see Welton 2021 for an excellent review of utility governance needed to tackle modern grid challenges), however, little empirical evidence exists that demonstrates public or cooperative utilities, either on average or an masse, are more equity-minded than their private utility counterparts. Indeed, public utilities demonstrate shut-off rates that largely align with those of their investor-owned utility counterparts ().

7

Historically, to the authors’ knowledge, access to residential technologies has not been an issue, since these distributed energy resources are relatively new to energy markets. Yet, even with more centralized energy technologies, there have long been disparities in who is able to access and afford the electricity that is produced by them, including disparities along urban and rural lines and across income groups.

8

There is some debate among the energy justice and consumer advocacy community about whether universal moratoria are the only “just” approach to utility disconnections, but these debates often do not identify alternative mechanisms for overcoming this moral hazard challenge.

9

International demand for coal, however, has continued to rise over time, which keeps U.S. coal mining operations open longer than they would otherwise, or leads to mining operations that start and stop in fits ().

10

Although the coal mining company, Westmoreland Coal Co., filed for Chapter 11 bankruptcy in 2018 and sold the mine to another company.

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