Industrial Policy Is Climate Policy
CMGE Executive Director Priyanka Mohanty testified in front of the California State Senate Economic Development Committee. Read her testimony here.
Last week, CMGE Executive Director Priyanka Mohanty gave testimony to the California State Senate Economic Development Committee about the importance of industrial policy to California’s continued climate action, arguing that without clear economic benefit climate action becomes socially invisible and politically fragile. What follows is her testimony:
Around the world, countries treat climate action as development strategy. They create new industries, quality jobs, and growth opportunities, all while bringing people into the collective project of a massive economy-wide transition. This is increasingly relevant here at home.
California has been a global leader in climate action, shaping national markets and building a strong foundation to continue decarbonizing despite national regression. But the state must now reckon with the reality that its climate strategy has been driven by consumer incentives. Those that can afford electric vehicles, solar panels, or home battery storage, buy them. Most cannot.
Most Californians experience climate change as austerity. Wildfires and heat waves give way to inflated energy bills and higher insurance costs. Programs designed with accessibility in mind, like financial incentives for EVs, are means tested and often hard to access.
For example, we often hear that California now has more EV chargers than gas nozzles. While this is certainly an achievement, it masks a messier reality. Though the state leads in EV charger proliferation, it also has some of the highest proportion of renters in the country, who rely on their already-limited access to fast public charging. Even homeowners are often deterred by the upfront costs of an EV—not just of the car, but of panel upgrades needed to charge at home.
Polling reflects this reality. Cost remains the top barrier to EV adoption for eight in ten Americans across income levels, and only one-third of Americans say they want to own an EV. At the same time, cities across California are banning battery-storage installations because the technology still feels unfamiliar and risky—despite the overwhelming evidence that battery fires are rare and increasingly so.
The lives of the majority of Californians feel unaffordable above all else, so these perceptions matter. When people do not experience the energy transition to their benefit—when it feels abstract, extractive, or elite—it becomes a scapegoat.
This is why industrial policy and clean-energy manufacturing is the critical next step in building California’s green economy. It is an opportunity to grow good jobs across regions, invest in the state’s tax base, socialize technologies that need widespread adoption, and connect climate action to economic development—all solutions which will make the green energy transition more tangible to working Californians.
When we talk about industrial policy, we refer to a time-tested playbook: public investment, joint ventures, loan guarantees, local production requirements, state procurement, and strategic supply-chain planning. We have seen this approach used both here and around the world:
India’s Production Linked Incentive Scheme provides domestic manufacturers in strategic sectors with financial support tied to sales and performance benchmarks.
Brazil’s Neo-Industrial Policy provides special credit lines for domestic green technology manufacturers and preferential procurement for local products.
China has cross-applied manufacturing know-how from parallel industries (ex. Cell phones to battery storage) to invest in low-cost chemistries, strategically integrate the supply chain, and generate sub-national competition supported by provincial industrial policy. The result is climate affordability. Today, roughly 60 percent of EVs sold in China are cheaper than internal-combustion vehicles.
None of this should feel foreign to us. The federal government has the tools to do this, most notably through the Defense Production Act which allows them to provide direct investment, loan guarantees, and offtake commitments, while funding workforce development and machinery for manufacturers in sectors of national interest, from semiconductors to vaccines. California should take up these tools to achieve the same benefits in the climate context.
Our industrial strategy must also be targeted to meet the moment or we risk falling behind. One target in particular integrates issues of affordability, energy transition, and manufacturing: batteries. The political and market landscape for batteries shifted dramatically in 2025, as the rollback of federal incentives disrupted manufacturing investment nationwide. Here in California, our partner companies poised to manufacture in the coming years scaled back their ambitions as private investment dried up. At the same time, demand for utility-scale battery storage accelerated faster than expected. AI data centers, electrification, and renewable integration are driving unprecedented load growth.
California will host the third-largest concentration of data centers in the country, and utilities are actively seeking long-duration storage, new battery capacity, and upgraded transmission infrastructure. Automakers like Tesla, Ford, and General Motors are shifting portions of their business models toward a battery storage manufacturing industry in which they see growth opportunity.
Data centers, and the massive energy production they demand, complicate California’s energy transition. They also present an opportunity to apply lessons learned from green economies emerging elsewhere. The same industrial policy innovation that built robust industries—public financial support, guided by state strategic planning—can help scale emerging technologies from California’s many innovators. We can make the batteries Californians need right here in California.
Despite its challenges, California is the epicenter of clean tech innovation. Its strong labor standards are an asset to build expertise, reduce turnover and improve productivity. It wields enormous market power, with its procurement decisions and consumer markets able to grow industries from scratch. The question is not whether industrial policy works, but rather which elements are best applied here.
We are in the midst of what has been called the mid-transition: our energy transition will be successful based on the jobs we create, the industries we build, and whether people can see themselves in this future. Most Californians do not own solar panels or electric vehicles. But they all understand what it means to see their economic opportunities grow.
Watch the full hearing, including Priyanka’s testimony, here.
ICYMI: What We Read and Reacted to This Week
EIA: 99%+ of new US capacity in 2026 will be solar, wind + storage (1/28/2026)
Analysis of new energy capacity in 2025 sees a strong showing for renewable production paired with battery storage. While renewable capacity ballooned by 45, 198 MW, all fossil fuels and nuclear power combined declined by 519 MW. This is a trend that is only expected to accelerate in the year to come, with the Energy Information Administration projected that 99% of net new capacity in 2026 will stem from renewables and storage.
Ford’s $30,000 EV Pickup Takes A Page From Tesla To Transform How Cars Are Built (2/5/2026)
Ford CEO, Jim Farley, who in recent months has decried the difficulty in finding skilled labor, has shared a bit of how the automaker is hoping to cut production costs. He says Ford will use unicasting techniques for the first time, condensing 146 parts into just two. Farley says this is one production tweak that will help bring an affordable EV pickup truck to market and “match the production costs of BYD’s made-in-Mexico EVs.”
How the west fell behind in the green tech race (1/12/2026)
Though many green technologies can trace their roots back to Europe, their scaling and industrialization has only been accomplished in China, which has reaped the economic benefits wholesale. Experts, even in the West, now acknowledge that “We all were asleep at the switch as the Chinese government decided to prioritise these clean energy technologies as a matter of national industrial strategy,”
Resources & Calls
Jobs With Justice SF is Hiring
A pillar of Bay Area coalition-building is seeking a Climate Organizing Director. A successful applicant will work to build worker and coalition power to win strategic victories for workers rights and good jobs in the era of climate change, and worker-led transition in California. The position remains open until filled.
Energiize Commercial Vehicles Program
Infrastructure projects serving medium or heavy-duty commercial zero-emission drayage vehicles with the Megawatt Charging System (MCS) can apply to receive a portion of the $10 million in grant funding available. The application deadline is February 26, 2026.
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