Decarbonization Is a Coordination Problem — and Private Markets Can't Solve It

Melanie Brusseler, US Program Director, Common Wealth

Photo by Jimmy Giannini

Economic coordination — how a society organizes the interconnected work of investment, production, distribution, and provisioning — is the central question of progressive economic policy, and one we rarely stop to interrogate. Yet the two great planks of any progressive agenda, decarbonizing the economy and guaranteeing the affordable, universal provision of essentials, are at root the same kind of problem: not only what we want to achieve, but how the complex programs of economic activity needed to achieve it are to be organized, and by whom.

For decades the answer has been left implicit, and it has almost always been the same. Policy is built around private capital as the default decision-maker and market exchange as the default coordinating mechanism. We treat this as neutral — simply how an economy works — when it is in fact a political choice with deep structural consequences for the kinds of transformation that become possible.

The trouble is that private market coordination has four features that work directly against the investment, divestment, and provision that decarbonization and affordability require.

The first is the profit imperative: capital flows toward what is most profitable, not toward what the transition needs, and the provision of essentials gets organized around returns rather than need. The second is the liquidity preference — a structural reluctance to lock money into the long-term, large-scale fixed investment that building a clean economy demands. The third is fragmentation: coordination by millions of uncoordinated private actors cannot deliver the sequenced, system-wide transformation decarbonization requires, where capacity must be wound down in one place exactly as it is built up in another. The fourth is the lock-in of sunk capital: the owners of profitable fossil assets have every incentive to resist their managed retirement, not to wind them down on the schedule the climate demands.

These are not frictions to be smoothed away with better incentives. They are why the most ambitious climate frameworks to date — the Inflation Reduction Act in the US, the green growth agenda in the UK — have fallen short. Each was premised on a limited role for the state: making green investment attractive to private capital rather than undertaking it directly. The result was disappointing on pace, thin in the character of transformation actually achieved, and politically fragile — leaving the economic insecurity of working people unaddressed and the whole project dangerously exposed to backlash. Much of the current affordability debate makes the same narrow bet, reaching for deregulation to coax housing construction or subsidies to prop up private insurance.

Building the next progressive agenda means making a different choice. Public coordination — the state acting directly to invest, provide, and coordinate within and across key sectors — offers a fundamentally different set of capacities. It can decouple investment and divestment from the test of private profitability. It can bring coherence and sequencing to activity that fragmented private actors never could. It can bear risk collectively and more equally. And it can guarantee the provision of essentials outside the market, deciding deliberately how resources and goods are distributed rather than leaving that to price.

This is the foundational premise of Common Wealth's Green Planning Commission: that policy aimed at decarbonization and affordability should begin from public coordination, rather than from the assumption that private actors must be coaxed into delivering transformation. That does not mean replacing markets everywhere. It means building a green mixed-ownership economy in which public institutions set the terms in the sectors that matter most, even as private exchange continues across much of the economy. Through green democratic planning, we can change the terms of our collective economic life — and loosen the grip that capital and for-profit exchange hold over the foundations of a dignified life.